Tech stocks have been treated poorly this last year. Granted, they certainly were perhaps treated too well in the years leading up to the current downturn. But even so, some strong companies out there are now providing investors with opportunities of a lifetime, including this undervalued stock.
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And that undervalued stock is…
Dye & Durham (TSX:DND) is the undervalued stock I would certainly take a look at these days. Now at first glance, you might not think there is much value there. The company is coming off of poor earnings and shares are slumped, yet the price-to-earnings (P/E) ratio is still quite high.
But if you’re a long-term investor, don’t let these facts scare you off. Instead, what you want to look at is the security provided by DND stock. That’s where the value truly lies. DND stock provides software and technology solutions for financial institutions, governments, law firms, and more. These are institutions that are simply not going anywhere. What’s more, they need products year after year, signing onto recurring contracts that bring with it recurring revenue.
Because of this, you can practically guarantee that DND stock will be here for years to come. What’s more, it will continue to expand in these incredibly secure areas of the market. In fact, even with poor earnings, it’s been doing just that.
What’s happened lately
DND stock reported a net loss of $34.8 million during its second quarter, with revenue falling 3% compared to the same time last year. This is a huge increase in net loss from the $4 million reported last year.
Now on the surface, of course, this is not good news. But there is something that long-term investors should benefit from. DND stock is currently on track to exceed its 10% cost reduction plan for the full-year of 2023. It’s purchasing shares for cancellation, and already reduced costs by $17.8 million in the first six months of fiscal 2023.
“We continue to innovate our product offering and take concrete actions to fortify the business in the current challenging environment. Our disciplined approach toward capital allocation and cost management position the business for sustained growth.”
Matt Proud, CEO of Dye & Durham
So what’s in store for 2024?
Should the company continue towards this 10% cost reduction plan, it will create an opportunity for those seeking an undervalued stock. If you believe that a stock has a strong long-term plan, then this is exactly the time you want to buy it. Pick it up when it’s down, and you can look forward to years of growth in the future.
Shares of DND stock are down about 29% in the last year alone as of writing, but up 47% in the last three months. What’s more, shares fell but only slightly after earnings, likely because of the strength of this plan.
So if you’re an investor wanting a long-term hold and huge returns by 2024, then I would certainly consider DND stock as an undervalued stock to pick up now.
