The Goldilocks Valuation Zone: Where Big Tech Discovers Innovative-Value – Entrepreneur

This story originally appeared on Zacks

Mega-cap techs recent windfall into oceans of digitally fueled capital has these firms looking high and low for ways to profitably deploy it. Stock buybacks are at record levels, but the valuation discounts that many next-generation innovators have fallen to cant be ignored.

There appears to be a Goldilocks valuation zone where big tech is looking to pick up new economy innovators after the January capitulation.

Goldilocks valuation range: $5 to $30 billion market cap, (preferably) below a 10x forward P/S, and market-disrupting potential.

Monday (2/14), the WSJ reported that Cisco CSCO was looking to acquire Splunk SPLK for over $20 billion, with designs on reinvigorating its innovative growth outlay. SPLK was the Nasdaq 100s leading Valentines Day component, with an over 9% daily rally.

Splunk currently resides in that perfect Goldilocks valuation zone to be picked up by the recently cash-rich big tech firms. SPLK has slid 45% from its peak 1.5 years ago into this Goldilocks valuation range: $19.7 Billion market cap, 6.5x forward P/S, and undeniably market-disrupting potential in AI-driven machine data management and real-time actionable analytics.

I wouldnt be surprised if other SPLK suitors came out of the fray before CSCO can lock anything in, as this leading real-time data management business begins proving a successful cloud transition.

I expect to see elevated M&A activity among young market disruptors in the coming months, so look out for companies in this Goldilocks valuation zone.

Stocks Im eying: HubSpot HUBS, Upstart UPST, and Alight ALIT.

Even if these next-gen buys dont get picked up, theyll add sizable long-term growth potential to your portfolio for the future.

Zacks Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

Its a little-known chemical company thats up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.

This company could rival or surpass other recent Zacks Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free reportCisco Systems, Inc. (CSCO): Free Stock Analysis ReportSplunk Inc. (SPLK): Free Stock Analysis ReportHubSpot, Inc. (HUBS): Free Stock Analysis ReportUpstart Holdings, Inc. (UPST): Free Stock Analysis ReportAlight, Inc. (ALIT): Get Free ReportTo read this article on Zacks.com click here.Zacks Investment Research

View post:

The Goldilocks Valuation Zone: Where Big Tech Discovers Innovative-Value - Entrepreneur