These 6 tech companies are the best bargains hiding in the tech selloff's wreckage heap (FB, GOOGL, BKNG, WIX, TTD, ROKU)

Facebook presentation Mark Mahaney IGNITION 2016

The prices of many tech stocks have plunged in recent months.
Thanks to that sell-off, the shares of many companies are now trading at values that are out of whack with their real worth, RBC Capital Markets analyst Mark Mahaney argues in a new research note.
Mahaney scrutinized more than 30 stocks to come up with his six top picks.

Thanks to the recent sell-off in tech stocks, you can find some great deals in the bargain bin.

That's the take of Mark Mahaney, one of the top analysts covering the internet sector. The selling was overdone, and the shares of many tech companies are now out-of-whack with their historical values and underlying business trends, RBC Capital Market's Mahaney argues in a research note issued Sunday afternoon.

But some stocks are more disconnected from their real worth than others. In his report, Mahaney took a look across the more than 30 companies he covers to find the best bargains.

He looked at companies' valuations compared with their historical value or underlying trends; how their growth in the third quarter compared with their past rates; and whether they were expected to have any fundamental changes in their businesses that might spark faster growth. After passing the companies through those screens, he came up with a list of six — three with large valuations and three with small or medium-sized valuations — top picks.

Here are Mahaney's internet sector best buys:

Facebook (FB)

Yes, the social-media giant has been facing a slew of scandals this year. And, yes, its growth has slowed and its costs have gone up as CEO Mark Zuckerberg has tried to refocus the company on combatting fake news and other problems. But the precipitous drop in the company's shares of late — Facebook's shares are off 37% since hitting their all time-high in July — have made them the biggest bargain on the block, Mahaney says.

The 22% drop in Facebook's shares just since the end of August has been among the steepest of all the large-cap internet stocks. Thanks to that decline, the ratio of the company's enterprise value to its earnings before interest, taxes, depreciation, and amortization (EBITDA) is about 10. That's at the low end of the four-year range for that ratio, Mahaney notes in the report.

Meanwhile, as of the close of trading Friday, the company's stock was just 4% above its 52-week low.

That valuation seems way out of line with where Facebook is as a business in Mahaney's eyes. If anything, Facebook has become more dominant than ever this year, since it owns four of the top social-networking and messaging services and is grabbing an ever-larger share of online advertising.

Even though many tech companies have been beat up lately, Facebook still "stands out," says Mahaney, who has a $190 price target on the company's stock. Facebook's shares closed Monday at $136.38.

Alphabet (GOOGL)

Shares in the search giant haven't fallen as much as Facebook's — through Friday, they were down 16% since the end of August. But Alphabet still has a strong case to make for being severely undervalued, Mahaney says.

Alphabet's ratio of enterprise value to EBITDA is 10.6, according to his report. Like Facebook, that's near the bottom of its four-year range. And as of Friday, Alphabet was trading just 5% above its 52-week low.

But Alphabet has other things in its favor, according to Mahaney. For example, its revenue growth has shown remarkable consistency. For 35 straight quarters, the company's base revenue has grown by 20% or more on an annual basis.

Additionally, the company has huge potential growth drivers for the future. With video becoming increasingly important online, YouTube's business is poised for a big windfall, he says. And then there's Waymo, the company's self-driving car effort.

It has the "pole position against arguably the biggest product cycle in tech – autonomous vehicles," Mahaney says. His price target on Alphabet is $1,400; the company's stock closed Monday at $1,055.94.

Booking Holdings (BKNG)

Shares of Booking, formerly known as Priceline, were down only 10% from August 31 through Friday. That's significantly less than other big tech stocks.

But its shares look cheap by other measures, Mahaney says. Its ratio of enterprise value to EBITDA is 13.7, which is at the bottom of its four-year range, he noted. As of Friday, Booking's share price was only 4% above its 52-week range.

And the company could be poised for improving results. Its growth rate picked up in the third quarter and the company looks set to build on that in coming quarters, writes Mahaney.

Booking still only accounts for a small portion of the total global travel market. And it's investing in long-term opportunities, including the Chinese market, he says.

"The takeaway here is that online travel trends remain strong," says Mahaney, who has a price target of $2,425 on Booking's shares. The company's stock closed Monday at $1,802.44.

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