Investment Insights: Top Tech Stocks Under $10

Internet accessibility continues to increase all over the world, and for that reason, the tech sector remains on a roll, boosted by breakthrough innovations in AI and cloud computing, among others. All these are changing learning platforms, search engines, and legal and compliance solutions and, therefore drive the industry towards growth and impact.

Introduction to the Growing Tech Sector

Thus, investors may scout for investment opportunities in these fundamentally sound tech stocks with prices below $10, potentially rising with stocks similar to those at the prices of Chegg, Inc. (CHGG), LegalZoom.com, Inc. (LZ), and trivago N.V. (TRVG).

This upward trend in the number of internet users worldwide has been even more accelerated by a wide majority through smartphones, demanding solutions that are easy and accessible. The result has been innovations such as travel navigation, education technology, and customer service platforms by companies. The growth in internet usage is changing these markets, thereby fueling growth and opportunities within the tech industry.

The Surge in Internet Usage and Its Impact

Moreover, Gartner forecasts that IT services spending will grow by 9.7% and will be at $1.52 trillion this year with increasing internet usage via digital expansion, subscription commerce, personalization using generative AI, and interactive Progressive Web Apps. Thus, the global internet services market is likely to show a 4.4% CAGR in the coming years to reach $733.79 billion by 2031.

Keeping the above positive trends in mind, let us analyze the fundamentals of the above-tech stocks.

The Surge in Internet Usage and Its Impact

Stock #1: Chegg, Inc. CHGG

CHGG offers a direct-to-student learning platform under the brand; it is an online portal dedicated to providing learners with critical life and work skills as a prerequisite to expedite their journey from learning programs that cut across the globe. Its subscription services include Chegg Study, Tinger Gold, DashPash Student services, Chegg Writing, Chegg Math, Chegg Study Pack, and Busuu.

On August 5, 2024, CHGG announced a partnership with Max by adding the Max with Ads plan to its Perks program for U.S. subscribers of Chegg Study and Study Pack. This will enable students to stream popular shows and movies within their subscription.

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Regarding the trailing-12-month gross profit margin, CHGG’s clocks in at 73.40%, 98.1% above the industry average of 37.05%. As for its 8.58% trailing-12-month levered FCF margin, it is 67.1% higher than the 5.14% industry average. In yet another metric, CHGG comes in at 13.90% for its trailing-12-month Capex / Sales, 369.5% above the industry average of 2.96%.

Revenues for CHGG in the second quarter June 30, 2024 was $163.15 million. Consequent to the same, the adjusted EBITDA was $44.10 million. The non-GAAP net income and non-GAAP EPS stood at $26.50 million and $0.24 respectively of the company. Consequent to the same, total current assets of CHGG at the end of June 30, 2024 were $433.55 million as compared to December 31, 2023, $414.84 million.

Street is calling for CHGG’s fiscal 2025 EPS to rise 17.3% year-over-year to $0.99. It has topped the Street EPS estimates in three of the last four quarters. In the last month, the stock has decreased 8.6% to close at $1.92 in the last trading session.

CHGG has strong prospects as reflected in POWR Ratings. POWR Ratings evaluate stocks according to 118 distinct factors, each weighted.

It ranks at #38 out of 53 equities in the B-rated Internet industry. The stock is an A rated Value and a B rated Growth. Click here to see LZ’s ratings for Momentum, Stability, Sentiment, and Quality.

Stock #2: LegalZoom.com, Inc. (LZ)

LZ offers an online platform for legal and compliance solutions. The company’s platform provides products and services covering from business formations up to estate planning documents, the protection of intellectual property, a few forms and agreement completions, independent attorney advice, and connections to a network of professionals for tax preparation and bookkeeping services.

In June 2024, LZ revealed a partnership with BusinessLoans.com to increase the reach of capital for small-scale enterprises. Integration of funding solutions offered by BusinessLoans.com into the LZ’s platform will be one way streamlined loan options and financial support will be provided to entrepreneurs.

On the trailing-12-month gross profit margin, LZ scores with a 63.40% which translates into a distance of 102.4 % above the industry average of 31.33%. Similarly, the 12.35% trailing-12-month levered FCF margin in its own books is 89.7% above the industry average of 6.51%. Its asset turnover ratio of 1.68x in the trailing-12-month period surpasses the 0.78x industry average by a distance of 114.3%.

The second quarter ending June 30, 2024, resulted in LZ’s revenue, which increased year-over-year by 5% to $177.36 million, whereas gross profit increased 8.2% year-over-year to $113.75 million; meanwhile, the non-GAAP net income for the company was $18.81 million, and non-GAAP net income per share was $0.10, the same as it had been in the prior-year period.

Revenues of LZ for the quarter ending September 30, 2024, are expected to increase marginally year over year to $167.45 million. EPS for the same quarter of LZ is likely to be 24.1% higher than the comparable quarter of last year at $0.15. It topped the consensus estimates for both EPS and revenues in three of the last four quarters. The stock has surged 10.2% in the last month to close at $6.48 in the last trading session.

LZ’s POSITIVE OUTLOOK is reflected in its POWR Ratings. It has an overall rating of B, which translates into a Buy in our proprietary rating system.

It ranked #10 in the same industry. It has an A grade for Quality and a B for Value. To see LZ’s Growth, Momentum, Stability, and Sentiment ratings .

Stock #3: trivago N.V. (TRVG)

TRVG operates a hotel and accommodation search platform in the United States, Germany, the United Kingdom, and international regions. The headquarters of TRVG has been stationed in Düsseldorf, Germany with its subsidiaries operating across the world. The company offers an online meta-search for hotels and accommodations with online travel agencies, hotel chains, and independent hotels.

On July 30, 2024, TRVG disclosed its strategic investment in the AI-driven travel tech platform Holisto to better service its “trivago Book & Go” service with an aim to boosting conversions and enhancing the experience of the user. With this partnership, technology from Holisto will be used to enable TRVG’s travelers to receive optimized hotel rate aggregation and better offers.

For its trailing-12-month asset turnover, TRVG’s 0.90x is lagging by a distance of 81.3% compared with an industry average of 0.50x. Its 97.55% gross margin for the same period is 90.7% better than the industry average at 51.15%.

For the second quarter, which ended June 30, 2024, TRVG reported total revenue of €118.56 million or $130.75 million. Other income, net total, was reported to be at €987 thousand or $1.09 million for the period ended June 30, 2024. Total current assets for the company also came in at €191.38 million or $211.05 million as of June 30, 2024, versus €187.93 million or $207.25 million as of December 31, 2023.

TRVG is estimated to boost the revenue quarter ending September 30, 2024 to $172.59 million, an increase of 3.5% year over year. Its EPS for fiscal 2025 is also expected to rise 735.9% year over year to $0.05. It has managed to outperform the estimates for EPS in three of its last four quarters. The stock has recently declined by 8.3% in the past month and closed the last trading session at $1.88.

We present POWR Ratings as a representation of TRVG’s solid fundamentals. With an overall rating of B, we classify it as a Buy in our proprietary rating system.
It is graded B in Value, Sentiment, and Quality. At the industry level, it ranks #9 in the Internet sector. Click here to access other POWR Ratings of TRVG for Growth, Momentum, and Stability.

Skyrocketing Tech Stocks Under $10 In today’s volatile market, investors are seeking high-potential opportunities without breaking the bank. This report presents a curated list of tech stocks priced under $10 that have witnessed remarkable growth and exhibit strong potential for further expansion. From innovative startups to established players, these stocks offer an attractive investment proposition for those looking to capitalize on the evolving tech landscape. Explore these compelling options and make informed investment decisions.

LZ shares are trading at $6.74 per share this afternoon, up $0.26 (+4.01%). Year-to-date, LZ has declined -40.35%, versus a 18.26% rise in the benchmark S&P 500 index for the same period.