Bargain Hunting? Look At This Tech Stock

Kevin Kelly was recently a guest on #PreMarket Prep, a daily trading idea radio show hosted by Joel Elconin and Dennis Dick.

Recon Capital Chief Investment Officer Kevin Kelly said that ARM Holdings plc ARMH is a great stock to look at for "bargain hunting" investors. The company, Kelly said, trades below its five-year historical price-to-earnings ratio. The stock is also 20 percent below its 52-week high, hit in late July.

This pick fits within Kelly's overall philosophy that traders should shy away from names with earnings that drag the S&P 500 earnings lower and instead favor industries that are growing – namely technology and healthcare. ARM Holdings, which is the U.S.-listed ticker for a U.K.-based company, has a wide variety of clients in technology. Those clients include QUALCOMM, Inc. QCOM and a number of Chinese companies, who rely on ARM to design the chips powering the Internet of Things.

That broad-based client base means that the company is experiencing 17 to 20 percent revenue growth, something that Kelly highlighted as a reason to buy the name. In addition, ARM pays around a 1 percent dividend – an added benefit, Kelly suggested.

Year-to-date, ARM Holdings has dipped 6.8 percent, compared with a 0.4 percent increase in the Nasdaq 100 Index. Those losses came mainly in the past three months. At one point in June, ARM had gained more than 15 percent on the year.