For Immediate Release
Chicago, IL – March 11, 2022 – Today, Zacks Investment Ideas feature highlights Apple AAPL, Advanced Micro Devices AMD and Nvidia NVDA.
These 3 Household Tech Stocks Can Give Your Portfolio a Boost
Volatility has been the story for the majority of 2022, causing year-to-date price declines in all major indices and wiping out nearly all returns from 2021. The S&P 500 is at a level we haven’t seen since the summer of last year, the Nasdaq has retreated into the low 13,000 range, and the Dow touched as low as 32,600 yesterday.
The war undergoing in Ukraine has been a major driving force of the uneasiness and has sent stocks plummeting, spooking investors. COVID-19 seems to be retreating slowly, but many still have fears of the lingering effects on the economy.
So far, investors have been showing an increased interest in energy stocks, commodities, and currencies for a safe haven to preserve capital and hedge themselves against inflation caused by geopolitical factors.
While these assets can be a good hedge during times like this, these shorter-term trends won’t last forever. Cheaper investment opportunities in proven names like Apple, Advanced Micro Devices and Nvidia have arisen, so let’s take a look at why these three Zacks Rank #1 (Strong buy) tech names could be great additions to a portfolio during volatile times.
Record-breaking sales are what Apple is known for, and within the last five years, this is exactly what the company has done.
Since FY17, Apple’s top line has jumped nearly 60% from $229 billion to $366 billion. Net income during this period has increased nearly 96% from $48 billion to $94 billion, while EPS has seen an increase of 143%, or $3.31 per share.
The tech giant also beats earnings estimates consistently, and over the last four quarters, Apple has had a trailing 20.3% average earnings surprise. In its most recent quarterly report in January, Apple reported earnings per share of $2.10, pleasantly surprising analysts and investors with an EPS surprise of 11%, or $0.21 per share.
FY22 and FY23 estimate trends have increased as well over the last 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, has also seen strong growth in sales numbers. Revenue for the flagship product increased nearly $50 billion, or 25%, from $190 billion to $240 billion from FY20 to FY21.
Analysts are expecting strong returns from the company over the long term. Apple’s latest event showcased many new growth opportunities, from its cheaper iPhones and iPads to its cutting-edge microchip, the M1 Ultra, which it expects to rival Nvidia’s flagship RTX 3090 graphics card and AMD’s Ryzen Threadripper 3990X processor.
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 thrust itself into the technology sector with its state-of-the-art processing unit, the Threadripper 3990X.
Over the last five years dating back to FY17, Advanced Micro Devices has seen its top-line surge by 210%, or $11.2 billion, to $16.4 billion from a previous value of $5.2 billion. EPS for the company has increased by $3.64 to $3.70 per share from a previous EPS of $0.06 in FY17, and net income for the chip name has risen by $3.2 billion. AMD has witnessed significant growth over the last several years, and there is no reason to believe that this will slow down anytime soon.
The company has beaten out quarterly estimates in each of its previous four reports, posting an average earnings surprise of 17%. In its latest quarterly report, AMD beat out estimates by nearly 23% and beat the $0.75 per share estimate, officially reporting a quarterly EPS of $0.92 per share.
FY22 and FY23 estimate trends have increased quite significantly over the last 60 days, bringing confidence to 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 computing and graphics line of business has seen favorable increases as well since FY17. Since then, this metric has increased by a massive 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’ll analyze is the widely known creator of the highly successful GPU (Graphics Processing Unit), Nvidia.
Revenues for NVDA have been nothing short of impressive since FY17. Since then, the company has enjoyed an impressive 290% increase in its top line, climbing from $6.9 billion to $26.9 billion. EPS for the company has been on a tear as well, up 470%. Nvidia’s net income has jumped through the roof as well, up 2200% since FY17.
NVDA is currently on a hot earnings streak, stringing together four straight earnings surprises with an average surprise of 7% over the last four quarters. In its quarterly report in February, Nvidia posted an EPS of $1.32, beating estimates by $0.10, or 8%.
The consensus estimate trend for FY22 and FY23 has been increasing over the last 60 days. The FY22 estimate trend has gained 8.6%, or $0.44, to $5.56 per share. For FY23, the trend is following a similar path, up 7.8%, or $0.46, to $6.37 per share.
Revenue for the company’s data center has seen significant leaps since FY18. The revenue in this line of business for NVDA has increased nearly 450%, or $8.6 billion, which likely stems from the digital shift that the world has undergone over the recent years, and should continue for some time.
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).
Overall, AAPL, AMD, and NVDA are very strong names that are leaders in the computing era. Many investors have been shaken out of these growth names over the last year due to an uneasy economy, COVID-19’s lingering effects, and more recently, the conflict in Ukraine.
With investors flocking to names that provide hedging value for their portfolios, the longer-term picture for these massive tech names is often lost within the short-term noise in the market. However, I believe that these are times that investors should be focusing on stocks like AAPL, AMD, and NVDA. These growth leaders typically carry on with regular business operations even when the market is unfavorable, providing ample investment opportunities at slashed prices.
Additionally, Apple’s aggressive move to rival AMD’s and NVDA’s chips is an extremely exciting time to be an investor in technology. This collision will no doubt force AMD and NVDA to further push boundaries within processing units, further improving technology and overall business.
The future looks bright for all of the three names, so investors should think about taking advantage now.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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