Value stocks are typically considered to be equities that are trading below their intrinsic value - that is, the price it should theoretically command based on its fundamentals and future cash flows. Notably, value stocks are often characterized by low valuation metrics, such as price/earnings (p/e) or price/book (p/b) ratios, along with a decent dividend yield.

So far in 2023, value stocks have yielded positive returns, with the SPDR Portfolio S&P 500 Value ETF (SPYV) - an ETF that tracks the performance of the S&P 500 Value Index - up 12.1% on a YTD basis. However, the wider S&P 500 Index ($SPX) and the tech-heavy Nasdaq Composite ($NASX) have both outperformed these value stocks, up 16.4% and 32.1%, respectively.

As the stock market attempts to find its footing in the historically challenging month of September, now seems like an opportune time to look for investments that combine some of the qualities of value stocks - like consistent profitability and attractive valuations - with the outsized share price returns and upside potential associated with higher-growth sectors. With this in mind, here's a look at three top value picks from the tech sector right now. 

Flextronics

Founded in 1969, Flextronics (FLEX) is a diversified manufacturing company involved in original design manufacturing, contract manufacturing, engineering services and supply chain management. The company, which has operations in more than 40 countries worldwide, currently commands a market cap of $11.73 billion.

Shares of FLEX have gained 38.7% over the past 52 weeks, easily besting a 16% gain for the broader Nasdaq, and the stock is up 22.5% year-to-date.

Flex reported a mixed set of numbers for the first quarter ended June 30, with revenues almost flat year-over-year and EPS rising slightly. However, both metrics managed to surpass the expectations of the Street. Revenues for the quarter came in at $7.34 billion, down marginally from the prior year. Meanwhile, EPS rose by 5.6% to $0.57, which was above the consensus estimate of $0.51. In fact, Flex's EPS has come in above expectations in each of the past five quarters.

Looking ahead, the company is focusing on solar developments and automotive capabilities as key drivers of future growth. Earlier this year, its subsidiary Nextracker (NXT) spun off via its own IPO, and Flex recently forged a partnership with Nvidia (NVDA) for autonomous driving. 

Flex is also trading at relatively attractive levels when compared to its sector averages on some key metrics. Flex is currently trading at a forward p/e, price/sales (p/s), p/b and price/cash flow (p/cf) of 12.10, 0.40, 1.73 and 12.97, respectively - all of which compare favorably to sector averages of 26.92, 2.71, 4.07 and 19.41.

In terms of earnings growth, analysts are forecasting Flex to improve its bottom line by 2% for the current quarter and 12% for the next quarter.

Overall, analysts remain bullish about the stock, with a consensus “Strong Buy” rating and a mean target price of $31.67 - indicating upside potential of about 20.5% from current levels. Out of 4 analysts covering the stock, 3 have a “Strong Buy” rating and 1 has a “Hold” rating on the stock.

Jabil Circuit

Next up on our list is another electronic manufacturing services company, Jabil Circuit (JBL). Founded in 1966 with operations in 30 countries worldwide, Jabil is engaged in design and engineering, manufacturing, assembly, testing and logistics services. The company currently commands a market cap of $14.22 billion and offers a dividend yield of 0.29%.

Jabil Circuit stock has had a stellar run in 2023 so far, rising 58% to outpace the Nasdaq Composite by a wide margin.

For its latest quarterly results, Jabil posted strong numbers, with both revenue and earnings surpassing Street estimates. Net revenues arrived at $8.5 billion for the quarter, up 1.8% from the previous year. The core EPS of $1.99 denotes a yearly growth of 15.7%. Moreover, Jabil has reported YoY EPS growth - and surpassed Street expectations - in each of the past five quarters.

More recently, on Aug. 27, Jabil announced the sale of its mobility business to Chinese EV company BYD for $2.2 billion. Following this announcement, JBL jumped 8.9% as investors cheered the sale of the low-margin business, with proceeds expected to be used in debt reduction, share buybacks and capital expenditure in electric vehicles (EVs), renewable energy, healthcare, AI cloud data centers, and other end markets.

Notably, even after the searing rally this year, Jabil stock appears to be undervalued relative to its sector peers. Its forward p/e, p/s, and p/cf of 16.10, 0.43 and 7.48 are all much lower than industry averages of 26.92, 2.71 and 18.61, respectively.

Further, analysts are targeting continued earnings growth of 28.6% in the next quarter and 15.1% for fiscal 2023.

Overall, analysts remain optimistic about Jabil stock, with a consensus “Strong Buy” rating and a mean target price of $109.17 - indicating only about 1% upside potential from current levels, though estimates range as high as $126. Out of 6 analysts covering the stock, 5 have a “Strong Buy” rating and 1 has a “Hold” rating.

Cognizant Technology Solutions

We conclude our list of top value tech stocks with IT services and consulting company Cognizant Technology Solutions (CTSH). The New Jersey-based company was founded in 1994, with operations encompassing consulting, systems integration, application development and maintenance, IT infrastructure management, and BPO. The company currently commands a market cap of $35.98 billion, and offers a healthy dividend yield of 1.60%.

Cognizant stock is up more than 26% so far in 2023 - outpacing the S&P 500 Index by a wide margin, though it's just shy of the Nasdaq Composite's gain.

Cognizant reported better-than-forecast numbers for the second quarter, though revenues were flat and EPS down slightly from the prior year. The IT specialist raked in quarterly revenues of $4.9 billion, unchanged from the previous year amid a slowdown in its core markets of the U.S. and Europe. Nevertheless, revenues came in above the consensus estimates.

Likewise, adjusted EPS of $1.10 declined by 3.5% from the prior year, but topped the Street expectations for $0.99. The company's EPS record is impressive, as CTSH has topped consensus estimates in four out of five recent quarters.

The company recorded yearly booking growth of $26.4 billion, up 14% - also quite impressive, considering the macro headwinds currently prevailing across the globe.

Additionally, CTSH appears to be undervalued based on some key metrics. Cognizant has a current forward p/e, p/s, p/b, and p/cf of 16.25, 1.88, 2.79, and 16.39, all of which represent a discount to sector averages of 19.87, 2.71, 3.05 and 14.41 of the sector, respectively.

Analysts are projecting earnings growth of 4.95% in the next quarter and 0.23% for FY 2023.

Overall, the Street has earmarked a “Hold” rating on the stock with a mean target price of $69.67, which suggests downside potential of 2.3% from current levels. However, the Street-high target price of $91 alludes to a 27.6% upside potential from current levels - and analysts have grown less bearish on CTSH over the last month. Out of 18 analysts covering the stock, 2 have a “Strong Buy” rating, 13 have a “Hold” rating, 1 has a “Moderate Sell” rating and 2 have a “Strong Sell” rating - a modest improvement compared to 3 “Strong Sell” ratings a month ago.