October was a month of two tech markets. A handful of companies delivered strong results and continued trading to new highs. For investors overweight Tesla Inc. (ticker: TSLA) or Microsoft Corp. ( MSFT), for example, it was a fine month. For most other tech investors, however, October was less pleasant.
This earnings season, stocks have been tumbling on any weakness, no matter how slight. Social media got hit especially hard, with companies like Snap Inc. ( SNAP) taking a beating. This sort of bifurcated market creates opportunities, however. While the overall Nasdaq index continues to sit near its all-time highs, there are a lot of big corrections out there, too. With that in mind, here are five of the best tech stocks to buy for November:
— Facebook Inc. (FB)
— Global Payments Inc. (GPN)
— UiPath Inc. (PATH)
— Texas Instruments Inc. (TXN)
— Uber Technologies Inc. (UBER)
Facebook Inc. (FB)
Facebook isn’t just a social network. It’s also a leading stock market soap opera. Founder and CEO Mark Zuckerberg’s efforts to pivot the company toward the ” metaverse” has caused a good deal of consternation. After all, Facebook will be spending $10 billion per year on efforts to develop its virtual reality universe with an uncertain return on investment.
Many investors would prefer a dividend instead. However, many of Zuckerburg’s past capital allocation decisions, such as buying Instagram for just $1 billion, ended up being home runs. There is a good argument for giving Zuckerburg some leeway. In the meantime, Facebook just posted 35% year-over-year revenue growth and 19% earnings growth despite all the negative scrutiny the firm has received in recent months. On top of that, Facebook authorized another $50 billion in share buybacks.
Like previous media firestorms, this too shall pass, and Facebook’s investors — or should we say Meta’s investors, as the company is rebranding — will be just fine.
Global Payments Inc. (GPN)
Global Payments is a leader in the payment processing space. Following a merger with rival Total System Services in 2019, it became one of the dominant players in the field. And, until recently, Global Payments stock was a star; shares had tripled over the past five years. That changed this year, however, as the company has given back much of its recent gains. Furthermore, on Oct. 27, Global Payments tumbled 8%. This followed underwhelming earnings both at rival Fiserv Inc. ( FISV) and credit card leader Visa Inc. ( V).
Investors interpreted poor earnings as a sign that alternative payments methods such as cryptocurrency and “buy now, pay later” may threaten traditional payments processors. That may eventually be true, but there’s little evidence of it yet. More accurately, this seems to be a bit of a bump from delays in travel and a few other economic categories in terms of COVID-19 reopening. In any case, analyst Brett Horn of Morningstar is not too concerned. Horn has fair value for Global Payments stock at $186 per share, which is dramatically above the company’s current $144 share price.
UiPath Inc. (PATH)
UiPath is a tech firm that recently completed its IPO. Shares debuted in April and started trading near $70 a pop. The stock has slid to $50 now, offering quite a discount to that opening price. Admittedly, UiPath still looks expensive based on its current results. But that can be justified, given the firm’s uniqueness.
UiPath’s core focus is in designing programming applications and software for robots. As the company’s website states: “Hello, we’re UiPath. We make software robots, so people don’t have to be robots.” The ability to automate automation itself is quite the new frontier. The company has attracted high-profile backers, including Cathie Wood of Ark Invest. The company is still at a relatively early stage, with about $800 million in annual revenue. However, UiPath is growing its top-line revenues more than 30% annually and could back up its valuation surprisingly soon.
Texas Instruments Inc. (TXN)
Texas Instruments is a leading semiconductor firm focused on the analog chip space. These chips are integral for taking real-world data such as weather conditions and translating it into digital information. Texas Instruments is a big player in the automotive space. Cars collect more and more data about the world around them for functions such as driver assistance, radar and sensing, braking, and eventually full self-driving vehicles.
Analog chips are also vital to other emerging fields such as the internet of things and remote connected devices. The push for this sort of integration of smart remote devices has only grown with the pandemic. As more and more work occurs outside the office or the factory, it is vital that managers can keep tabs on everything from one smart dashboard. Throw in the global semiconductor shortage, and it’s been good news for margins, in addition to product demand, for firms like Texas Instruments. After a successful run in 2021 in which the stock had climbed 25%, shares pulled back sharply following the firm’s most recent earnings report. This gives investors who felt that they had missed the move a second chance to take a position.
Uber Technologies Inc. (UBER)
Uber is one of the more controversial tech stocks. The company has run up a huge amount of operating losses over the years, and past management teams made some serious public relations blunders. The pandemic added further doubts to the company’s already uneven strategy. It’s not shocking that Uber shares are down in 2021 as the delivery division continues to burn cash and investors wonder about the speed of the turnaround in the core ride-share business.
The economic recovery has largely kicked in, but certain categories such as office and business-travel commuting have been slow to normalize. However, Morningstar’s Ali Mogharabi views these concerns as overblown. Beyond the headlines, Uber’s core business is inching closer to profitability. Meanwhile, Uber is selling at a cheap price-to-sales ratio. And long-term efforts such as self-driving vehicles could catapult Uber’s valuation higher. For now, Mogharabi sees fair value of $69 per share; shares are currently at about a 35% discount to that price.
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