For immediate release
Chicago, IL – March 11, 2022 – Today’s Zacks Investment Ideas feature highlights Apple AAPL, Advanced Micro Devices AMD, and Nvidia NVDA.
These 3 domestic tech stocks can give your portfolio a boost
Volatility has been history for the majority of 2022, driving year-to-date price declines across all major indices and wiping out almost all returns from 2021 onwards. The S&P 500 is at a level we haven’t seen since the summer of last year, the Nasdaq retreated to the low 13,000 range, and the Dow touched as low as 32,600 yesterday.
The ongoing war in Ukraine was a key driver of the malaise and sent stocks tumbling, spooking investors. COVID-19 appears to be slowly receding, but many still fear lingering effects on the economy.
So far, investors have shown increased interest in energy stocks, commodities and currencies as a safe haven to preserve their capital and protect against inflation caused by geopolitical factors.
While these assets can be a good hedge in times like this, these short-term trends won’t last forever. Cheaper investment opportunities in proven names like Apple, Advanced Micro Devices and Nvidia have emerged, so let’s see why these three Zacks Rank #1 (Strong buy) tech names could be great additions to a portfolio during volatile times. .
Record sales are what Apple is known for, and over the past five years, that’s exactly what the company has been doing.
Since fiscal 2017, Apple’s revenue has jumped nearly 60%, from $229 billion to $366 billion. Net income during this period increased by nearly 96%, from $48 billion to $94 billion, while EPS increased by 143%, or $3.31 per share.
The tech giant also consistently beats earnings estimates, and over the past four quarters Apple has had a 20.3% surprise on average earnings. In its latest quarterly report in January, Apple reported earnings per share of $2.10, pleasantly surprising analysts and investors with a surprise EPS of 11%, or $0.21 per share.
The trends in the estimates for fiscal years 22 and 23 have also increased over the past 60 days. For FY22, the trend is up 5.8%, or $0.34, from $5.82 per share to $6.16 per share. For FY23, the trend is up 7% or $0.44 from $6.24 per share to $6.68 per share.
A key line of business for Apple, the iPhone, also saw strong growth in sales. Flagship revenue increased nearly $50 billion, or 25%, from $190 billion to $240 billion in FY20 to FY21.
Analysts expect strong returns from the company over the long term. Apple’s latest event showcased plenty of new growth opportunities, from its cheaper iPhones and iPads to its cutting-edge chip, the M1 Ultra, which is expected to rival Nvidia’s flagship RTX 3090 graphics card and Ryzen Threadripper 3990X processor. from AMD.
AAPL has a Value Style Score of F, a Growth Style Score of A, and a Momentum Style Score of B. Its overall VGM score is a C and is a Zacks Rank #1 (Strong Buy).
AMD has entered the tech sector with its state-of-the-art processing unit, the Threadripper 3990X.
In the past five years dating back to fiscal year 2017, Advanced Micro Devices has seen its revenue grow 210%, or $11.2 billion, to $16.4 billion, from a previous value of $5.2 billion. The company’s EPS increased $3.64 to $3.70 per share from a previous EPS of $0.06 in FY17, and Chip Name net income increased 3 .2 billion. AMD has seen significant growth over the past few years, and there’s no reason to believe it’s going to slow down anytime soon.
The company beat quarterly estimates in each of its previous four reports, posting an average earnings surprise of 17%. In its latest quarterly report, AMD exceeded estimates by nearly 23% and beat the estimate by $0.75 per share, officially reporting quarterly EPS of $0.92 per share.
Estimate trends for FY22 and FY23 have increased quite significantly over the past 60 days, providing confidence for long-term investors. For FY22, the trend is up 21.7%, or $0.71, from $3.28 per share to $3.99 per share. For FY23, the trend is up 22% from $3.90 per share to $4.76 per share.
AMD’s Computer and Graphics business has also seen favorable increases since FY2017. Since then, this metric has increased by 208%. I believe this increase is due to the ever-increasing demand for high-quality computing and digital products.
AMD has a Value Style Score of F, a Growth Style Score of A, and a Momentum Style Score of F. Its overall VGM score is a D and is a Zacks Rank #1 (Strong Buy).
The last Zacks Rank #1 (Strong Buy) name I will analyze is the widely known creator of the highly successful GPU (Graphics Processing Unit), Nvidia.
NVDA’s revenue has been nothing short of impressive since FY17. Since then, the company has seen an impressive 290% increase in revenue, from $6.9 billion to $26.9 billion. The company’s EPS also saw a tear, up 470%. Nvidia’s net income has also skyrocketed, up 2,200% since fiscal 2017.
NVDA is currently on a strong earnings streak, racking up four consecutive surprises with an average surprise of 7% over the past four quarters. In its February quarterly report, Nvidia published EPS of $1.32, beating estimates by $0.10, or 8%.
The trend of consensus estimates for FY22 and FY23 has increased over the past 60 days. The FY22 estimate trend gained 8.6%, or $0.44, to $5.56 per share. For FY23, the trend follows a similar trajectory, up 7.8%, or $0.46, to $6.37 per share.
The company’s data center revenues have seen significant jumps since FY18. Revenue from this line of business for NVDA has increased by almost 450%, or $8.6 billion, which is likely a result of the digital shift the world has been experiencing in recent years, and is expected to continue for some time to come. .
NVDA has a Value Style Score of F, a Growth Style Score of B, and a Momentum Style Score of B. Its overall VGM score is a D and is a Zacks Rank #1 (Strong Buy).
All in all, AAPL, AMD, and NVDA are very strong names that are leaders in the computing age. Many investors have been rattled by these growth names over the past year due to a difficult economy, the lingering effects of COVID-19 and, more recently, the conflict in Ukraine.
As investors flock to names that offer hedging value for their portfolios, the long-term image of these massive tech names is often lost in the short-term noise of the market. However, I think it’s time for investors to focus on stocks like AAPL, AMD and NVDA. These growth leaders typically continue their regular business operations even when the market is unfavorable, providing plenty of investment opportunities at discounted prices.
Additionally, Apple’s aggressive decision to compete with chips from AMD and NVDA is an extremely exciting time to invest in technology. This collision will undoubtedly force AMD and NVDA to further push the boundaries within processing units, further improving the technology and overall business.
The future looks bright for all three names, so investors should think about taking advantage now.
5 shares ready to double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations climbed +143.0%, +175.9%, +498 .3% and +673.0%.
Most of the stocks in this report fly under the radar on Wall Street, which provides a great opportunity to get in on the ground floor.
Zacks Investment Research
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Past performance is not indicative of future results. The potential for loss is inherent in any investment. This document is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold any security. No recommendation or advice is given as to whether any investment is suitable for any particular investor. It should not be assumed that investments in the securities, companies, sectors or markets identified and described have been or will be profitable. All information is current as of the date hereof and is subject to change without notice. The views or opinions expressed may not reflect those of the company as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management of securities. These returns come from hypothetical portfolios composed of stocks with Zacks Rank = 1 that have been rebalanced monthly without transaction fees. These are not the returns of actual stock portfolios. The S&P 500 is an unmanaged index. To visit https://www.zacks.com/performance for more information on the performance figures displayed in this press release.
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