5 of the Best Tech Stocks to Buy for December

The Thanksgiving holiday didn’t end up being a festive one for investors. The arrival of a new COVID-19 variant caused markets to tumble lower on Black Friday. The gyrations have continued since then, with many growth stocks in particular getting clobbered. A lot of high-fliers are now down 50%, 67%, or in some cases even 80% from their highs this spring.

Sure, the S&P 500 and Nasdaq are holding up fairly well due to a few stable mega-cap stocks. However, remove them from the picture and the rest of the tech sector is a wreck right now. With panic selling comes good buying opportunities. Investors have the chance to buy some true holiday gifts for themselves at today’s prices. Here are five particularly interesting tech stocks right now:

— Robinhood Markets Inc. (ticker: HOOD)

— StoneCo Ltd. (STNE)

— Spotify Technology S.A. (SPOT)

— Sabre Corp. (SABR)

— Salesforce.com Inc. (CRM)

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Robinhood Markets Inc. (HOOD)

Heading into 2021, Robinhood seemed like it would be one of the year’s most promising initial public offerings, or IPOs. The company’s trading app gained tremendous market share with younger traders thanks to its game-like features. Robinhood has enjoyed massive amounts of free advertising on social media as people make videos about huge wins and shocking losses on the app. Reddit’s WallStreetBets forum helped launch Robinhood into the stratosphere.

Indeed, Robinhood’s IPO opened strongly, with shares popping from $35 to $80 shortly after their debut this summer. Since then, Robinhood stock has lost the majority of its value, and has slipped to around $24 recently. For one, Robinhood’s growth slowed following the controversy around its handling of the GameStop Corp. (GME) short squeeze earlier this year. For another, Robinhood generates a huge portion of its revenues from cryptocurrency trading. These revenues plummeted last quarter thanks to Dogecoin’s sharp decline. However, Robinhood still has a ton of active users, and could rally again on any rebound in cryptocurrency trading or other revenue-generating services.

StoneCo Ltd. (STNE)

StoneCo is a Brazilian payments firm. It primarily helps small and medium-sized businesses process transactions both in-person and online. The company enjoyed tremendous growth during the pandemic, as merchants rushed to get e-commerce solutions up and running. StoneCo has also made acquisitions, such as in retail software services, to help broaden its product portfolio and improve its recurring revenue streams. The company had enjoyed a tremendous run-up during the pandemic with shares spiking from $30 to $90. However, since its peak this spring, shares have now fallen a shocking 80% due to issues with the Brazilian economy, increasing competition and a total collapse of the broader payments sector. However, StoneCo continued to grow revenues by 57% year over year last quarter and it has the backing of prominent investors including Berkshire Hathaway (BRK.A, BRK.B) and Cathie Wood’s Ark Invest.

As tax loss selling winds down, StoneCo could be set for a huge comeback.

Spotify Technology S.A. (SPOT)

Traders have turned down the volume on Spotify in recent weeks. Shares have gotten caught in the broader correction in growth stocks, particularly ones held by Ark Invest and other popular tech funds. Momentum is a fickle thing, and right now, money is flowing in the wrong direction for these sorts of stocks.

The actual business of Spotify is going well, however. The company continues to execute on its business plan, diversifying away from pure music. Spotify is investing heavily in podcasts and other audio content, along with building its advertising platform. This will help address Spotify’s big issue: It pays out too much of its revenue to the music labels, which limits profitability. Other efforts such as merchandise and events with musical artists should also help Spotify broaden its reach. Given that Spotify faces little serious competition aside from Apple Inc.’s (AAPL) music platform, it seems likely that Spotify will be a much larger business in five or 10 years than it is today. Long-term investors wanting to own the Netflix Inc. (NFLX) of audio would be wise to give Spotify a look during this correction.

Sabre Corp. (SABR)

Travel software company Sabre has had a rough couple of years. The company runs a ticketing system for airlines, cruise lines, hotels and other such businesses. It serves as a marketplace where companies such as airlines post their tickets and schedules there and buyers such as online travel agents can assess the competition and make an informed purchase. As goes with marketplace services, Sabre gets a cut of the action. Not surprisingly, Sabre’s business dried up in 2020 as few people wanted to buy airline tickets or make hotel reservations.

Things started looking up earlier in 2021 as the economy reopened and Sabre regained most of its COVID-19-induced losses. However, Sabre shares have dropped about 50% over the past six months as the delta and now omicron variants have caused investors to fear that travel will remain disrupted for quite some time. At the end of the day, there are only three major players in Sabre’s industry; it’s a sticky business with a high barrier to entry and large pool of customers. When travel returns to normal, Sabre shares should regain their recent losses.

Salesforce.com Inc. (CRM)

Salesforce.com was returning to form. The company finished its long-awaited acquisition of collaboration software package Slack and shares had resumed their upward climb. However, Salesforce hit a big speed bump with its latest earnings report. Shares fell sharply following quarterly earnings that were just slightly short of expectations. However, in software stock land, any miss — no matter how modest — is now an excuse for a knee-jerk sell-off. It seems that software sector traders have piled up big gains on the year, and are now locking in profits ahead of a potential bigger correction in the sector. That’s understandable, to be sure. But that sort of near-term weakness represents an opportunity in the best-of-breed software firms. Salesforce is right up there. Its marketing software is indispensable for modern corporate America and the company is quickly building out an ancillary set of additional offerings to keep the growth trajectory intact. With the latest decline, Salesforce shares are back under 10 times forward revenues for the first time since this summer.

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5 of the Best Tech Stocks to Buy for December originally appeared on usnews.com

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