Call it the “tech wreck” or the “great rotation,” but investors’ pivot to value and cyclical stocks since mid-February has left many leading technology stocks gasping for air. Stock prices for some of the biggest names in technology have stagnated at best or suffered steep declines at worst as investors flee high-growth names in favor of stocks likely to do well as the global economy resumes running at full tilt.
There are many technology stocks that still have a ton of upside left. Here are four of them.
High inflation has only accelerated the move out of technology stocks. But while understandable, the current shift doesn’t make a ton of sense when we evaluate company fundamentals and long-term investment potential.
Tech Stocks to Buy Today: Amazon (AMZN)
It’s hard to ignore online retailer Amazon’s runaway success and market dominance. Consider that Amazon now earns more than $100 million in revenue each quarter and continues to grow despite its leading market share. It’s difficult to bet against the Seattle-based company that began life in the 1990s as an online seller of books.
For this year’s first quarter, Amazon reported that its revenue rose 44% to $108.52 billion. Earnings came in at $15.79 per share versus $9.54 that analysts had expected. That marks the second consecutive quarter that Amazon earned more than $100 billion of revenue.
And despite its mindboggling growth and success, the company provided bullish forward guidance. Amazon forecasts that its sales will be between $110 billion and $116 billion for the current second quarter that ends June 30.
Outside of its core retail business, Amazon’s cloud-computing business continue to boom. Amazon Web Services saw net sales of $13.5 billion during the first quarter, up 32% year-over-year. Oh, and “Prime Day” is scheduled to take place this June, which will likely give the company’s spring sales an even bigger boost.
Despite its success, AMZN stock is only up 1% year-to-date at $3,222.90. Analysts agree that the share price is currently undervalued, and have a median price target on them of $4,175.00, for a potential future gain of 30%.
If you’re looking for a true tech stock bargain, check out Zillow. The Seattle-based online real estate marketplace continues to report impressive earnings, but its stock price has been sliding downwards.
Since mid-February, ZG stock has declined 47% and now trades around $113 a share. This is well below the median price target of $188 on Zillow stock and quite near the lowest analyst estimate of $110 per share.
ZG stock has been hurt by the rotation out of technology growth stocks despite the fact that the company reported first-quarter revenue of $1.2 billion and net income of $52 million, both above analyst expectations. Traffic to Zillow’s apps and websites stood at 221 million average monthly unique users in the first quarter, up 15% from a year earlier.
The hot residential real estate market is a huge boon for Zillow and increasing use of Internet to buy and sell homes is a trend unlikely to reverse.
The iPhone super cycle is real and driving Apple sales to new heights around the world. The 5G Internet-enabled iPhone 12 is a blockbuster product for Apple and its sales have been going gangbusters since it launched last fall. As a result, Apple reported that its quarterly revenue rose 54% from the same period in 2020.
Strong sales of iPad tablets and Mac computers also boosted revenue in the quarter. The Cupertino, California-based company reported fiscal second-quarter sales of $89.6 billion, up 54% from a year earlier and well ahead of analyst expectations of $77.3 billion in revenue.
Apple’s quarterly profit came in at $1.40 a share, also topping Wall Street estimates. The world’s largest technology company has mostly thrived during the pandemic as people work and learn from home, driving demand for iPhones, iPads and Mac computers.
Demand for 5G iPhones is expected to remain strong and Apple continues to diversify with Apple TV and other subscription-based offerings. The company announced that it is increasing its dividend by 7% and increasing its share buyback program by $90 billion this year, which should be music to investors’ ears.
Despite all the success and good news, APPL stock has defied logic and is actually down 1.5% year-to-date at $127.45 a share. The stock has been largely stuck in neutral since it split on a 4-for-1 basis last August. The current slump isn’t likely to last though.
The median analyst price target calls for Apple stock to reach $160 within the next 12 months, for a potential upside of 25%. The high target on the shares is $185.
Teledoc Health (TDOC)
For another seriously beaten down tech stock, look no further than Teledoc Health. This Purchase, New York-based company specializes in telemedicine and virtual healthcare, and as can be expected, business boomed over the past year during the global pandemic. This year though, TDOC stock has been crushed by investors’ rotation into value and cyclical stocks.
Since mid-February, Teledoc Health’s stock has been beaten down 55% and now sits at just under $140 per share. The depreciation of TDOC stock came after the company said it anticipates revenue growth slowing this year as the pandemic recedes.
However, most analysts agree that telemedicine and virtual consultations with physicians are here to stay, and the industry is only expected to grow in coming years. Last year (2020), the global telemedicine market size was estimated at $55.9 billion and is forecast to grow at a compound annual growth rate (CAGR) of 22.4% between now and 2028.
Teledoc Health is an industry leader and well-positioned to capitalize on that growth.
On the date of publication, Joel Baglole held long positions in APPL and ZG . The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.