Tech stocks have defined the market over the last decade. Up until this year, technology companies were on fire, outperforming other sectors handsomely. The Nasdaq-100 index, reflected in the Invesco QQQ Trust (NASDAQ:QQQ) exchange-traded fund, gained 394% over the last 10 years, while the S&P 500 index, as reflected in the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) saw a 212% gain. Naturally, the best stocks to buy benefitted immensely from robust economic growth and low-interest rates.
So, why are tech stocks down now? For starters, inflation rates have risen to multi-year highs coupled with an unprecedented increase in interest rates. Also, you have geopolitical tensions due to the Russia/Ukraine war, which has severely impacted supply chains. Hence, investors have moved away from the traditionally risky tech stocks to safer bets such as dividend stocks.
Nevertheless, tech stocks offer plenty of long-term value with their ability to outperform the market by incredible margins. Hence, the current downturn allows investors to load up on some of the top tech stocks.
|TDOC||Teladoc Health, Inc.||$34.53|
|FVRR||Fiverr International Ltd.||$14.83|
Teladoc Health (TDOC)
Teladoc Health (NYSE:TDOC) is a leading telehealth platform that delivers on-demand healthcare and chronic care management services. TDOC stock was one of the most successful investments during the pandemic, with patients moving to virtual medical care rather than in a physician’s office. However, a weaker-than-expected first quarter and guidance come-down for the year has weakened the stock considerably.
The firm posted a hefty Q1 loss, almost entirely due to a goodwill impairment expense. Excluding the effects, Teladoc comfortably beat analyst estimates and its bottom-line trended in the right direction. Moreover, it reduced its revenue outlook by less than 6% at the midpoint and expects revenue expansion at around 20%.
According to Fortune Business Insights, the telehealth sector is set to grow at an incredible 32% from 2021 to 2028.
GPS device maker Garmin (NYSE:GRMN) has been one of the most consistent performers in its niche. Its recent first-quarter results show that it’s on track to grow sales to about 10% this year. If it can achieve that number, it could be its fifth straight year of double-digit increase in sales.
Moreover, GRMN stock offers a reasonable valuation at its current price and a healthy dividend yield of over 2.4%. Early May saw a slew of price target adjustments.
Garmin’s management is confident in the firm’s future, which stems from robust growth rates across all core segments. The reliance on its automotive segment is decreasing, as other segments have been growing at a breathtaking pace.
Also, the automotive segment has reversed its fortunes with an 11% jump in sales on a year-over-year basis.
Garmin ended the first quarter with $1.8 billion in cash and securities on its balance sheet.
Snowflake (NYSE:SNOW) is a cloud-based data warehousing services provider which allows entities to track, analyze and store data effectively. It was one of the top IPOs in the pandemic-ridden 2020, and its stock quickly shot up to meteoric highs.
Last fiscal year, the company grew revenues 106% from the prior-year period to $1.2 billion, with over 75% gross margins. Moreover, it had 184 customers contributing more than $1 million in sales each. The trend continued in the first quarter of this fiscal year, where its revenues blew past estimates, rising over 85% to $422 million on a year-over-year basis.
Snowflake benefits from secular demand from the need for advanced business intelligence, making it one of the most exciting long-term prospects.
Fiverr International (FVRR)
Fiverr International (NYSE:FVRR) is a top freelancing marketplace that earns revenue through services from sellers and charges commissions on platform purchases.
Like other tech stocks, FVRR has shed over 60% of its value in the past six months alone. Hence, a lot of the frothiness around its valuation has cleared out, and it is perhaps a significantly more attractive stock than in the past.
Fiverr boasts a solid base of repeat buyers, which has been its strength. It uses data segmentation to better know its customers and connect them with the appropriate sellers. Last year, it amassed an impressive 59% of its revenue from its existing customer base.
Moreover, Fiverr’s ability to introduce new services and expand into new profitable verticals has been a hallmark of its success. The company has been growing its top line over the sector average over the past several years and continues to expand its addressable market.
Twilio (NYSE:TWLO) is a cloud-based enterprise communications platform that has established itself as a juggernaut in the field. It delivered monstrous growth numbers quarter-over-quarter with a five-year average of roughly 60%. Last year, its revenues soared to $2.84 billion, representing a 61% bump from 2020.
Revenues for the first quarter came in at a whopping $875 million, a 48% improvement from the prior-year period. Moreover, dollar-based net expansion increased by a tremendous 48%.
Twilio expects to see strength across its international business as its investments continue to pay off over the past couple of years.
Despite tough comps, the company’s growth rates are astonishingly high, and CEO Jeff Lawson guides for over 30% organic revenue expansion through 2024. With an amazing outlook ahead, TWLO stock trades at just five times forward sales.
MongoDB (NASDAQ:MDB) offers a novel approach to database design, which effectively frees developers from the constrictions of a typical SQL database. Its approach provides a significantly cheaper way to scale and allows for greater flexibility. The platform reached more than 210 million downloads as of the last quarter, a testament to its product quality and real-world utility.
Its fourth-quarter results show how effective it’s become in growing its customer base. Its blow-out Q4 results showed a 56% increase in sales on a year-over-year basis to $266.5 million. The bulk of its revenue expansion pertains to its Atlas cloud data platform. Moreover, 164 customers are spending upward of $1 million annually each, a 70% uptick from last year.
Additionally, 1,307 customers are spending more than $100,000 annually. Therefore, the usage of its tools is accelerating with every passing quarter, pointing to a healthy growth runway ahead.
SAP (NYSE:SAP) has offered its flagship business application software to its clients since 1972. It assists its clients in production processes to facilitate data analysis effectively. Moreover, it improves the efficiency of day-to-day activities, including accounting, risk, and supply chain management.
It operates as a mature company with a sustainable track record for multiple decades. Its revenue and EBITDA have grown consistently over the past several years, as its customers generate close to 90% of total global commerce. Additionally, 99 of the world’s top 100 enterprises are SAP customers.
The global enterprise applications sector will likely reach $468.2 billion by 2027, representing nearly 9% growth. Hence, the business’s future is bright, and its current price is highly attractive given its remarkable growth runway ahead.
On the publication date, Muslim Farooque 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.