Like the animal they imitate, bear markets are known to have a wide range. When bones take a look at high stock prices, few names survive.
This year’s attack on the bear market has saved few industries. High-tech companies have been particularly affected by the impact of rising rates on valuations and fears of a global economic slowdown.
Even the mega head tech names have been dragged down by sales pressure. The good news is that the 2022 technology wreck has created attractive entry points for some of the world’s most beloved companies.
However, not all bruised mega-head tech stocks are purchases. Some still have high ratings and major challenges ahead.
In other cases, the hematoma seems exaggerated and the opportunity to launch is ready. The bear market has not been friendly with these three megacaps, but it is the right time for long-term investors to face them.
Is Microsoft Stock a purchase?
Microsoft Corporation (NASDAQ: MSFT) has a $ 100 discount and we are not referring to a new Office subscription. Approximately, that amount has been reduced from the company’s share price since its record high of $ 349.
The sale, while partly justified after a big run in 2021, has coincided with year-over-year earnings growth and expectations of more of the same in the coming quarters. Last quarter, Microsoft surpassed consensus gains (as it usually does) thanks to solid contributions from all core segments: Office, Windows, Azure, LinkedIn, and Gaming.
Although management narrowed its focus in the fourth quarter due to the adverse effects of the change, another period of growth in the final result is expected. When Microsoft reports earnings for the last quarter of its fiscal year next week, Street will expect a BPA of $ 2.30, representing 6% growth. It’s not a big end, but it would limit a year of 20% profit growth despite the challenging macro context.
More importantly, Microsoft will likely once again prove that their companies are doing well in every way. Regardless of how short-term economic winds blow, companies will spend on software that drives cloud transformation, remote workforce collaboration, and business intelligence, as well as the addition of Activision Blizzard should strengthen the division of games.
With subsequent gains of 27 times, Microsoft is trading below its five-year average P / E of 33 times. This is a bargain you can’t miss that won’t last long.
Why is Alphabet’s stock price so low?
Alphabet Inc. (NASDAQ: GOOGL) it is cheap for several reasons. First, the bear market decided that $ 3,000 was enough for now. Second, the company recently completed a 20 by 1 division that holds the shares at a more affordable price of $ 100. And three, the P / E ratio of 21x shares is well below both its own historical average (26x) and that of the interactive services and media industry (27x).
Like its mega-tech counterparts, the old Google has been hit by higher spending as it expands into new markets and emerging technologies. The relentless legal pressures it faces from its dominant search position have also raised the risk profile of stocks in a market that has been exposed to risk for most of the year.
After a stellar 2021 led by the demand for pandemic advertising, Alphabet will continue to face difficult complications. The consensus estimate for the 2022 EPS points to low or no growth. But after pressing the reset button this year, the outlook for 2023 is brighter.
Analysts forecast earnings growth of 18% next year. This is because companies of all shapes and sizes are expected to spend on digital advertising along with their transition to e-commerce. Despite many challenges, Google is still the place to be for online advertisers.
Meanwhile, an expanding presence in the cloud market is reducing Alphabet’s reliance on search. Initiatives related to artificial intelligence, wearables, home automation and health should also lead to more balanced growth.
Is Amazon.com a purchase ahead of earnings?
Amazon.com, Inc. (NASDAQ: AMZN) it also enacted a 20 by 1 split that has made its already discounted price even lower. Now trading at around $ 120, the king of e-commerce doesn’t seem as powerful as usual.
Wide market sales have been tough for one of the biggest winners of the pandemic. With physical stores reopened, the reality check of normalized growth has been set in motion. Amazon has recently recorded its lowest sales growth in about 20 years. As a result of the slowdown, management has shifted its focus to improving productivity and cost efficiency as consumer spending patterns moderate.
On the other hand, the market share that the company gained during the first days of Covid has shown no signs of deterioration. According to the eMarketer research group, Amazon has a dominant 40% share of the U.S. e-commerce market. This means that while large retailers like Walmart and Target (not to mention a lot of small retailers and mom-and-pops) are increasing their digital presence, Amazon remains the preferred destination for most retailers. online shoppers.
When Amazon reports second-quarter performance next week, the bar will go down. The Street predicts a $ 0.15 division-adjusted BPA, which would be an improvement over last quarter’s net loss, but far short of the previous year’s period. But rest assured, management will find ways to be more efficient in the post-Covid world and assert mastery of the company’s online shopping. This is an unusual time for Amazon and it will come out stronger. The unusual price of the stock makes it a fantastic long-term purchase.