Finding the best tech stocks to buy now is a little more complicated than a year ago.
While the S&P500 held up relatively well, the bear market was brutal for individual stock investors. Simply put, many individual names have been erased, especially in the area of technology. Given the selloff, investors are looking for tech stocks to buy amid the weakness.
A handful of names held up pretty well, like Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT). Overall though, the technology has struggled tremendously amid the volatility.
I want to look at a handful of tech stocks to buy even though they’ve been beaten because they seem to have gone down unfairly. Essentially, we are looking for good companies and not so good stocks. Investors also have some leeway here.
There are distressed tech stocks to buy based on balance sheet strength or cash flow. Or they could buy relative strength leaders, like the aforementioned Apple or Microsoft. I’m looking for a bit more of a mix – names that have held up to some degree but are companies that are still humming along. These are the best undervalued tech stocks to buy.
|AMD||Advanced mic Devices||$84.84|
|PANW||Palo Alto Networks||$565.17|
|TTD||The trading post||$66.64|
Advanced Micro Devices (AMD)
Currently, chip stocks are not doing very well. Nvidia (NASDAQ:NVDA) recently reported enough disappointing figures and several others too. Some pre-announced poor results and others waited for the report. None of these are Advanced mic Devices (NASDAQ:AMD) yet.
Its skeptics may not believe it, but AMD continues to grow revenue, profits, margins and cash flow. The company announced strong results in August and, although expectations were a little below expectationshe was close to the line and quite good.
I think if the rest of this group is affected, so will AMD stock. It’s not fair, but it’s the reality. As it stands, AMD stocks will simply become the tech stocks to buy on the downside.
Shares are trading at around 19 times earnings this year, while the company is expected to generate $26.2 billion in revenue. Next year, revenue estimates call for 13% growth to nearly $30 billion and earnings growth of 12% to nearly $5 a share.
For what it’s worth, analysts have always been too conservative with this company in their forecasts.
Palo Alto Networks (PANW)
For some reason, investors tend to overlook cybersecurity stocks during tough times. This is probably due to the evaluation, but when you listen to the management of Palo Alto Networks (NASDAQ:PANW) – or any cybersecurity company – they will tell you that just because the economy is slowing doesn’t mean cybercrime is. On the contrary, the pace is accelerating.
On August 22, the company delivered a beating profits up and down for its fiscal fourth quarter results, with sales up 27% year over year. Even better, the company’s guidance for fiscal year 2023 was strong.
Management expects revenue of $6.85 billion to $6.90 billion versus consensus expectations of $6.76 billion. If achieved, it would represent about 25% growth from 2022. Earnings forecasts also exceeded analysts’ expectations.
The Trade Desk (TTD)
Finally, we have The trading post (NASDAQ:TTD). While it’s hard to tell, this may be one of the tech stocks to buy on a deeper decline. When The Trade Desk released its latest earnings, it dropped a bullish bombshell on investors.
The stock had already rebounded 30% in just days before printing, then exploded 36% in a single session after the report. It was so good. However, when you look at the advertising space, there is clearly a slowdown. So far, The Trade Desk seems well insulated against these pressures. That’s great, but we have to be aware of macroeconomic pressures. Much like despite how AMD continues to outperform its peers, its stock may be dragged down.
If this is the case for The Trade Desk, this is the one to focus on.
Revenue grew 35% year-over-year and exceeded estimates, while tips for the third quarter exceeded expectations. While not exceeding expectations, The Trade Desk continues to generate substantial growth and is profitable, making it a rare combination for a growth stock at this time.
Analysts expect Revenue growth of 33% this year and growth of 24% to 27% through 2025. Revenue is expected to double from 2022 to 2025 (not annually). If so, it’s one of the few ad companies out there right now.
As of the date of publication, Bret Kenwell had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.