One of the best ways to make money is by trading fear – just like famed investors have done.
In fact, we’re seeing plenty of that in the tech sector these days, which is creating impressive opportunities. Sir John Templeton taught us to buy excessive pessimism.
Warren Buffett says that a “climate of fear is your friend when investing; a euphoric world is your enemy.” Even Baron Rothschild once told investors, “The time to buy is when there’s blood in the streets, even if the blood is your own.”
With a good deal of fear priced into the tech sector, here are five hot stocks to consider.
Opportunity No. 1 – Advanced Micro Devices (AMD)
One of the best tech stocks to consider is Advanced Micro Devices.
Not only has growth been explosive, but the company continues to chip away at competitor market share, which should continue for some time.
Just look at recent earnings. The company posted better than expected Q4 results, and its forecast was well above expectations.
For the quarter, AMD posted revenue of $4.8 billion – up 49% year over year, with non-GAAP profits of 92 cents a share. That beat expectations for $4.5 billion on profits of 76 cents. For all of 2021, the company had revenue of $16.4 billion, up 68%, with non-GAAP profits of $2.79 a share, up from $1.29 a year earlier.
Going forward, the company expects to see Q1 revenue of $5 billion, up 45% year over year. It also sees non-GAAP gross margins of 50.5% for the quarter, up 50% quarter over quarter. The Street was looking for $4.3 billion in revenue, and profits of 70 cents.
For full-year 2022, AMD expects to post revenue of $21.5 billion, up 31% from 2021, with non-GAAP gross margin of 51%, up from 48% in 2021. That’s also ahead of Street expectations for $19.3 billion in revenue.
Opportunity No. 2 – DocuSign Inc. (DOCU)
DocuSign has seen better days.
After posting earnings, the stock gapped from $230 to $118.
However, don’t write off the stock just yet. Not only is it wildly oversold, CEO Daniel Springer has been actively buying shares. In fact, in early December 2021, Springer bought about $5 million worth of DOCU stock. In January 2022, Springer bought another $2.4 million worth of DOCU shares at $128.89.
In addition, the company is likely to benefit from digitization. At the moment, DOCU has about 70% market share, as noted on the DocuSign site. In addition, according to a McKinsey Global Institute report, “We find that about 20 to 25 percent of the workforces in advanced economies could work from home between three and five days a week.”
Opportunity No. 3 — Roblox Corp. (RBLX)
By now, you’ve heard of the metaverse.
Or, the combination of multiple elements of technology, including virtual reality, augmented reality and video where users ‘live’ within a digital, says USA Today.
At the moment, Roblox is the closest thing to a mainstream social metaverse, with a mission of building a human co-experience platform that enables billions of users to come together to play, learn, communicate, explore and expand their friendships, according to Roblox.
Even better, RBLX growth has been solid. In Q3 2021, the company said revenue increased 102% over Q3 2020 to $509.3 million, bookings increased 28% over Q3 2020 to $637.8 million, average Daily Active Users (DAUs) were 47.3 million, an increase of 31% year over year.
Opportunity No. 4 – Digital Turbine (APPS)
Digital Turbine was one of the most explosive stocks on the market.
After bottoming out around $3.90 in early 2020, the stock ran to a high of about $92. While the stock has since pulled back to about $44, it’s still a solid opportunity. Especially after inking a strategic partnership with Google, which caught the attention of Roth Capital’s Darren Aftahi.
“APPS will act as one of the lead app discovery platforms for the roughly one billion Android devices across the globe Ignite – AAPS’ app delivery and discovery platform – supports, streamlining APPS’ ability to achieve greater scale and install footprint in which it can begin to introduce more products and services (many of which carry higher revenue per device rates),” said the analyst, as quoted by Tip Ranks.
Even better, the analysts at Macquarie upgraded the stock to outperform, as well with a price target of $80, believing the stock trades at an attractive valuation following a pullback.
Opportunity No. 5 – STMicroelectronics (STM)
Next up is STMicroelectronics, which ran from a recent low of $41 to $51. From here, we’d like to see it closer to $60 as the chip shortage issue continues.
According to Jean-Marc Chery, STMicroelectronics President & CEO:
- “As we announced on January 7, 2022, our Q421 net revenues and gross margin came in better than expected primarily due to better than anticipated operations in an ongoing dynamic market.
- “Full year 2021 net revenues increased 24.9% to $12.76 billion, reflecting a strong performance across all the end markets we address and our engaged customer programs throughout the year. Operating margin increased to 19.0% from 12.9% in FY20 and net income was up 80.8%.
- “ST’s first quarter outlook, at the mid-point, is for net revenues of $3.50 billion, increasing year-over-year by 16.1% and decreasing sequentially by 1.6%; gross margin is expected to be about 45.0%.
- “Q421 net revenues were 9.9% higher year-over-year, with a further increase in profitability: operating margin of 24.9% improved from 20.3%.”
- “Based on our strong customer demand and increased capacity, we will drive for FY22 revenues in the range of $14.8 billion to $15.3 billion.”
Even better, Craig-Hallum analyst Anthony Stoss just raised his price target on the STM stock to $65 from $57, with a buy rating. “The analyst continues to believe STMicroelectronics is one of the best ways to play EVs and urge investors to get involved,” added TheFly.com.
