The past few days haven’t been great ones for the broad market. Although they haven’t exactly been horrifying either. We’ve shrugged off worse.
A certain sliver of the stock market has been undeniably harder hit than any other, however. The technology sector is down a more than 5% just since last Wednesday’s close, versus the S&P 500’s far more modest 1% lull. And for the handful of tech stocks that drug the whole group lower, a ‘mere’ 5% loss would be a welcomed alternative to the kind of misery they’ve dished out. Facebook (NASDAQ:FB) shares are still in the hole by more than 20% following its disappointing quarterly numbers from last week, and Netflix (NASDAQ:NFLX) is down almost as much since it dropped a bomb on shareholders a couple of weeks ago.
There’s a silver lining to the sector-specific implosion though. That is, some of the market’s very best tech stocks are now on sale at prices not seen in a long, long time. Though the sector may not be at its ultimate swing bottom, for most buy-and-hold investors who’ve been waiting for the window of opportunity to open, this is it.
Here’s a run-down of the top technology stocks to consider buying in the midst of this dip.
Best Tech Stocks to Buy on the Dip: Facebook (FB)
If investors are being intellectually honest, they all had to know there’d come a day when growth stopped coming as easily for Facebook. There are only so many people on the planet who are willing and able to access the site, and in the wake of the Cambridge Analytica scandal, ads are at least a little less targeted than they used to be.
If investors are going to remain intellectually honest, however, they all also had to acknowledge that Facebook on a bad day is still driving more growth than most other companies are on their best day. Realistically speaking, it’s still the only social networking game in town.
While user growth rates are expected to slow by high-single-digits in the latter half of the year, the recent setback has left FB shares at a forward-looking P/E of 20.2. That’s still affordable relative to its still-solid growth rates.
Best Tech Stocks to Buy on the Dip: LogMeIn (LOGM)
Never heard of LogMeIn (NASDAQ:LOGM)? Don’t sweat it; most investors haven’t… at least not that they can recall. It’s possible they’ve used or benefitted from LogMeIn, however, without even realizing it.
In simplest terms, LogMeIn offers a way of letting people access a computer remotely. The company also offers a platform that can help tech-support people access a computer remotely and fix a problem that computer’s primary user can’t. It’s not the only outfit to provide such a service, but it’s one of the best.
LOGM shares fell 25% just last week mostly in response to tepid guidance for the Q3. That fall, however, translated into more than a 40% pullback from February’s high, even though there’s still respectable growth in the cards for this year and next year.
Best Tech Stocks to Buy on the Dip: NXP Semiconductors (NXPI)
NXP Semiconductors (NASDAQ:NXPI) was never on the firmest of footings anyway, as it was an easy pawn to thrust into the middle of the war of tariff threats currently being fought between China and the U.S. But last week, Qualcomm (NASDAQ:QCOM) made it official — it’s abandoning its effort to acquire NXPI.
That decision dragged NXPI shares back to multi-month lows last week, down 24% from its February peak when it looked as if the buyout was likely to happen.
Individual investors might want to look at the reasons the buyout was even possible, however. Then, they might see that the NXPI tumble has turned it into one of the best tech stocks to consider here. That is, NXP Semiconductors is still the world’s biggest maker of automotive data processors at a time when “smart cars” are becoming the new norm. And newcomers can buy NXPI for a whole lot less than Qualcomm would have had to pay.
Best Tech Stocks to Buy on the Dip: Box (BOX)
Box (NYSE:BOX) is another name the average consumer/investor might not be all that familiar with, but it is well known (and well respected) within corporate technology circles.
The simple explanation: Box lets enterprise employees share and collaborate on the creation of content and documents without requiring those workers to be working from the same computer… or even in the same building.
It’s not profitable yet, but that’s in the cards. The pros say this year’s expected revenue growth of 20% and next year’s revenue growth of 21% should turn this year’s projected loss of 18 cents per share into a profit of six cents per share in the upcoming fiscal year.
Best Tech Stocks to Buy on the Dip: Western Digital (WDC)
Western Digital (NASDAQ:WDC) isn’t a company that needs an introduction. It’s arguably the biggest names in computer disk drives, and certainly one of the most recognizable.
Calling a spade a spade, it was late to the SSD (solid-state drive) party. Though it has arrived — deciding just this year to make them a major priority — it’s got a ton of catch-up work to do. The market has punished its tardiness. WDC shares are 33% below their March peak and down 38% since late-2014 –when it should have turned up to the SSD party.
Still, a forward-looking P/E of less than 6.0 is a bargain by any standard, and in any situation.
Best Tech Stocks to Buy on the Dip: FireEye (FEYE)
FireEye (NASDAQ:FEYE) just can’t get a break. After rallying rather nicely for the better part of 2017 and acting like it was finally going to get — and stay — in bullish mode, the advance faltered. FEYE shares are down 20% since April, and knocking on the door of new multi-week lows.
Meanwhile, things have never looked better for the company. Though sales growth has always been and will continue to be slow for the cybersecurity outfit, FireEye is expected to swing to a profit this year — on the heels of sales growth!
Specifically, last year’s loss of 16 cents per share is on pace to turn into a profit of two cents per share for 2018. That bottom line is expected to widen to 17 cents per share in 2019.
Best Tech Stocks to Buy on the Dip: Momo (MOMO)
If the name Momo (NASDAQ:MOMO) doesn’t ring a bell, there’s a reason. The company’s based in China, and caters to China’s consumers. Nevertheless, the 28% selloff in Momo shares since mid-June makes it an interesting prospect.
Momo is a social networking and entertainment platform that takes aim at China’s fast-growing mobile market. Though growth in the number of smartphones in China came to a surprising standstill in 2017, there’s still a gigantic market there, and the one who have phones are using them more and more. That’s how Momo is on pace to grow its top line by more than 50% this year, and grow it by 26% next year.
Oh yeah… Momo is profitable too, unlike many of its peers.
Best Tech Stocks to Buy on the Dip: Tower Semiconductor (TSEM)
It’s unlikely the average investor could name one component it makes, but suffice it to say if Tower wasn’t around, your computer, smartphone and television wouldn’t function as fluidly as they do.
Its important role in the technology space hasn’t prevented the stock from losing more than 40% of its value over the course of the past several months. And to be fair, sales and profits are both on pace to shrink this year.
The bears have overshot though. TSEM is now trading at a forward-looking P/E of only 9.4, making TSEM one of the best tech stocks to scoop up in the midst of the carnage.
Best Tech Stocks to Buy on the Dip: Iqiyi (IQ)
Iqiyi (NASDAQ:IQ) has been called the Netflix of China, and for good reason… it’s pretty much like Netflix. More important though, it’s on the same kind of growth trajectory there that Netflix enjoyed in its early days . Last quarter’s top line was up a whopping 57% year-over-year, and more big-time growth is in the cards.
Nevertheless, Iqiyi is going through the same growing pains most stocks do shortly after they go public. In the shadow of the typical post-IPO runup, IQ shares have fallen more than 30% just since their mid-June peak.
Giving credit where it’s due, Ian Bezek recently made a cogent case arguing IQ stock could reach a value of $50 per share before the end of the year.
Best Tech Stocks to Buy on the Dip: NCR Corporation (NCR)
Last but not least, add NCR Corporation (NYSE:NCR) to your list of the market’s best tech stocks to look at after strong selloffs.
Veteran investors will recognize NCR as “the old ‘National Cash Register’ company.’ It’s not just cash registers (like the one pictured above) anymore though. One of the reasons NCR adopted a new, simplified moniker is that it now offers a wide array of point-of-sale solutions that are far more like computers and much less like cash registers of days gone by. More than that, this equipment offers retailers and other merchants the kind of consumer data they could once only dream about garnering.
Revenue and earnings are… hot and cold, though reliable in a bigger picture sense. Either way, the 45% selloff since early 2017 has left NCR shares trading at only nine times next year’s projected earnings. That may be a bargain too good to pass up.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.
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