The tech industry is growing rapidly, fueled by rising demand for software solutions in diverse industries. Thus, investors could consider adding fundamentally sound tech stocks Sprinklr, Inc. (CXM), Sabre Corporation (SABR), and Enfusion, Inc. (ENFN) to their portfolios, which are currently trading under $10.
The Information Technology and Innovation Foundation reported that more than one-third of U.S. economic growth comes from tech sectors, which underscores its relevance. According to the International Trade Administration, the United States is home to one-third of the global IT market.
Moreover, businesses are increasingly pursuing automation solutions to enhance productivity and simplify operations. This emphasis on efficiency is a major factor driving the growing demand for IT services in automation. The global IT services market is expected to expand at a CAGR of 7.1% from 2024 to 2034.
Considering these factors, let’s take a look at the fundamentals of the three tech stock picks.
Sprinklr, Inc. (CXM)
CXM provides enterprise cloud software products worldwide. The company operates the Unified Customer Experience Management platform, a software that enables customer-facing teams to collaborate across internal silos, communicate across digital channels, and leverage a complete suite of capabilities to deliver customer experiences.
On June 6, 2024, CXM and Reddit announced an expanded strategic partnership. The partnership spans Reddit’s Data and Advertising APIs, now open with Sprinklr as the first official partner.
CXM collaborates with numerous major global brands to unify teams, tools, and data for all customer-facing departments on a single platform. Strong partnerships with social and digital channels enable CXM customers to monitor and analyze brand-related conversations, optimize content for maximum reach and engagement, and customize advertising for optimal effectiveness and ROI.
CXM’s forward EV/Sales of 2.33x is 20.4% lower than the industry average of 2.93x. Its forward EV/EBIT multiple of 17.54 is 11.8% lower than the industry average of 19.89.
CXM’s total revenue for the fiscal first quarter that ended April 30, 2024, increased 13% from the year-ago value to $195.96 million. Its non-GAAP gross profit rose 10.1% year-over-year to $144.83 million. Moreover, its non-GAAP net income stood at $25.31 million, up 49.1% over the prior-year quarter. Also, its non-GAAP net income per share grew 50% year-over-year to $0.09.
Analysts expect CXM’s revenue for the quarter ended July 30, 2024, to increase 8.9% year-over-year to $194.38 million. Its EPS is expected to be $0.07 for the same quarter. The company surpassed Street revenue and EPS estimates in each of the trailing four quarters, which is impressive.
The stock has gained marginally intraday, closing the last trading session at $8.97.
Based on 14 Wall Street analysts offering 12-month price targets for CXM in the last three months, the average target price is $11.73, indicating a 30.8% change from the last price, with a high forecast of $17 and a low forecast of $9.
CXM’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
CXM has a B grade for Sentiment and Value. It is ranked #24 out of 127 stocks in the Software - Application industry.
Beyond what is stated above, we’ve also rated CXM for Growth, Momentum, Stability, and Quality. Get all CXM ratings here.
Sabre Corporation (SABR)
SABR is a global software and technology powerhouse for the travel industry. The company provides an array of SaaS and hosted solutions, including reservation systems, commercial and operations products, and data-driven intelligence.
On August 21, 2024, SABR finalized a multi-year renewal of its distribution agreement with Delta Air Lines. The long-term agreement enables SABR-connected travel agents to access traditional EDIFACT and New Distribution Capability (NDC) content, enhancing their ability to provide comprehensive travel offers to their customers.
On June 24, 2024, SABR’s Hospitality announced the launch of SynXis Retailing, a comprehensive retailing solution that includes standalone offers and automated fulfillment, enhancing hoteliers' revenue opportunities and guest satisfaction. This new platform enables the sale of experiences and services beyond room reservations, with automated fulfillment powered by Nuvola.
SABR’s forward Price/Sales of 0.39x is 56.6% lower than the industry average of 0.89x. Its forward EV/EBIT multiple of 12.79 is 12.2% lower than the industry average of 14.57.
SABR’s revenues for the second quarter ended June 30, 2024, increased 4% year-over-year to $767.24 million. The company’s adjusted operating income increased 132% year-over-year to $106.99 million. Its adjusted EBITDA grew 76% from the year-ago value to $128.69 million.
Additionally, SABR’s total current assets, as of June 30, 2024, stood at $1.17 billion, compared to $1.16 billion as of December 31, 2023.
Street expects SABR’s revenue to increase 4.8% year-over-year to $3.05 billion for the year ending December 2024. The company’s EPS for the same quarter is expected to be $0.09. Also, SABR surpassed the consensus revenue and EPS estimates in three of the trailing four quarters, which is impressive.
The stock has gained 15.1% over the past six months to close the last trading session at $3.05.
Based on two Wall Street analysts offering 12-month price targets for SABR in the last three months, the average target price is $3.75, indicating a 23% change from the last price, with a high forecast of $4 and a low forecast of $3.50.
SABR’s robust fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to a Buy in our proprietary rating system.
The stock has a B grade for Growth, Value, and Momentum. SABR is ranked #20 out of 75 stocks in the Technology - Services industry.
Click here to access the additional SABR ratings (Sentiment, Quality, and Stability).
Enfusion, Inc. (ENFN)
ENFN provides software-as-a-service solutions for the investment management industry in the United States, Europe, the Middle East, Africa, and the Asia Pacific.
ENFN’s 1.76x trailing-12-month asset turnover ratio is 182.9% higher than the 0.62x industry average. Furthermore, the stock’s 66.94% trailing-12-month gross profit margin is 35.1% higher than the 49.55% industry average.
During the second quarter, which ended June 30, 2024, ENFN’s total revenues increased 15.8% year-over-year to $49.46 million. Gross profit surged 12.3% from the year-ago quarter to $33.49 million. Furthermore, the company’s net income grew 155% and 200% year-over-year to $2.55 million and $0.02 per share, respectively.
For the quarter ending September 30, 2024, ENFN’s EPS is expected to increase 77.3% year-over-year to $0.06. Its revenue for the same quarter is expected to grow 17.6% year-over-year to $52.17 million. It surpassed consensus revenue estimates in three of the trailing four quarters.
Based on four Wall Street analysts offering 12-month price targets for ENFN in the last three months, the average target price is $9.67, indicating a 16.7% change from the last price, with a high forecast of $11 and a low forecast of $8.
The stock gained 1.1% intraday, closing the last trading session at $8.29.
ENFN’s POWR Ratings reflect bright prospects. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
The stock has a B grade for Value and Growth. ENFN is ranked #26 in the Software - Application industry.
In addition to the POWR Ratings highlighted above, one can access ENFN’s ratings (Quality, Momentum, Stability, and Sentiment) here.
What To Do Next?
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CXM shares were trading at $8.97 per share on Monday afternoon, up $0.07 (+0.79%). Year-to-date, CXM has declined -25.50%, versus a 19.34% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
3 Tech Stocks Under $10 With Massive Upside Potential StockNews.com
