For quite some time, mega-tech and growth stocks led the markets, indexes, and perhaps even most retail portfolios. Headwinds in 2022 managed to push the Nasdaq into correction territory and numerous market darlings to lose 30-60% of their value in the past month alone.
Bearish market sentiment and fear are driving markets lower, making everything look risky, especially the technology sector.
Since the decline brought down most of the names in the sector, now could be a good time to identify companies that could offer value and growth. Finbold has highlighted three stocks that could make sense in a volatile market.
Picks for you
Micron Technology Inc. (NASDAQ: MU)
Micron is a semiconductor company that is at the moment benefiting from the global chip shortage. In its latest quarter, the company did $7.79 billion in revenue compared to $6.24 billion for the same quarter in 2021. Net income was $2.44 billion or $2.14 earning per share (EPS) while having $3.63 operating cash flow on their hands.
Shares of the company are down 30% year-to-date (YTD), and the price action in the last session was testing October 2021 resistance lines. Trading volumes are lower in May compared to April, so any positive news could propel shares higher.
Wall Street analysts also recognize the potential the company has and give it a strong buy rating with only two analysts maintaining a hold rating. For the next 12 months, analysts predict that the average price of the shares will reach $111.33, which is 64.42% higher than the current trading price of $67.71.
ASML Holdings (NASDAQ: ASML)
ASML is in a unique position as they create machines that create semiconductors, which in turn makes their products sell like hotcakes. In the latest quarter, the company beat EPS by €0.05 with revenue rising by 11.8% to €3.35 billion. The expected gross margin the company declared for 2022 will be between 49% and 50%.
Like most companies on the Nasdaq, ASML too got punished in 2022 where the price action created a wide downward channel. Currently, the shares are below all daily Simple Moving Averages (SMAs). YTD shares are down 34%, despite the solid quarter and ensured dividend of 1.15%.
Elsewhere, analysts deem the stock a moderate buy, predicting that for the next 12 months the average share price could be $686.67 or 31.46% higher than the current trading price of $522.36.
Daqo New Energy Corp. (NYSE: DQ)
DQ is a leading manufacturer and seller of polysilicon, which is used by manufacturers of solar power products. In Q1 2022 earnings announcement, the company reported an EPS beat of $0.70 and a revenue increase of an incredible 399.8% year-on-year to $1.2 billion.
Average polysilicon production costs were lowered while output grew. Shares of the company are far from their glory days in late June of 2021 when the share price reached $90. After the November 2021 tumult, the shares haven’t completely recovered trading below all SMAs. However, the value and earnings the company is bringing in possibly warrants a repricing of the stock.
Not many analysts cover the stock, but those that do deem it a moderate buy. For the next 12 months, the analysts see the average price of the shares to reach $77.93, which is 100.90% higher than the current trading price of $38.79.
Despite the volatile market and value destruction that took place YTD there are technology companies that could make sense as they deliver high-value products. Earnings shown by the above three as well as their importance in the economy signal that they are worth keeping an eye on.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
