Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 6 stocks made the list for top value stocks in the Communications & Networking industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Communications & Networking Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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6 Undervalued Communications & Networking Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 6 undervalued stocks in the Communications & Networking industry for Friday, March 15, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Communications & Networking industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Digital Ally Inc’s Value Grade

Value Grade:

Digital Ally, Inc. is engaged in video solution technology, human and animal health protection products, healthcare revenue cycle management, ticket brokering and marketing, event production and jet chartering. The Company?s segments include Video Solutions, Revenue Cycle Management, and Entertainment. The Video Solutions segment produces digital video imaging, storage products, disinfectants, and related safety products for use in law enforcement, security, and commercial applications. This segment includes both service and product through its subscription models offering cloud and warranty solutions, and hardware sales for video and health safety solutions. Revenue Cycle Management Segment provides billing, verification, and related services to medical providers throughout the Country. It provides working capital and back-office services. Its Entertainment segment acts as an intermediary between ticket buyers and sellers within its secondary ticketing platform, ticketsmarter.com.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Digital Ally Inc has a Value Score of 79, which is considered to be undervalued.

When you look at Digital Ally Inc’s price-to-sales ratio at 0.23 compared to the industry median at 1.18, this company has a lower price relative to revenue compared to its peers. This could make Digital Ally Inc’s stock more attractive for value investors.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Digital Ally Inc’s shareholder yield is lower than its industry median ratio of (0.25%). Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Digital Ally Inc’s price-to-book ratio is lower than its industry median ratio of 1.66. This could make Digital Ally Inc more attractive to investors looking for a new addition to their portfolio.

Electronic Systems Technology Inc’s Value Grade

Value Grade:

Electronic Systems Technology, Inc. is engaged in the development and manufacturing of digital data (non-voice) radio transceivers for use in industrial wireless networking applications. It designs, develops, manufactures and markets the ESTeem line of industrial wireless products and accessories. The Company?s ESTeem line of products provides communication solutions for applications underutilized by conventional, commercial grade communication systems. Its products include ESTeem Models, such as 210M, 195M, 195C, 195H, Horizon900, Horizon2.4MIMO, Horizon4.9, Horizon5.8 and Edge900. It manufactures over nine models of the ESTeem industrial wireless modems that operate in frequency from 150 megahertz to 5.8 gigahertz. It offers product lines in markets for process automation in commercial, industrial and government arenas domestically as well as internationally. The Company offers various accessories to support the ESTeem products, such as antennas, power supplies and cable assemblies.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Electronic Systems Technology Inc has a Value Score of 74, which is considered to be undervalued.

Electronic Systems Technology Inc’s price-to-book ratio is higher than its peers. This could make Electronic Systems Technology Inc less attractive for value investors when compared to the industry median at 1.66.

You can read more about Electronic Systems Technology Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Ituran Location and Control Ltd. (US)’s Value Grade

Value Grade:

Ituran Location and Control Ltd. is a provider of location-based services, consisting of stolen vehicle recovery (SVR), fleet management services and other tracking services. The Company also provides wireless communication products used in connection with its location-based services and various other applications. Its operations consist of two segments: location-based services and wireless communications products. Its location-based services segment consists of its SVR and tracking services, fleet management and value-added services consisted of personal locater services and concierge services. Its wireless communications products segment consists of short and medium range two-way machine-to-machine wireless communications products that are used for various applications, including automatic vehicle location (AVL) and automatic vehicle identification. It primarily provides its services, as well as sells and leases its products in Israel, Brazil, Argentina and the United States.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Ituran Location and Control Ltd. (US) has a Value Score of 70, which is considered to be undervalued.

Ituran Location and Control Ltd. (US)’s price-earnings ratio is 12.0 compared to the industry median at 21.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Ituran Location and Control Ltd. (US) more attractive for value investors.

Ituran Location and Control Ltd. (US)’s price-to-book ratio is lower than its peers. This could make Ituran Location and Control Ltd. (US) more attractive for value investors when compared to the industry median at 1.66.

You can read more about Ituran Location and Control Ltd. (US)’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Quarterhill Inc’s Value Grade

Value Grade:

Quarterhill Inc. is a Canada-based company, which is engaged in providing tolling and enforcement solutions in the Intelligent Transportation System (ITS) industry. The Company provides end-to-end mobility systems to some of the tolling authorities in the United States, including in Texas, California and Illinois through Electronic Transaction Consultants, LLC (ETC). ETC’s core products comprise the riteSuite platform, a scalable and customizable cloud-based tolling and mobility solution. The platform has applications for the roadside and back office, with strengths in vehicle identification, tracking, dynamic pricing and interoperability amongst agencies. The Company’s wholly owned subsidiary is International Road Dynamics Inc. (IRD), is a multi-discipline, technology company and provider of Intelligent Transportation Systems. It provides integrate ITS technologies into systems designed to solve and challenging transportation problems.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Quarterhill Inc has a Value Score of 77, which is considered to be undervalued.

Quarterhill Inc’s price-to-book ratio is higher than its peers. This could make Quarterhill Inc less attractive for value investors when compared to the industry median at 1.66.

You can read more about Quarterhill Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

UTStarcom Holdings Corp’s Value Grade

Value Grade:

UTStarcom Holdings Corp. provides broadband products, solution and services. The Company delivers broadband transport and access (both wireless fidelity (Wi-Fi) and fixed line) products and solutions, optimized for mobile backhaul, metro aggregation, broadband access and Wi-Fi data offloading. Its segments include Equipment, which is focused on its equipment sales, including network infrastructure and application products, and Services, which is engaged in providing services and support of its equipment products and also the new operational support segment. The broadband product lines include family of packet transport network (PTN) products based on multi-protocol label switch transport profile (MPLS-TP) and carrier Ethernet (CE) technologies enhanced through in-house software-defined networking (SDN) platform to support the network evolution, and multi services access network (MSAN) platform. Wireless broadband access is represented by end-to-end Carrier Wi-Fi solution.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

UTStarcom Holdings Corp has a Value Score of 64, which is considered to be undervalued.

You can read more about UTStarcom Holdings Corp’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Viasat Inc’s Value Grade

Value Grade:

ViaSat, Inc. is a global communications company. Its segments include satellite services, commercial networks and government systems. The satellite services segment provides satellite-based broadband and related services to residential customers, prepaid Internet users, enterprises, commercial airlines and other mobile broadband customers. The commercial networks segment develops and offers advanced satellite and wireless broadband platforms, ground networking equipment, radio frequency and advanced microwave solutions, application-specific integrated circuit (ASIC) chip design, satellite payload development and space-to-earth connectivity systems. The government systems segment provides global mobile broadband services to military and government users and develops and offers network-centric, Internet protocol (IP)-based fixed and mobile secure communications products and solutions. The Company also holds a multi-layered, global spectrum portfolio, covering L-band, Ka-band, and S-band.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Viasat Inc has a Value Score of 61, which is considered to be undervalued.

Viasat Inc’s price-to-book ratio is higher than its peers. This could make Viasat Inc less attractive for value investors when compared to the industry median at 1.66.

You can read more about Viasat Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Communications & Networking Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Communications & Networking stocks as well as other industrys.

Choosing Which of the 6 Best Communications & Networking Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Digital Ally Inc stock has a Value Grade of B.
• Electronic Systems Technology Inc stock has a Value Grade of B.
• Ituran Location and Control Ltd. (US) stock has a Value Grade of B.
• Quarterhill Inc stock has a Value Grade of B.
• UTStarcom Holdings Corp stock has a Value Grade of B.
• Viasat Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 6 undervalued stocks in the Communications & Networking industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Communications & Networking Stocks

Want to learn more about Communications & Networking stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 6 Undervalued Communications & Networking Stocks for Friday, March 15
• 5 Undervalued Communications & Networking Stocks for Thursday, March 14
• Why Viasat Inc’s (VSAT) Stock Is Down 8.21%
• 4 Undervalued Communications & Networking Stocks for Wednesday, March 13

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.