The Nasdaq Composite ($NASX) faced headwinds in the latter part of the year, grappling with the Federal Reserve’s hawkish stance on interest rates and traditional September market volatility. As investors seek refuge from riskier assets like equities due to rising bond yields, the Nasdaq has experienced a month-to-date decline of over 6%.
However, seasoned investors recognize that market pullbacks can present opportunities to acquire quality stocks at favorable prices. In the current environment, several top tech stocks are standing out as appealing options. Here are three tech stocks worth considering:
Apple Stock: The Iconic Consumer Brand
Apple (NASDAQ:AAPL) extends its influence far beyond the tech sector, holding a prominent place as a cultural phenomenon. Recognized for its iPads, Macbooks, iMacs, and the ubiquitous iPhone, Apple is a global consumer brand powerhouse. The company boasts a five-year Compound Annual Growth Rate (CAGR) of 8.51% in revenues and 16.62% in earnings per share (EPS).
Despite a recent pullback, Apple’s stock has delivered a year-to-date gain of 31%, surpassing the Nasdaq’s 25% increase. In its latest quarter, Apple reported net sales of $81.8 billion, a minor decline from the previous year, but EPS grew by 5% to $1.26, exceeding consensus expectations.
Apple’s new iPhone models are gaining traction globally, with strong demand reflected in record-high lead times. The company’s share of the U.S. smartphone market also increased to 55%, indicating continued consumer interest. As the holiday season approaches, a traditionally strong period for iPhone sales, analysts anticipate 7.8% earnings growth for the current quarter and 11.7% in the next.
Analysts maintain an optimistic outlook on AAPL, with a consensus rating of “Moderate Buy” and an average price target of $205.81, suggesting a potential upside of approximately 20%.
Microchip Technology: A Leader in Semiconductors
Microchip Technology (NASDAQ:MCHP) is a significant player in the semiconductor industry, specializing in microcontrollers. The company designs, manufactures, and sells embedded control solutions for diverse applications, including automotive, industrial, consumer, aerospace, and defense. With a market capitalization of $41.39 billion, Microchip offers a dividend yield of 1.94%.
While MCHP has experienced a month-to-month decline in line with broader Nasdaq weakness, its long-term performance has been more moderate, with a 10% gain in a strong year for tech stocks. In its most recent fiscal quarter, Microchip reported net sales of $2.29 billion, marking its 11th consecutive quarter of revenue growth. EPS rose by 19.7% to $1.64, in line with analysts’ estimates.
Despite guidance that met the low end of consensus expectations, MCHP’s stock saw some pressure after its earnings report. Analysts project an 11.5% earnings growth for the current quarter and 1.6% for fiscal 2024.
The consensus rating for MCHP is “Moderate Buy,” with an average price target of $98.26, suggesting an approximate 28% upside potential.
Shopify Stock: A Global E-Commerce Force
Shopify (NYSE:SHOP), a Canadian e-commerce company with a presence in over 175 countries, provides a range of services, including payments, marketing, shipping, and customer engagement tools. With a market capitalization of $66.06 billion, Shopify is in a growth phase and does not offer dividends.
While SHOP has seen a sharp decline of over 21% in September, its year-to-date performance remains strong with a 50% gain. In its latest quarterly results, Shopify reported revenues of $1.69 billion, a 31% increase from the previous year, with EPS at $0.14 compared to a loss per share of $0.03 in the previous year.
Key operational metrics, such as Gross Merchandise Volume, Gross Payments Volume, and Monthly Recurring Revenue, also demonstrated growth, reflecting Shopify’s robust execution and operational capabilities. The company recently announced AI-focused initiatives, including Shopify Magic and Sidekick, aimed at enhancing merchant operations.
Furthermore, Shopify’s partnership with Amazon (AMZN) on the “Buy With Prime” program is expected to contribute to future revenue growth.
Analysts anticipate substantial earnings growth of 200% in the next quarter and 63.2% in FY 2023 for SHOP.
The consensus rating for SHOP is “Moderate Buy,” with an average price target of $68.74, indicating a potential upside of around 33%.
In conclusion, these three tech stocks present compelling opportunities for investors in the fourth quarter. Whether considering Apple’s brand strength, Microchip Technology’s semiconductor leadership, or Shopify’s global e-commerce presence, each company brings unique strengths to the table. Despite recent market volatility, their long-term growth potential makes them worth considering for investment portfolios.
Featured Image: Unsplash
Author Faith Yakubu