These 2 Futuristic Stocks Are Completely Different Yet Exactly the Same

Maxar Technologies Ltd. (TSX:MAXR)(NYSE:MAXR) is still deeply discounted, unlike one other visual computing stock.

| More on:

Two stocks operating in the visual computing space, one American and one Canadian, look to be almost direct opposites: one of them is involved in commercial and government Earth-imaging, while the other is a key player in the gaming industry. Together they make the perfect odd-couple, although only one of them wins on value. Let’s see which of these two very similar — yet very different — stocks is worth your investment.

Money makes the world go round … but this company maps it

Probably the best undervalued tech stock on the TSX index, Maxar Technologies (TSX:MAXR)(NYSE:MAXR) had a bad end to 2018, to put it mildly, with a pretty precipitous nosedive. An aerospace and geospatial intelligence player, Maxar operates in the imaging and data business, earning its bread and butter with planetary imaging and the kind of cutting-edge Earth imagery you’ve seen more basic versions of whenever you use your GPS or online maps.

Selling at a discount of more than 50% of its future cash flow value, Maxar is still in undersold territory today, with a negative one-year past earnings growth that failed to match the 16.9% aerospace and defence industry average for the same 12 months, while its own five-year average is also in the red.

Never mind the bad news though, or the fact that Maxar’s debt level is way up at 187.8% of net worth, because it gets better: inside buying has been high over the last six months, with the last three months in particular seeing significant volumes of shares changing hands.

Meanwhile, deep undervaluation is indicated by a very low P/B ratio of 0.2 times, and a cheap share price is pushing up the dividend yield to impressive double digits. Thinking of buying at that deep discount? If you do, you should hold on for the rewards, because a 69.6% expected annual growth in earnings is on the way over the next one to three years.

Time to get your investing game on!

Overvalued by almost a quarter of the future cash flow value, Nvidia (NASDAQ:NVDA) stock is one expensive puppy. A P/E of 19.5 times isn’t too bad at all, but a P/B ratio of 9.7 times means that anyone buying today will be paying close to 10 times what this stock is worth in terms of real-world assets. Still, if you’re into gaming, artificial intelligence, or self-driving cars, then this is the stock for you.

If you want to see a good track record in your stocks, a one-year past earnings growth of 82% beats the semiconductor industry average of 7.1% for that same year, as well as its own (already impressive) 50.4% five-year average past earnings growth. Meanwhile, a debt level of 21% of net worth is below the danger threshold, meaning that this stock is relatively safe to hold long term, and a 50% ROE for the past year is exceptionally high — even if a dividend yield of 0.43% is not.

The bottom line

E-sports are set to be a huge growth industry — a trend which will only continue exponentially if a global economic downturn forces people to cut back on spending money — and if industries decide to cut back on people to save money. That’s right — the robot revolution is coming, and companies like Nvidia will be front and centre when it happens. Maxar is much better value, though, so if you want affordable visual computing shares, you may want to buy Canadian.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Victoria Hetherington has no position in any of the stocks mentioned. The Motley Fool owns shares of Nvidia. Maxar is a recommendation of Stock Advisor Canada.

More on Dividend Stocks

Question marks in a pile
Dividend Stocks

Where Will Brookfield Infrastructure Partners Stock Be in 5 Years?

Brookfield Infrastructure Partners (TSX:BIP.UN) kicked off 2024 with a bang. Where will it be in five years?

Read more »

Dividend Stocks

Golden Years Gain: Your CPP Benefits at Age 70

CPP users delaying pension payments until 70 will receive substantial monthly income streams in the golden years.

Read more »

data analytics, chart and graph icons with female hands typing on laptop in background
Dividend Stocks

3 Dividend Stocks You Can Safely Hold for Decades

Top TSX dividend stocks are on sale.

Read more »

Dividend Stocks

Where Will Canadian Utilities Stock Be in 5 Years?

Canadian Utilities (TSX:CSU) is a classic example of a stock where the dividend is all you get. Can the company…

Read more »

Man holding magnifying glass over a document
Dividend Stocks

2 Stocks I’m Watching for Big Passive Income

Consider Bank of Nova Scotia (TSX:BNS) and another top passive-income play to power your dividend portfolio!

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

These top TSX stocks have increased their dividends annually for decades.

Read more »

bulb idea thinking
Dividend Stocks

2 Supercharged Dividend Stocks to Buy if There’s a Stock Market Sell-Off

These two top stocks offer attractive yields, have reliable operations and are dividend aristocrats, making them two of the best…

Read more »

question marks written reminders tickets
Dividend Stocks

Better Buy: Loblaw Companies or Metro Stock?

Loblaw Companies (TSX:L) stock is riding on recent momentum. Meanwhile, Metro (TSX:MRU) is executing for future earnings growth.

Read more »