2 Cheap Tech Stocks to Buy Now

There are many ways to define a “cheap stock,” but there’s nothing as classic as a growth stock changing hands at a low valuation. With that in mind, I highly recommend taking a closer look at a freelance services platform Five (NYSE: FVRR) and the giant of memory chips Micron Technology (NASDAQ:MU) right now. Their shares look deeply undervalued.

Micron: Cyclical Growth

The technology sector operates in broad, sweeping cycles. The growth that drives the market almost always makes middle-market suppliers overly optimistic about the long-term bull market that might be forming for their goods. In many cases, they end up with overstocked components when the high demand fades faster than expected. Then everyone gets caught off guard by the next boom. Demand surges, and the market realizes that the excess supply from the previous downturn has been sold or has become obsolete, and in the meantime, no equipment supplier has built a single factory since the industry’s last cyclical downturn began. Manufacturers then have to pick up the slack to add capacity and meet the new wave of revived demand.

Such is life in the memory sector, where Micron operates. The industry is currently grappling with surging demand for products as each piece of the artificial intelligence (AI) puzzle requires a ton of fast memory chips. As it happens, the aftershocks of the coronavirus crisis and floods in Taiwan have left the largest memory makers completely unprepared to meet this surge in demand.

But growth is happening, and I don’t see how it can stop. From smartphones and PC systems to data center servers and tech-packed cars, the devices around us are screaming for more memory chips. That’s why Micron is ramping up its internal manufacturing capacity, planning a multibillion-dollar build by 2025.

Micron’s chip production and sales are growing after a strong slump in 2022 and 2023. Cash profits and net income are following suit. However, it is currently unprofitable in terms of earnings per share. As a result, Micron stock may seem expensive at first glance due to negative earnings and a nonexistent price-to-earnings (P/E) ratio.

But its net income should skyrocket over the next few years. The stock is trading at just 9 times next year’s estimated earnings and a reasonable 4.5 times sales. In short, Micron looks poised to grow in 2025 and beyond, and the stock deserves a higher P/E. It’s a great buy at these modest share prices.

Fiverr: Changing the course of profitability

Many investors had written Fiverr off as the beneficiary of a short-lived trend from a few years ago. Freelancing in digital commerce dovetailed perfectly with the excess free time people had during COVID-19 lockdowns. So Fiverr’s stock soared to unsustainable heights during the era of social distancing, then fell hard as many of the platform’s users and potential users returned to their workplaces.

The stock has been on a downward spiral since the start of 2021, down 92% from its peak. But something funny happened on the road to Fiverr’s financial ruin.

The company never stopped growing.

Sure, its net profits dipped into the red ink for a while, and revenue growth slowed from the breakneck pace of 2020. But Fiverr continued to grow its business, inch by inch, while also raking in plenty of cash profits. Fiverr’s sales grew 128% over three years, while its free cash flow skyrocketed 1,400%.

FVRR revenue data (TTM) by YCharts.

Business is doing great, and analysts are starting to take notice. Net profit estimates for the next fiscal year are climbing, and Fiverr’s share price is struggling to keep up. As a result, the stock is trading at just 9.7 times estimated future earnings and 2.3 times today’s sales.

This small company has big ambitions. In the long run, this gig economy leader hopes to change the way people think about careers and work. The company has been around for a decade, but it’s still in the early stages of a potentially epic long-term growth story. I see a huge buying opportunity in Fiverr at its current modest valuation.

Is it worth investing $1000 in Micron Technology now?

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Anders Bylund holds positions at Fiverr International and Micron Technology. The Motley Fool holds positions at and recommends Fiverr International. The Motley Fool has a disclosure policy.