Owning good companies for a long time is one of the best ways to build wealth in the stock market, as such a strategy allows investors to harness the power of capitalization and benefit from secular growth trends in fast growing markets. .
This is why investors looking to buy potential long-term winners should take a closer look at the tastes of Micronic Technology (NASDAQ: MU), Intelligence (NASDAQ: INTC), and Apple (NASDAQ: AAPL). These three tech companies not only have great potential, but their stocks are also currently trading at attractive valuations. Let’s take a close look at why these three tech stocks are worth buying today and holding on to for a long time.
1. Micron technology
Micron Technology sells memory chips that are used in a variety of applications, from personal computers to data centers to smartphones. Thus, the chipmaker is operating in a market designed for secular, long-term growth, thanks to an increase in the amount of data generated through connected cars, automated factories, the Internet of Things (IoT), artificial intelligence (AI) applications, fifth generation wireless networks (5G) and others.
Research firm IDC estimates that the amount of data that will be created and replicated globally is expected to grow at an annual rate of 23% through 2025. It will not be surprising to see data creation and storage continue. to grow to high levels beyond that. , as new applications such as the metaverse and self-driving cars emerge.
An estimate by a third points out that the amount of data generated in 2030 could be 10 times higher than levels last year. By 2050, the amount of data generated could be 1,000 to 10,000 times greater than last year. All of this means that demand for Micron’s dynamic random access memory (DRAM) and NAND (short for “not and”) flash memory is expected to continue to increase to store and process more data.
That’s why investors looking to add cheap growth stocks to their portfolios shouldn’t miss out on Micron stock, as it trades at just 14.6x sliding earnings and 10.2x future earnings. These are attractive multiples given that the shares of the S&P 500 have an average price-to-earnings (P / E) ratio of 29. Buying Micron shares at its current valuation seems a no-brainer, as its earnings are expected to grow at an annual rate of almost 24% over the next five years.
It should be noted that Micron is growing at a much faster rate than these expectations. Company profits increased 114% in fiscal 2021 (ended September 2). Micron also looks set to replicate such impressive profit growth this fiscal year, as earnings jumped 177% year-over-year in the first quarter of fiscal 2022 (ended Dec. 2). This clearly shows that Micron is a good deal worth buying right now and keeping for a long time.
Intel may seem like a surprise choice as a long-term investment right now, given the company’s struggles against rivals like Advanced micro-systems (NASDAQ: AMD), but there are signs of recovery in Chipzilla that are worth a look.
Intel has started to show that it can take revenge on its rivals. The company’s Alder Lake processors (central processing units) are said to gain popularity with customers. Sales data from German retailer MindFactory reveals that Intel had a 30% share of processor sales at the retailer, which was its highest sales share at the retailer so far in 2021.
This is a big improvement from the 23% sales share Intel had at MindFactory in October. It should be noted that Alder Lake chips hit the market in November, so Intel’s resurgence can be attributed to their arrival. The improvement in Intel’s sales performance after the launch of the Alder Lake chips is not surprising. These processors are based on a 10 nanometer process, which means they have erased the competitive advantage AMD previously enjoyed through the popularity of its 7nm process chips.
This is because Intel’s 10nm process chips are as dense as AMD’s 7nm process, indicating that they can deliver identical performance at aggressive prices. It turns out that Alder Lake’s chips would have taken the gaming crown from AMD, and Intel is also giving its rival a run for its money on the price side.
Intel is now looking to regain its technological lead over its competitors by 2025. Its Meteor Lake 7nm chips are currently in the testing phase and are expected to hit the market next year. The company plans to launch 3nm chips in the second half of 2023, followed by 2nm chips in 2024. As the processors on Intel chips get smaller, they are likely to get more powerful. The number of transistors packed in a chip will be higher, allowing more computing power and less power consumption.
As such, Intel seems capable of turning its recent spark into a full-fledged comeback, especially as it will significantly increase its capital spending to meet its goals. With stocks trading at just 10x earnings, perhaps now is a good time to continue long before its potential reversal makes it more expensive.
Apple stock may not look exactly like a good deal as it is trading at 31 times earnings, but it is a good deal given that it is trading at 40 times earnings in 2020. It would make sense to ‘buy Apple shares now, given that it’s been on a resurgence over the past six months and could become more expensive in 2022.
One of the reasons that the rally in Apple shares may continue is that iPhone sales are expected to improve significantly in 2022. A report from the Taiwanese website DigiTimes points out that Apple could increase iPhone production by 30% in the first half of 2022 to meet strong end market demand. Additionally, the company could end the year with up to 300 million iPhone shipments according to the report, which would be a huge increase from this year’s estimated shipments of 240 million units.
While this looks like a strong short-term catalyst for Apple stocks, it’s worth noting that the company is working on new avenues to drive long-term growth. For example, Apple is reportedly working on a fully autonomous electric car that is expected to hit the market in 2025. It’s no secret that Apple has worked on self-driving vehicles before, as the tech titan has a fleet of 69 Lexus cars in California.
Wall Street seems optimistic about the launch of an Apple car. Morgan stanley‘s Katy Huberty believes that entering this market could double the company’s earnings and market capitalization in the long run. This is not the only potential catalyst for Apple, however. The company is said to be working on an augmented reality / virtual reality (AR / VR) headset that could hit the market in 2022.
Such a device could unlock another great revenue opportunity for Apple, as AR / VR headsets will open the window to the metaverse for millions of customers across the globe. As such, Apple is pulling the right strings to ensure it remains a top tech stock for the long haul, which is why investors looking to add this tech titan to their portfolios should consider buying it. before it gets expensive.
This article represents the opinion of the author, who may disagree with the âofficialâ recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.