The tech-heavy Nasdaq Compound (^IXIC -3.94%) the market index is down 20% since the start of the year, almost doubling the S&P500 (^GSPC -3.37%) 12% price drop from the market tracker.
As a result, some of the most expensive tech stocks of yesteryear are on the sellout in 2022. And while some of them really deserved a drastic haircut, others didn’t do anything wrong, and investors should consider buy them at today’s modest stock price. .
On that note, here are three tech stocks that look like fantastic buys right now. Will they also fit your wallet? Let’s look.
Intel: a sleeping giant
Semiconductor giant Intel (INTC -4.38%) has been on the ropes for the past few years. Management scandals and manufacturing mishaps paved the way for small chip companies such as Advanced micro-systems (AMD -6.17%) to eat away at Intel’s dominant market share, especially in the lucrative data center market. If you’ve sold your Intel stock in the past five years, I understand.
But you can’t keep this tech titan around for long. Intel is investing heavily in expanded and improved chip manufacturing facilities, including a $30 billion expansion of its factories in Chandler, Arizona. The company is many times larger than AMD or Nvidia, and eager to once again turn its unparalleled capital reserves into real business advantage.
Meanwhile, Intel shares are trading at five-year lows at a much discounted valuation of 7.5 times earnings or 9.5 times free cash flow. These measures are well below their 5-year averages of 13 and 16, respectively.
The stock also offers a generous dividend yield of 4.3%, among the highest yields in the company’s history. I recommend locking in those huge effective dividend yields while Intel’s stock price is low.
Nokia: don’t call it a comeback
… because nokia (NOK -3.94%) been here for years. It’s just a little different from what you’re used to.
The Finnish telecom equipment giant has changed a lot in recent years. Smartphones are now just a hobby for Nokia, as the company focuses on the network provider side of the mobile networking equation. As a global leader in this field, Nokia is a preferred supplier of 5G network equipment in important markets such as the United States, Taiwan, Mexico and Japan.
These multi-year agreements provide Nokia with a solid operating base from which to generate consistent sales and improve profit margins, even in difficult market conditions. Yet Wall Street pays no attention to this proven technology leader. Nokia shares have fallen 18% in 2022 and are currently changing hands at the advantageous valuation of 11 times forward earnings or 1.3 times trailing sales.
And if you thought the move from handsets to telecommunications infrastructure was a radical shift in strategy, you might not have known that the same company sold paper products and car tires. This company is ready to take any beating the market might throw at it, and the stock is incredibly cheap. It’s a reliable recipe for strong long-term returns.
Roku: A Market-Defining Pioneer
The entertainment industry is changing. I mean, the way people consume movies and TV shows is changing before our eyes. Cable TV, broadcast stations and movie theaters once ruled, but a new set of digital streaming services are lunching right now. So I could recommend the leader in streaming content netflix (NFLX -4.57%) or family veteran waltz disney (SAY -2.89%) here, highlighting how digital streams still represent a small portion of consumer content consumption, both domestically and internationally. The target market is roughly the size of the planet and the untapped growth potential is enormous.
But then you’ll have to pick a long-term winner in the streaming wars. Early leaders like Disney and Netflix will likely retain their market share for many years to come, but you never know when another content creator might step in with a surprisingly successful catalog.
I don’t want to pick a winner here, so I own both Netflix and the House of Mouse. At the same time, I also built a great position as an expert in streaming technology Roku (ROKU -6.96%)because this company will benefit from the growth of the digital media market, no matter who emerges victorious in the content battles.
Additionally, Roku has lately been dragged through Wall Street’s bargain bin. Roku shares were uninvited from the market’s modest rebound over the summer and shares are now trading near three-year lows. Critics point to a slowdown in ad sales, which led Roku to miss analysts’ revenue and revenue estimates in last month’s second-quarter report. But bears make a mountain out of a temporary molehill.
“The current economic situation is forcing TV advertisers to stop and reconsider their spending, which is painful in the short term,” Roku CEO and Founder Anthony Wood said on the latest earnings call. “But it also pushes them to seek greater efficiency and [return on investments], which will benefit Roku in the medium to long term. It reminds us of when advertisers halted spending during the 2008 recession, but it became a catalyst that accelerated the shift in ad spending from print to digital.”
This idea makes a lot of sense. Advertisers are currently looking for ultra-efficient marketing platforms, hoping to get the most out of every advertising dollar. Lessons learned from both sides of the advertising platform and the advertiser relationship will be useful when marketing budgets increase again.
In other words, market makers are punishing the stock because results look a little weak in the short term, while Roku is currently learning how to generate a richer profit in the long term. This is an obvious buy signal in my eyes.
Anders Bylund holds positions at Intel, Netflix, Nokia, Roku and Walt Disney. The Motley Fool holds positions and recommends Advanced Micro Devices, Intel, Netflix, Roku and Walt Disney. The Motley Fool recommends the following options: January 2023 Long Calls at $57.50 on Intel, January 2024 Long Calls at $145 on Walt Disney, January 2023 Short Calls at $57.50 on Intel, and January Short Calls 2024 at $155 on Walt Disney. The Motley Fool has a disclosure policy.