From Yahoo Finance: 2025-04-01 14:30:00

Xperi Inc. (NYSE:XPER) is one of the best debt-free IT stocks to buy under $10. With an enterprise value of $313 million, market cap of $359 million, and an EV to Market Cap ratio of 0.9, it ranks 8th on the list. The company specializes in audio, imaging, and semiconductor solutions, with brands like DTS, IMAX Enhanced, and TiVo. Financial analyst Hamed Khorsand expects XPER’s rising user base to drive revenue growth in 2025, with further upside from media expansion through TV OS and IPTV partnerships. XPER’s financials remain strong, with revenue and adjusted net income exceeding estimates. The company’s attractive EV/EBITDA multiple of 4.6x, alongside projected revenue and EBITDA growth, makes it an appealing investment, leading Khorsand to reaffirm a Buy rating with a $30 price target. However, the potential for higher returns in the AI sector prompts consideration of other options.

Debt can be a useful financial tool for companies, but it also carries risks. Companies accumulate debt for various reasons, including lower costs compared to equity financing, tax deductibility of interest, and the ability to fund expansion or operations. However, debt also poses fixed costs and interest rates, potentially threatening a company’s operations and existence. In volatile times with elevated interest rates, investing in financially stable, debt-free companies becomes crucial to mitigate bankruptcy risks. CNBC reported a surge in corporate bankruptcies in the U.S., reaching levels higher than during the COVID-19 pandemic, emphasizing the importance of financial stability.

Ray Dalio highlighted the growing supply-demand imbalance in the U.S. debt market, posing a near-term risk due to the projected volume of debt exceeding demand from global investors. To address this imbalance, Dalio suggested the need to significantly reduce the fiscal deficit from 7.2% of GDP to around 3%. Without adjustment, the U.S. could face challenging decisions like debt restructuring, political pressure on foreign creditors, and debt monetization. The challenging economic backdrop and rising bankruptcies emphasize the importance of investing in financially stable companies to weather the storm.

Interest rates play a significant role in companies’ ability to manage debt, with increased rates making it more expensive for companies to handle their financial obligations. In a volatile market, investing in debt-free, affordable stocks may be a prudent decision. Small cap stocks, while risky, can offer growth opportunities without the added risks of debt. Identifying fundamentally strong companies with low or no debt can allow investors to capitalize on growth prospects while minimizing exposure to debt-related risks.

Investing in debt-free IT stocks under $10 presents opportunities for growth and stability. By focusing on companies with strong financials and low or no debt, investors can mitigate risks associated with debt accumulation. Using data from Insider Monkey’s hedge fund database, the top 10 IT stocks with the highest hedge fund ownership were identified, providing insight into potential investment opportunities. Evaluating enterprise value, market capitalization, and hedge fund ownership can help investors make informed decisions in a volatile market.



Read more at Yahoo Finance: Is Xperi Inc. (XPER) the Best Debt-Free IT Stock to Buy Under $10?