Is Unisys Corp. (UIS) the Best Technology Penny Stock to Buy Right Now?
Marta Norton, the chief investment strategist at Empower, appeared on CNBC's 'Squawk Box' on March 26 to express her bullish outlook on small caps and emphasize that the market's short-term trajectory depends on upcoming tariff decisions. The question is whether tariffs are short-term and less disruptive negotiating tools, or a disruptive and longer-lasting precursor to a shift in global trade that could address the trade deficit, and create extra revenue for the federal government. Norton explained that tariffs initially affect earnings and are then followed by the companies' attempts to pass increased costs to consumers. However, this usually doesn't happen due to demand elasticity and the general nature of consumers. Sectors like tech show minimal earnings revisions despite the potential cost and revenue impacts that come from retaliatory measures.
Norton advised investors to go for a balanced approach in 2025 and stated that there aren't many areas where you can move in right now, but small caps are an exception to this sentiment. Small-cap stocks have transitioned from relatively cheap to absolutely cheap very recently. While small caps exhibit economic sensitivity, adding positions in them is relatively safer. Later, on March 29, Tony Wang, T. Rowe Price portfolio manager, joined 'Closing Bell Overtime' on CNBC to talk about the volatility in tech, and whether it's a time for heightened caution or not. Wang noted that this volatility is more likely a buying opportunity than not. He observed that growth and momentum in the tech sector have been high in the past few years. The tech sector in particular recently saw two years of strong growth. He thinks that valuations haven't yet reached capitulation levels.
We sifted through the Finviz stock screener to compile a list of the top technology penny stocks that were trading under $5 as of March 28. We then selected the 13 technology stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. The hedge fund data was sourced from Insider Monkey's database which tracks the moves of over 900 elite money managers.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A computer engineer developing a secure cloud infrastructure solution.
Share Price as of March 28: $4.65
Number of Hedge Fund Holders: 25
Unisys Corp. (NYSE:UIS) is a global IT solutions company that operates in three segments. These include Digital Workplace Solutions (DWS); Cloud, Applications & Infrastructure Solutions (CA&I); and Enterprise Computing Solutions (ECS). The company also offers various micro-market and business process solutions. It serves industries that include financial services, travel and transportation, healthcare industries, and government agencies among others.
The company is currently implementing its ClearPath Forward 2050 strategy, which focuses on modernizing the company's legacy ClearPath systems through the integration of cloud and emerging technologies. ClearPath systems refer to the company's powerful and secure enterprise computing platforms for mission-critical and high-volume transactions. Due to this strategy, Unisys Corp.'s (NYSE:UIS) License and Support (L&S) segment is growing with the segment's expected revenue for 2025 projected to reach $390 million.
In Q4 2024, L&S revenue improved by 8.4% year-over-year and resulted in a full-year figure of $432 million. This came from long-term L&S renewals secured during Q4 with travel & transportation clients and public sector clients. The company's ability to modernize services from both Enterprise Computing Solutions (ECS) and Cloud Applications & Infrastructure (CA&I) was a key reason for these renewals.
Overall, UIS ranks 5th on our list of best technology penny stocks to buy right now. As we acknowledge the growth potential of UIS, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than UIS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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