Investors looking to make the best of what’s left of summer, and buy a few growth stocks before the next leg of the bull market takes off, I’ve got a warning for you. The market might not just go in your favor.
There are plenty of recession signals flashing red. And while a number of economists have pegged their hopes on a soft landing or no landing scenario taking place, it’s unclear whether this will actually transpire. Why, you ask? Well, because most times when the yield curve is this inverted for this long, it doesn’t work out that way.
That said, for those looking to take advantage of some longer-term growth trends that are becoming very prevalent in today’s market, such as the rise of artificial intelligence and the applications that will support this future, there are some options to consider.
These companies are ones I’d consider long-term plays. Thus, for those with a one or two-decade long time horizon, I’d say consider investing in these stocks for the long-haul, particularly if they dip from here.
Key Points About This Article:
- Finding tech stocks to buy in this current environment can be a difficult task, given all the recessionary indicators that are flashing red right now.
- However, these three stocks appear to be decently-valued with strong long-term growth prospects that could propel them much higher over the next 10 to 20 years.
- If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.
Adobe (ADBE)
Adobe (NASDAQ:ADBE) recently reported a strong quarter, posting $5.31 billion in revenue, which was up 10.2% year-over-year. The company exceeded expectations in revenue, RPO, and EPS, largely due to a $487 million Digital Media ARR. This figure surpassed estimates of $434 million and led the company to raise its annual guidance. Unsurprisingly, ADBE stock surged on these results, with analysts noting that the company’s record revenue driven by growth in Creative Cloud, Document Cloud, and Experience Cloud should provide meaningful upside over the long-term.
I tend to agree. Adobe has a strong track record of beating projections, and has a track record to back this up. Over the past 10 years, the company has grown its revenue at a 17.4% CAGR, while free cash flow increased by 19.7%, and adjusted net income rose 36.4% annually. Despite these impressive growth rates, the stock’s price gain is moderate, indicating a fair value relative to its business performance.
Importantly, this is also a company that’s been integration AI into its core suite of products. The company recently announced that it would be introducing generative AI into its Creative Cloud suite, enhancing tools like Photoshop and Premiere Pro with the Firefly AI engine for tasks like editing photos and videos via simple text commands. I think that while there’s always going to be room for improvement on this front, and it will take time for investors to fully realize the impact of these investments, this is a company that’s clearly moving in the right direction. As far as top-tier tech stocks are concerned, Adobe earns a buy rating from me for now.
Qualcomm (QCOM)
Qualcomm (NASDAQ:QCOM) exceeded analyst expectations for its Q3 results and Q4 guidance despite weakness seen in the company’s smartphone segment. Despite this weakness, analysts project potential revenue growth of 5% for the next fiscal year with a rebound in AI-powered devices. We’ll have to see how this goes. But I think it’s important that investors consider the company’s extended partnership with Apple (the next company on this list), which lasts until 2026. This partnership should continue to provide the cash flow stability and optionality to allow Qualcomm to seek out the best opportunity that fits its model. It’s also a dynamic that has allowed some analysts, such s those at Baird, to upgrade their rating to the stock and increase their price target. If demand is high as anticipated for the iPhone 16, and Apple doesn’t want to jump through the hoops of finding new suppliers, this is a stock that could be seriously undervalued here.
But even without Apple’s contract, Qualcomm is a company I think is worth exploring. Qualcomm’s IoT segment supports smart home devices, remote monitoring, and robotics, while its automotive division focuses on autonomous driving and digital cockpit technologies. Recently, Qualcomm has ventured into PC chips with its Snapdragon platform, offering high performance and long battery life. Despite handsets driving 63% of its Q3 fiscal 2024 revenue, IoT contributed 15%, and automotive grew to 9% with 87% year-over-year growth.
Qualcomm’s low valuation, with a price-to-earnings ratio of 21-times, sets it apart from other major chip stocks. Following a downturn due to declining smartphone sales and the end of the 5G upgrade cycle, Qualcomm’s revenue growth rebounded to 11% annually, reaching $9.4 billion in Q3. Net income rose 18% to $2.1 billion, making the stock a strong value given its growth potential, especially as 5G adoption increases.
Apple Inc. (NASDAQ:AAPL) is among the leading consumer discretionary brands globally. Anyone who hasn’t heard of Apple has likely been living under a rock. This is a company that leads in market share in most developed markets, for good reason. The quality of Apple’s products and services, as well as the value its ecosystem provides, keeps consumers coming back fro more.
Analysts project AI PC shipments will surge from 44 million in 2024 to 103 million in 2025. Despite concerns over new EU regulations, Bank of America analyst Wamsi Mohan upheld a Buy rating for Apple with a $256 price target, noting the company’s ability to adapt to regulatory changes.
I think such ratings speak to Apple’s core prospects as a way for consumers to use every-day AI. The company is among the most utilized brands on a daily basis. If Apple can integrate AI well into its offerings, it’s off and to the races for this gem. At least, that’s what many analysts think.
Over the long-term, many investors have gone wrong betting against Apple. And while I may have some reservations about the company’s valuation, I can understand its value to the consumer. As far as stocks to hold for a decade or two are concerned, this would be on that would top my list.
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