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This 12 months has been brutal for U.S. shares, however that goes double for high-growth expertise shares.
A mixture of rising bond yields and recession worries have weighed on the tech sector since late final 12 months.
The
Nasdaq Composite
has fallen 22% in 2022, in contrast with a 13% drop for the
S&P 500 index.
The ache has been felt throughout the board—from social media corporations resembling
Meta Platforms
(ticker: FB) and
Snap
(SNAP), to streamers resembling
Netflix
(NFLX), and semiconductor corporations resembling
Nvidia
(NVDA).
The
Nasdaq 100
index—which options the most important nonfinancial corporations listed on the Nasdaq—has fallen 22%.
The specter of rising yields have weighed on tech shares as a result of they basically decrease the worth of future income. Recession worries, in the meantime, have hampered firms centered on promoting and discretionary client spending—resembling social media and e-commerce corporations.
With shares inching again in current days from the brink of bear market territory, cut price hunters might imagine it’s time to scoop up shares of robust companies at steep reductions.
That’s the reason Barron’s screened for Nasdaq100 corporations which have fallen greater than 20%, together with dividends, this 12 months. We then filtered out corporations with a ahead price-to-earnings a number of higher than the S&P 500’s common of 16.7 occasions estimated 2023 earnings, in line with Bloomberg. Lastly, we narrowed the display to corporations with estimated 2023 gross sales progress of 8% or extra, per Bloomberg estimates.
Firm / Ticker | Current Worth | Whole Return YTD | 2023E P/E | 2023E Gross sales Progress |
---|---|---|---|---|
Micron Know-how / MU | $73.32 | -21.0% | 5.8 | 20.3% |
Qualcomm / QCOM | 139.76 | -23.1 | 10.6 | 8.3 |
Meta Platforms / FB | 195.13 | -42.0 | 12.6 | 16.3 |
Utilized Supplies / AMAT | 119.48 | -23.7 | 13.5 | 10.9 |
Lam Analysis / LRCX | 531.02 | -25.1 | 14.1 | 16.4 |
Alphabet / GOOGL | 2246.33 | -22.6 | 15.0 | 16.3 |
Netflix / NFLX | 195.19 | -67.7 | 15.6 | 9.1 |
E=estimate
Sources: Bloomberg
The display standards narrowed the index down to simply seven shares.
Micron Know-how
(MU) was the most cost effective, buying and selling at 5.81 occasions ahead earnings estimates after a 21% decline this 12 months. Analysts anticipate 2023 gross sales progress of 20%, in line with Bloomberg.
Qualcomm
(QCOM) has fared even worse this 12 months with a 23% decline. The wi-fi chip maker has seen shares tumble amid a broader semiconductor selloff. The corporate is investing in lowering its dependence on its enterprise offering chips to
Apple
gadgets, to issues resembling automobiles, digital actuality gadgets, and computer systems.
Talking of digital actuality,
Meta Platforms
noticed shares sink in 2022 as its outcomes confirmed how a lot a pivot to “the metaverse” will price. The corporate’s promoting enterprise has additionally confronted challenges from TikTok and Apple’s privateness adjustments, which upended how the agency tracks the success of promoting on cellular gadgets. However with shares buying and selling at 12.57 occasions 2023 estimated earnings with expectations of 16% gross sales progress, there may be an argument to be made that the inventory is reasonable.
Utilized Supplies
(AMAT) and Lam Analysis (LRCX) are the following two on the record. The semiconductor tools producers have fallen sharply this 12 months as semiconductor shares have been hit by lockdowns in China and worries about demand. They commerce at 13.51 and 14.05 occasions ahead earnings estimates, respectively.
Rounding out the record are
Alphabet
(GOOG) and Netflix—the final two shares on the FAANG group of expertise giants. Alphabet inventory trades at 15.93 occasions estimated 2023 earnings and is predicted to develop gross sales by 16% in 2023. That doesn’t imply it’s all rosy for the Google mother or father. Macroeconomic considerations may weigh on the agency’s search and cloud companies within the coming months.
Netflix noticed shares sink because the agency revealed it was shedding subscribers. It now trades at 15.6 occasions earnings expectations for 2023 in contrast with anticipated gross sales progress that 12 months at 9.1%.
Write to Connor Smith at connor.smith@barrons.com
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