These tech stocks look cheap after the January rout, based on their growth prospects

Published Tue, Feb 1 20222:25 PM ESTUpdated Tue, Feb 1 20223:49 PM EST

Tech shares bore the brunt of last month's sell-off, but CNBC Pro found some names in the space could be cheap now, based on their future growth prospects. The tech-heavy Nasdaq Composite finished January down 12% from its high, as investors braced for interest rate hikes in 2022 and tighter Federal Reserve monetary policy to combat inflation. Many tech stocks are susceptible to declines from rising rates due to their high valuations. However, there may be some buying opportunities after the carnage. To find these names, CNBC Pro ran a screen on the S & P 500 tech sector that focused on each stock's PEG ratio. The PEG is a stock's price-to-earnings ratio divided by its estimated long-term earnings growth rate, and it is often used to evaluate growth stocks. We then found the names with PEG ratios below 2 that have pulled back more than 10% in 2022. The majority of analysts covering these stocks also have buy ratings on them. Take a look at the tech stocks on CNBC Pro's list: (Source: FactSet. As of Feb. 1, 2022.) Many of the stocks that turned up on CNBC's screen are semiconductor companies. Nvidia is among the names that matched our criteria, down 16.7% this year. The stock has a PEG ratio of 1.7. Nvidia is a well-liked name on the Street with 65.9% of analysts calling it a buy. "NVDA's unique combination of highly leverageable graphics silicon, software, scale and systems expertise position it at the forefront of some the largest and fastest growth markets in tech including cloud computing/AI, gaming, edge processing, metaverse, and autonomous and electric vehicles," Bank of America's Vivek Arya said. The chipmaker is Bank of America's top pick in semiconductors for 2022. Applied Materials is another stock that showed up on CNBC's screen, with a PEG ratio of 1. its stock is off 12.2% this year. Citi last week named Applied Materials a stock to buy on the dip. "We are buyers of dips in the group as stocks are increasingly discounting," Citi analyst Atif Malik said. SolarEdge could be cheap at current levels. Shares have fallen 15.1% in 2022 and its PEG ratio is 1.8. Guggenheim in January upgraded the solar stock, saying the correction presented a buying opportunity. "Although challenges remain, we believe that concerns regarding high valuations, high consensus expectations and potential negative news that we highlighted in our October 2021 downgrade have largely dissipated," Guggenheim's Joseph Osha said. Other stocks that made CNBC Pro's screen include Micron Technology , Broadcom and Teradyne . —CNBC's Michael Bloom contributed to this report.

A sign is posted in front of the Nvidia headquarters in Santa Clara, California, May 10, 2018.

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Tech shares bore the brunt of last month's sell-off, but CNBC Pro found some names in the space could be cheap now, based on their future growth prospects.