These 'second-tier' tech stocks are under the radar, and insiders are buying shares.
The so-called Magnificent Seven stocks have been leading the U.S. market this year, but now they look richly valued by many key measures — and they’re crowded trades.
Second-tier tech names For tech exposure now, it makes more sense to consider what I call second-tier tech names. This does not mean they’re lower quality. It just means they are not on everyone’s radar. But insiders like them a lot. In each of the second-tier tech names suggested below, insiders have been buying not too far below current prices.
2. Akami Technologies: Akami Technologies AKAM, +0.75% recently traded at a forward p/e of 16.8, a 9% discount to its trailing average of 18.5. It also has a PEG ratio of 2.1, below the cutoff of 2.5, which signals a discounted valuation for growth names in tech. Akami’s problem is that in recent years a lot of its customers figured out they could do this job in house, at a lower cost. Rather than just stand still, Akami has pivoted to cybersecurity, in part via acquisitions. The strategy is paying off. Security-related sales grew 14.4% in the second quarter, offsetting declines in delivery revenue of 8.2%. Total sales grew 4.4%.
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