Tech stocks have rallied over the past year, making it harder for growth investors to find good deals. Demand is high for many popular members of the Nasdaq Composite Indexup 10% so far in 2024 after soaring last year.
A great way to minimize the risk of overpaying for a stock in this environment is to have a longer time frame. By investing for a decade or more, you’ll be able to see beyond short-term volatility and the inevitable ups and downs of market returns.
With that long-term view in mind, let’s look at two tech stocks that, while not cheap, have a good chance of helping boost your portfolio’s returns from here on out.
1.Garmin
If you have decided to transmit Apple (NASDAQ:AAPL) stock right now due to its slow growth, consider owning Garmin (NYSE:GRMN) instead. The tech device specialist grew revenue at a rate of 13% last quarter, compared to a 2% rise for Apple. Garmin has also seen strong demand for its GPS-enabled fitness watches and smartwatches. “We enter 2024 with strong momentum,” CEO Cliff Pemble said in a press release.
It’s true that Garmin’s sales are skewed more toward hardware, which isn’t as profitable as software services. This is an important factor that explains the low operating profit margin of 21%, compared to 31% for Apple.
Yet Garmin still generates strong profits and exceptional cash flow. The company generated $1.2 billion in free cash flow last year, representing nearly 25% of its revenue. It’s also available at a decent discount, even though shares have rebounded over the past year. Today, you can own Garmin for 5.5x sales, compared to Apple’s 6.9x revenue.
2. Metaplatforms
Metaplatforms (NASDAQ:META) The stock will see some volatility around its April 24 earnings report, but investors won’t need to wait until then to get in on this stellar business.
Meta’s top engagement metrics are strong heading into this announcement. The social media giant last announced that its daily user base has reached 3.2 billion through the end of 2023. And as many as 80% of its monthly users log into its family of apps every day , anchored by Instagram and Facebook.
Meta monetizes this usage much better than in the past. Last quarter, average revenue per user exceeded $10, driven by the company’s higher volume of ads serving in feeds.
I’ll be searching Meta for a way to increase average ad rates in the next earnings report, which could unlock even faster earnings growth. But his momentum at this point is already quite strong. Operating profit jumped 62% last year to $46 billion, or 35% of revenue.
Next year might not be as impressive due to Meta’s choice to invest heavily in areas such as data centers, artificial intelligence capability and its virtual reality hardware. But expect CEO Mark Zuckerberg and his team to highlight the exceptional returns this spending could generate over the next decade or more. This is the same long-term orientation that investors should have for this stock, as it is the best way to ensure that you can withstand the volatility that has likely followed Meta’s huge rally over the year elapsed.
Should you invest $1,000 in meta platforms right now?
Before buying stocks on meta platforms, consider this:
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Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Demitri Kalogeropoulos holds positions in Apple and Meta Platforms. The Motley Fool posts and recommends Apple, Garmin, and Meta platforms. The Mad Motley has a disclosure policy.
Do you have $3,000? 2 tech stocks to buy and hold for the long term was originally published by The Motley Fool
