We recently compiled a list of the 7 cheap software stocks to invest in. In this article, we’ll take a look at where TELUS Digital (NYSE:TIXT) stands compared to the other cheap software stocks.
Avoiding hype and focusing on downstream opportunities
Billionaire investor David Tepper, founder and president of Appaloosa Management, recently shared his thoughts on the market and investment strategies in a conversation on CNBC on September 26. Tepper started by discussing his views on technology stocks, specifically mentioning Meta and Google, which he owns. , and Nvidia, which he previously sold due to concerns about its high valuation.
Tepper also discussed energy, specifically the growing demand for power to support the development of new technologies such as artificial intelligence (AI). He emphasized the importance of natural gas to meet this demand and stated that it is necessary to stimulate the growth of AI. Tepper expressed skepticism about the feasibility of relying solely on renewable energy sources, citing the need for a more practical and realistic approach to meeting the country’s energy needs. He also said he has spoken with governors from both sides of the aisle and believes a collective effort is needed to meet the nation’s energy needs.
When asked about the upcoming elections, Tepper stated that he favors a split government, believing it is beneficial for the economy and markets. He expressed concern about the potential for a bipartisan sweep, citing the risks of populist and progressive policies that could lead to giveaways and increased government spending. Tepper emphasized that his views are purely from a market perspective and that he does not want either party to dominate the government. He believes a split government will prevent either side from pursuing extreme policies, which would benefit markets.
Regarding AI, Tepper acknowledged that it is a fast-growing field, but expressed caution about investing directly in AI companies. Instead, he prefers to invest in downstream companies that will benefit from the growth of AI. Tepper also said he is impressed by AI’s potential to drive growth and innovation, but is unsure about the long-term prospects of certain companies that rely heavily on AI.
In terms of his investment strategy, Tepper emphasized the importance of being cautious and not getting caught up in the hype surrounding certain stocks or trends. He noted that he has been successful in the past by being contrarian and taking a more nuanced approach to investing. Tepper also said he is not afraid to take a step back and reevaluate his investment decisions, citing the importance of adaptability in a rapidly changing market environment.
David Tepper’s insights on market and investment strategies provide valuable perspective on the current state of the economy and technology industry. His emphasis on prudence and adaptability in a rapidly changing market environment is a timely reminder for investors to remain vigilant and avoid getting caught up in the hype surrounding certain stocks or trends. With that in context, let’s take a look at the seven cheap software stocks to invest in.
Our Methodology
To create our list of the seven cheap software stocks to invest in, we used stock screeners from Finviz and Yahoo to find the 30 largest software companies with a price-to-earnings ratio of less than 20. Based on that list, we narrowed our picks to the seven stocks that analysts see the most upside in. The list is sorted in ascending order of analysts’ average upside potential, as of October 3. We’ve also added the hedge fund sentiment around each stock, which was pulled from our database of 912 elite hedge funds, as of Q2 2024. The list is sorted in ascending order of their average upside potential.
Why do we care what hedge funds do? The reason is simple: our research shows that we can outperform the market by imitating the best stock picks from the best hedge funds. Our quarterly newsletter strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating the benchmark by 150 percentage points (see more details here).
A robotic process automation system in a modern data center.
TELUS Digital (NYSE:TIXT)
Future price-earnings ratio as of October 3: 8.59
Upside potential: 87.72%
Number of hedge fund holders: 9
TELUS Digital (NYSE:TIXT), formerly known as TELUS International, provides digital customer experience and IT services, including software infrastructure solutions. The company helps companies manage customer interactions and optimize their digital transformations. TELUS International (NYSE:TIXT) has expanded its service offerings across multiple industries, including healthcare, finance and e-commerce.
TELUS Digital (NYSE:TIXT) recently launched a new product called Fuel EX, an enterprise-grade Generative AI (GenAI) employee assistant designed to support productivity, creativity and research. Fuel EX provides employees with a single entry point to access a GenAI interface, where they can choose from more than 20 major language models (LLM) from different vendors to help them with everyday tasks such as knowledge searching, summarizing, copywriting, generating of images, and code writing.
According to the 2024 Work Trend Index Annual Report from Microsoft and LinkedIn, three in four global knowledge workers use AI for their work, and of those users, 78% bring their own AI tools to work, creating a major security problem for companies. . With Fuel EX, companies can be confident that all data entered and produced is kept secure, maintaining the integrity of sensitive business information.
TELUS Digital (NYSE:TIXT) faces a challenging macroeconomic environment and industry competition. However, the company is focused on bundling its services to drive revenue growth and profitability, with an emphasis on offering premium bundled offers for mobility and fixed services to increase average margin per user (AMPU).
In addition, TELUS Digital (NYSE:TIXT) is investing in product development and differentiation to stay ahead of the competition, launching new products and services such as its device-independent smart home platform. The company is also prioritizing cross-selling and increasing penetration of multiple products to drive revenue growth, leveraging its data and AI capabilities to increase product intensity and grow revenue.
Additionally, TELUS Digital (NYSE:TIXT) is undergoing a digital transformation to improve service costs and drive revenue growth, leveraging digital capabilities to improve customer experience and increase efficiency. The company is also investing in 5G and IoT to drive revenue growth, with a focus on B2B where it sees strong momentum. TELUS Digital (NYSE:TIXT) has also made strategic acquisitions, such as the acquisition of LifeWorks, to drive revenue growth and expand its presence in the healthcare and wellness sector. Additionally, the company is forming partnerships and collaborations, such as its partnership with AWS, to drive revenue growth and enhance its offerings.
Overall, TELUS Digital (NYSE:TIXT) is a high-risk, high-reward investment. The company’s ability to transform its operations and deliver on its growth story will be critical to its success.
In short, TIXT is in 1st place on our list of cheap software stocks to invest in. While we recognize TIXT’s potential as an investment, our belief lies in the belief that AI stocks hold greater promise for delivering higher returns in a shorter time frame. If you’re looking for an AI stock that’s more promising than TIXT but trades at less than five times earnings, check out our report on the cheapest AI stock.
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Disclosure: None. This article was originally published on Insider Monkey.