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In an otherwise forgettable 2022 for the S&P 500, the information technology sector fell -28%, the worst performing economic group for the year compared to REITs.
Rising interest rates, 40-year high inflation and the Russia-Ukraine conflict have put constant pressure on technology and other growth-oriented companies.
Now, signs of a recession are driving the U.S. economy into 2023.
It depends.
If economic data improves and the Fed signals the end of its aggressive rate hike campaign, the tech sector could bounce back quickly. Investors saw this before the Fed’s remarks turned hawkish in the fourth quarter.
This is not to say that finding the most volatile names is the best stock selection strategy. Given the uncertainty in the new year, companies with improved fundamentals and attractive valuations fare better.
The next time Auld Lang Syne plays, these three tech stocks should be in better spirits.
Is Cow Research stock undervalued?
Lam Research Corporation (NASDAQ: LRCX ) sells wafer manufacturing equipment and services to semiconductor manufacturers. Lam Research’s customers, makers of memory and logic chips, are recovering from an industry-wide supply chain and shortage crisis. This is particularly the case in the US, where chipmakers are racing to make products for growing end markets to reduce dependence on overseas supplies.
In its latest quarterly update, management said Lam Research is seeing strong global demand, except for China. The rapid build-out of cloud data centers and the 5G smartphone cycle are driving a lot of demand and positioning the company well for long-term growth. A slowdown in personal electronics sales may remain a headwind, but overall demand appears strong.
Lam Research shares have fallen 42% in the past year, creating a better entry point at 12x trailing earnings. The company behind the scenes has been promoting the digital economy for many years.
Will Qualcomm stock recover in 2023?
QUALCOMM Incorporated (NASDAQ: QCOM ) ended the year at a 52-week low and more than 40% above its January 2022 high. The maker of advanced chips for smartphones, tablets and business wireless has a healthy long-term outlook, though it has weighed against its peers.
First, however, it must work through the customer inventory issue of placing new orders. Management said declining customer inventory will reduce revenue by $2 billion in the current quarter and reduce EPS by 0.80. And while demand for Android phones is slowing, the launch of the iPhone 14 will help offset recent challenges in its core semiconductor business.
With supply chain issues and the handset slowdown mostly in the rearview mirror, Qualcomm in 2016 It will hit the reset button in 2023. The company estimates that its reachable market will expand sevenfold to $700 billion over the next 10 years. Connected devices explode. It’s showing annual revenue growth in the mid-teens over the next few years.
Qualcomm stock price screams at less than 10x earnings — and a $3.00 annual dividend to begin with.
What is a good cybersecurity inventory?
Fortinet, Inc. It has a customer base of nearly half a million (including most of the Fortune 100) who rely on Fortinet to protect data, detect threats and maintain network integrity. In turn, this translates into steady recurring revenues and strong profit margins. The company is projected to grow revenue and profit by 32 percent and 43 percent, respectively, by 2022.
Given all the headlines around cyber security, it’s no surprise that enterprises are rushing to find solutions that protect their own customer data and internal systems. The integrated workforce trend that has evolved since the pandemic appears to be here to stay, which is particularly good news for the industry. IT departments are expected to spend more on cybersecurity this year, with more than $5 billion set to go into Fortinet.
With Fortinet, investors are getting a cybersecurity leader and a company that has topped Wall Street’s earnings estimates every quarter of the past five years. In the year Even after falling 32 percent in 2022, the stock doesn’t look cheap at 39x this year’s earnings estimate — but relative to the peer group average, it’s a steal. And after it completed a 5-for-1 dividend earlier this year, retail investors can get access to shares of this long-time cybersecurity winner.
Before you consider cow research, you’ll want to hear this.
MarketBeat tracks Wall Street’s top-rated and best-performing research analysts and the stocks they recommend to their clients daily. MarketBeat identified five stocks that top analysts are whispering to their clients to buy before the broader market catches up… and Lam Research wasn’t on the list.
While Lam Research currently has a “Neutral Buy” rating among analysts, top rated analysts believe these five stocks are better buys.
Check out the five stocks here
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