Two Affordable Technology Stocks to Consider Investing in Today

Two Affordable Technology Stocks to Consider Investing in Today

The word “cheap” no longer applies to many tech stocks these days, especially after a rally that saw the Nasdaq Composite the index has climbed 46% over the past year. And it’s true that you’ll have to pay a lot more for quality companies today than you would have paid at the start of 2023.

That’s the price an investor must pay for more positive sentiment on Wall Street. Like billionaire Warren Buffett underlines in 2008, “If you wait for the blackbirds, spring will be over”.

However, there are always relative values ​​in the market, especially if your investment period spans several decades. Let’s look at two attractively priced “technology” stocks (see below for an explanation of why “technology” is in quotes).

1. This apple looks tasty

Unlike its software rival Microsoft, Apple (NASDAQ:AAPL) is not currently part of the $3 trillion market valuation club. This is mainly because the iPhone maker’s shares have significantly underperformed the market in recent months. The stock is up just 16% over the past year, compared to Microsoft’s 66%.

This gap creates a potentially attractive buying opportunity for patient investors.

Of course, Apple is currently going through a bit of a crisis. Sales barely increased last quarter, increasing just 2% year-over-year, compared to a 16% increase for Microsoft. The growth outlook doesn’t look particularly encouraging for next year either. Most Wall Street professionals expect sales to rise about 6% next year, following modest declines in fiscal 2024.

Consider, however, the value you get from owning Apple during this time of high pessimism. The stock is valued at just 7 times annual sales, compared to Microsoft’s price-to-sales (P/S) ratio of 14. Apple also prioritizes large cash returns, with $27 billion paid out directly to shareholders during the last quarter alone in the form of shares. buybacks and dividends.

These cash returns, which come primarily from buybacks, should continue to allow earnings per share to outpace sales growth in 2024 and beyond. This will provide a good buffer for shareholders while they wait for Apple’s new products – as well as the rise of more services – to reaccelerate growth.

2. Walmart should be considered a tech stock

I know it might seem like a stretch to call Walmart (NYSE:WMT) a tech stock, but hear me out. The retailer is coming off a fantastic year that saw e-commerce grow 23% to surpass $100 billion in annual sales. For context, Amazon increased product sales by 5% in 2023, to $256 billion; eBay reported an annual sales volume of $73 billion.

Walmart is also benefiting from increased revenue growth from other technology sources, such as its growing digital advertising business. So it’s no surprise that profit margins are increasing. The chain had a 10% higher operating profit last year, outpacing Walmart’s 6% rise in revenue.

Even with strong growth in its technology-driven segments, traditional retail will remain Walmart’s main living room for the foreseeable future. The good news is that this division is also operating at full capacity. Customer traffic increased 4% year over year during the holiday season, customer satisfaction levels are up, and the chain is capturing market share in groceries and discretionary consumption products, including among higher-income buyers.

You can own Walmart stock for a P/S of less than 1, or about the same valuation you would pay for Target stock at the moment. This price seems like a bargain for a fast-growing e-commerce company backed by a dominant brick-and-mortar business.

Should you invest $1,000 in Apple right now?

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Demitri Kalogeropoulos holds positions at Amazon and Apple. The Motley Fool holds positions and recommends Amazon, Apple, Microsoft, Target and Walmart. The Motley Fool recommends eBay and recommends the following options: long January 2026 $395 calls on Microsoft, short April 2024 $45 calls on eBay, and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

2 Cheap “Technology” Stocks to Buy Now was originally published by The Motley Fool

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