2 undervalued technology stocks with huge upside potential in 2022

After 2021 turned out to be a great year for the US stock market, picking winners for 2022 is no easy task. Indeed, many analysts believe that top technology stocks are vulnerable to a sharp correction after a strong rally over the past year.

Making the task of choosing the winners of the coming year even more challenging: The global economy continues to face challenges from the soaring Omicron variant and the risk of higher interest rates that are generally the attraction of high-growth stocks. That said, there are still many technology stocks with muscular growth potential that, according to analyst consensus estimates, remain undervalued and could see a strong recovery in the next 12 months.

In the wake of the tech sector sell-off on Wall Street on Wednesday, some tech stocks are likely to offer more attractive entry points for savvy dip buyers.

Below, we have identified two such stocks from different segments, both of which we believe have tremendous growth potential:

1. Shopify

The Canadian ecommerce platform provider Shopify (NYSE:) was a great winning bet during the pandemic. The Ottawa-based company offers tools primarily aimed at small businesses, enabling them to trade across multiple channels.

Since its inception 15 years ago, Shopify has sold software that enables approximately 2 million merchants worldwide to run websites. by paying a subscription fee ranging from $30 to $2,000 per month. Plus, the company offers merchants more than a dozen services for running an online store — everything from the actual e-commerce website to inventory management to payment processing. The global healthcare crisis has boosted the company, which grew by 86% in 2020 from 2019. During the recent Black Friday/Cyber ??Monday weekend in November, Shopify merchants brought in $6,000,000 in sales. 3 billion in, an increase of 23% from a year earlier.

Now Canada's most valuable company, it accounted for 8.6% of US e-commerce sales in 2020, well behind Amazon's (NASDAQ:) 39% but ahead of Walmart (NYSE:) and eBay (NASDAQ:), according to EMarketer.

Shopify's inventory, which closed Wednesday at $1,190, is now about 32% lower than the November record. But that dip could be a buying opportunity for long-term investors.

Chart: Investing.com

In an Investing.com survey of 41 analysts, 23 rated the stock as "outperforming." with a 12-month average price target of $1,679.14, implying a 41% increase for stocks. Evercore ISI analysts, as they upgrade Shopify to outperform last month, said in a note:

“We are upgrading SHOP to outperform with a price target of $1,770 based on four [analysts’] key opinions: 1) The stock is disrupted; 2) This is a high quality fundamental asset; 3) This is a high quality asset in terms of growth potential and option value.”

2. Pinterest

San Francisco-based Pinterest (NYSE:) is another tech stock offering an attractive buying opportunity after some weakness.

Shares of the digital scrapbooking and search company have been on a sustained downward trend since mid-last year, amid concerns that user growth will continue to slow as people resume their outside activities after a year of lockdown. The stock closed Wednesday at $32.84. It fell more than 47% in 2021 and took additional losses during the first week of trading in 2022. Do things around the home, such as decorating, gardening and cooking. Providing images and ideas for a variety of activities and projects, the platform was an ideal resource for a home environment. But the slowdown in user growth is likely over and PINS now looks cheap.

Chart: Investing.com

According to an Investing.com poll of 31 analysts, the stock could be 12 months can rise more than 68% from current levels.

Piper Sandler this week upgraded PINS from neutral to overweight, saying in a note to customers that concerns about user growth seem overblown. Piper Sandler lowered his Pinterest price target to $53 a share from $58. That's still 61% above where the stock closed Wednesday.

The note read:

“While PINS successively lost users [from its second quarter to the third quarter]the compositions in '22 should decrease. Nor are [monthly active users] equalized: comments suggest headwinds were primarily driven by non-mobile users, who contribute less to . Mobile users, on the other hand, generate a 'significant majority' of revenues and grew in the second quarter of the third quarter."

"Stocks now appear oversold, trading in the mid-1930s from a high of the 1980s. At current prices, PINS is trading at [less than six times] '23 [enterprise value]/Sales versus an average FY2 EV/Sales closer to 10x since 2019."

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