3 Tech Stocks to Buy This Earnings Season

  • These tech stocks have bright futures ahead of them and should be solid buys heading into the second quarter.
  • Hewlett Packard Enterprise (HPE): The enterprise computing giant has achieved around 20% order growth over the past year.
  • Micron Technology (MU): Increasing demand for memory chips makes this currently undervalued stock a good buy in Q2.
  • Qualcomm (QCOM): The mobile chipmaker expects its addressable market to grow over seven fold in ten years.
network server room with computers for digital tv ip communications and internet,3d rendering. Tech stocks
Source: Connect world / Shutterstock.com

Macroeconomic and geopolitical headwinds have recently led to pullbacks in many broader markets as well as many of the darlings of the pandemic investing scene. As a result, a number of tech stock offer better value for buy-and-hold investors.

The correction in tech shares has recently deepened as investors are increasingly concerned about the rising interest rates putting pressure on economic growth. For instance, the NASDAQ 100 Technology Sector Index has tumbled roughly 25% since January. Meanwhile, the Technology Select Sector SPDR Fund (NYSEARCA:XLK), which tracks the technology sector of the S&P 500 Index, has declined 17.7% year-to-date (YTD). By comparison, the Dow Jones Industrial Average is down 6.9% so far this year.

Yet, some analysts argue that the rout in most tech stocks could soon be over. According to JPMorgan Chase (NYSE:JPM) strategist Marko Kolanovic, there are “great opportunities in high-beta, beaten-down segments that now include innovation, tech, biotech, emerging markets.”

Many InvestorPlace readers are now wondering about how the earnings season will shape up for these beaten-down tech stocks. The impact of inflation as well as the upcoming interest rate hikes still remain to be seen.

With that information, here are three tech stocks to buy as the companies in the coming weeks:

HPE Hewlett Packard Enterprise $15.27
MU Micron Technology $67.08
QCOM Qualcomm $133.50

Hewlett Packard Enterprise (HPE)

Image of the Hewlett Packard Enterprise's building
Source: zakiahza / Shutterstock.com

Our first tech stock is Hewlett Packard Enterprise (NYSE:HPE), a major player in the IT space. It offers cutting edge solutions for customers to build their edge-to-cloud ecosystems.

HPE reported first-quarter fiscal year 2022 results in early March. Revenue came in at $7 billion, up 2% year-over-year (YOY). Non-generally accepted accounting principles (GAAP) earnings per share (EPS) was 53 cents. The number was better than the previously provided outlook of 42 cents to 50 cents per share. Free cash flow (FCF) for the quarter was -$577 million.

Management wants to have a substantial share of the growing demand for edge-to-cloud computing with the HPE GreenLake platform. Strong customer feedback promises that this well known brand in IT solutions is well positioned for tech mega trends.

According to Markets and Markets, the global cloud computing market is expected to grow at a compound annual growth rate (CAGR) of close to 16% between 2021 and 2026. So this enterprise IT solutions giant deserves your attention.

HPE stock is roughly flat since the start of the year and 4.1% in the past 12 months. The dividend yield is a respectable 3.1%.

Shares are trading at 7.5 times forward earnings and 0.7 times trailing sales. Meanwhile, the 12-month median price forecast for HPE stands at $19. I believe HPE shares offer value in Q2.

Micron Technology (MU)

An outside image of a Micron Technology, Inc. (MU) headquarters
Source: Charles Knowles / Shutterstock.com

Our next tech stock is Micron Technology (NASDAQ:MU), the prominent name in memory and storage solutions. This chip manufacturing leader delivers a rich portfolio of high-performance DRAM, NAND, and NOR memory and storage products through its Micron and Crucial brands.

Micron reported second-quarter FY22 results late March. Revenue was $7.8 billion versus $6.2 billion for the same period last year. Non-GAAP net income was $2.4 billion, or $2.1 per diluted share.

Investments in capital expenditures, including repurchase of shares resulted in adjusted FCF of $1.03 billion. Micron’s board also declared a quarterly dividend of 10 cents per share payable end April.

Management is confident the company will deliver high top line metrics and robust profits in fiscal year 2022. The company supplies fast growing diversified markets, which could mean solid growth for the near future.

According to Globe News Wire, the global memory chip market is expected to grow at a CAGR of 2.6% between 2021 and 2026. On the other hand, Mordor Intelligence highlights that the global solid-state drive (SSD) market, where Micron is a leading player, should increase at a CAGR of 17.2%. Analysts point out that this leading chip manufacturer will benefit from growing revenues and high profitability.

MU stock is down about 26% YTD and 20% over the past 12 months. The dividend yield is 0.6%. The decent decline in stock price has pushed the trailing P/E ratio to 8.8x, and P/S ratio to 2.6x. At present, the 12-month median price forecast for MU stands at $115. For semiconductor bulls, MU stock offers potential value around these levels.

Qualcomm (QCOM)

Qualcomm (QCOM) logo on a large sign with another sign that says 5G
Source: Xixi Fu / Shutterstock.com

Our final tech stock is Qualcomm (NASDAQ:QCOM), a major innovator in wireless chip manufacturing. The world relies on its 5G and artificial intelligence (AI) innovations for smartphones, smarter vehicles and cities. In other words, Qualcomm is at the center of connectivity.

Qualcomm reported Q1 FY22 results in early February. Revenue came in at $10.7 billion with a YOY growth of 30%. Net income was $3.7 billion, or $3.2 per diluted share. Meanwhile, the board returned $1.9 billion to shareholders in the form of 68 cents dividend per share as well as  $1.2 billion of share buybacks.

Management is excited about the size of the addressable market, expected to grow more than seven fold in the next decade. As 5G technology goes beyond consumer connectivity to internet of things (IoT) and automotive, a greater market opportunity for this innovator opens up.

Between 2021 and 2026, analysts expect a CAGR of 87.8 for the 5G chipset market. This metric suggests that the company is not necessarily over-optimistic in its growth expectations.

QCOM stock is down by 27.3% YTD and 2% over the past 12 months. The dividend yield is an attractive 2.3%. P/E ratio is at 15.7x, and P/S is 4.4x. Finally, the 12-month median price forecast for MU stands at $205. Interested readers could consider buying QCOM stock in Q2.

On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.

Article printed from InvestorPlace Media, https://investorplace.com/2022/04/3-tech-stocks-to-buy-this-earnings-season/.

©2023 InvestorPlace Media, LLC