4 Tech Stocks You Can Actually Believe In This Year

2016 is humbling tech stocks left and right out of the gate. But these four should be just fine come Dec. 31.

By Tom Taulli, InvestorPlace Writer & IPO Playbook Editor

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Do you invest in tech stocks? If so, you might need to dry your eyes a little.

4 Tech Stocks You Can Actually Believe In This YearThe past month’s worth of trading has been horrid for tech stocks, with much of the sector being hacked away by double digits. Apple (AAPL)? Off 14%. LinkedIn (LNKD)? Down 10%. And much of that has come in just the first few trading days of the year, which have seen names like Amazon (AMZN) and Google (GOOGL) drop 10% and 7%, respectively.

Ugly.

But ugly can be good for opportunists — you just have to catch them when momentum starts to swing the other way.

Dip-buying is an especially smart tactic in the tech sector, in which a number of megatrends — think the rise of cloud computing or big data analytics — should help boost performance for years on end.

If you’ve got some cash to burn, then, don’t flee — fling your money at some of these tech stocks instead.

Tech Stocks You CAN Believe In! Microsoft Corporation (MSFT)

Tech Stocks You CAN Believe In! Microsoft Corporation (MSFT)It wasn’t too long ago that the situation at Microsoft (MSFT) looked grim. The company’s core business model — which relied on up-front licenses — looked like a dinosaur.

So did the technology approach, which focused on installed software.

But Microsoft took swift actions and underwent a major restructuring under the guidance of CEO Satya Nadella, and so far, the bold moves look to be gaining traction.

A key has been an obsession with cloud computing. Office 365 — the cloud-based version of the Office suite — now has more than 18 million consumer subscriptions and more than 60 million commercial subscriptions. (That’s right: Subscription means that people are paying for it every year.)

MSFT also is building out its Azure platform, which allows companies to build and host their own cloud applications. Essentially, this is Microsoft’s answer to Amazon.com’s (AMZN) hugely popular Amazon Web Services system.

Microsoft is quietly turning into a juggernaut in the cloud industry, registering an annualized run rate of $8.2 billion in commercial cloud revenues, up 70%.

That’s a big industry with a lot of growth still to go. According to a report from Gartner, the amount of worldwide spending on the cloud is expected to jump from $130 billion in 2013 to $243 billion by 2017.

Tech Stocks You CAN Believe In! PayPal Holdings Inc (PYPL)

Tech Stocks You CAN Believe In! PayPal Holdings Inc (PYPL)When PayPal (PYPL) was spun off from eBay (EBAY) back in early June, the buzz was decidedly bullish.

Performance after the deal has gone the other way, with PYPL shares off more than 10% since their first day of trading — much of that coming in roller-coaster style, punctuated at the end by a New Year’s slump.

Still, PayPal’s pain is your gain as a nice opportunity, if you’re focused on the long haul.

PYPL is a dominant player in the fast-growing payments business. And PayPal itself is still growing pretty fast. For instance, last quarter, payment volumes surged 27% year-over-year to $70 billion and there were more than 4 million new signups, for a total of 173 million.

Now that PayPal is free of eBay, it has more latitude, especially in terms of dealmaking. PYPL already has been active, buying up Modest (a developer of apps for merchants) and Xoom (a provider of international money transfers).

PayPal also is being driven by the mobile megatrend. Again, looking back at last quarter, mobile payments raced ahead by 38% to 345 million transactions. The company’s Venmo app — which allows people to share payments — is helping to tap the millennial crowd; in Q3, Venmo’s transaction volume jumped from $700 million to $2.1 billion.

This is another monster opportunity. Research firm eMarketer predicts that in 2016, mobile payments in the U.S. will soar by 210% to $27.05 billion.

Tech Stocks You CAN Believe In! FireEye Inc (FEYE)

Tech Stocks You CAN Believe In! FireEye Inc (FEYE)The past few months haven’t been a picnic for many tech stocks, but it’s been downright miserable to be a FireEye (FEYE) shareholder.

Since mid-July, FEYE is off roughly 70%.

However, new money should realize that this is probably an overreaction. Cybersecurity remains a high priority for many organizations, and FireEye hasn’t exactly fallen down dead. The company continues to innovate its offerings, which allow for real-time assessments of key threat vectors including web, email, file storage and networks. And it’s still making deals — FireEye recently signed a major deal with Ingram Micro (IM) to distribute cybersecurity products in the US and Canada.

Another critical part of the business is Mandiant‎, which includes an elite team of consultants that help with massive data breaches. The division features a stable of high-profile clients including Sony (SNE), Anthem (ANTM), Home Depot (HD) and Michaels (MIK). Most recently, Mandiant‎ was brought in to investigate a breach at Hyatt Hotels (H).

And FireEye still is growing at a rapid clip, including a 45% year-over-year boost in revenues last quarter to $165.6 million.

Also enticing is FireEye’s potential as buyout bait. Larger companies like IBM (IBM), Cisco (CSCO), Hewlett-Packard Enterprise (HPE) and Microsoft have been looking to bolster their footprint in cybersecurity. Picking up FEYE would be a quick way to do this.

Tech Stocks You CAN Believe In! WageWorks Inc (WAGE)

Tech Stocks You CAN Believe In! WageWorks Inc (WAGE)More than a decade ago, Congress created the Health Savings Account, or HSA, allowing employees to allocate pretax dollars to pay for healthcare costs.

As you get with any sort of new governmental benefit, there were complexities and plenty of red tape.

But that still spelled opportunity for WageWorks (WAGE), which had the foresight to develop a cloud-based platform to help implement and manage HSAs and other healthcare benefits.

Growth has been strong here — last quarter, revenues increased by 22% to $83.2 million, helping to drive a profit of 21 cents per share — and WAGE has plenty of wind at its back, too. The company’s solutions help companies save money in various ways, such as by lowering payroll taxes thanks to the use of pretax dollars. Because of this, WageWorks has had lots of success signing large channel partners like Aflac (AFL) and Ceridian.

WAGE is valued with a bit of froth at 28 times forward earnings, but a premium is deserved when you consider WAGE’s strong cloud platform, compelling benefits for employers and high margins.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

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