Having dry powder is always the best ammunition when the market is in a free fall While the 2022 massacre could still have a way to go, now is the time for savvy investors to start looking at the stocks they would like to add at a substantial discount.
The reasons for the sell-off this year are plentiful: massive inflation, hawkish Federal Reserve policy, a bitter war in Ukraine, supply chain issues, the COVID-19 lockdowns in China and a host of additional issues. None of these is going away any time soon, and they will keep the pressure on stock prices. Many across Wall Street feel that the actual bottom for the venerable S&P 500 could be as low as 3,700. That is another 7% or so downside from Monday’s close at 3,991.
We screened our 24/7 Wall St. technology sector universe looking for quality companies that have been absolutely crushed and found five that investors with a higher degree of risk tolerance may want to start buying partial positions in.
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Broadcom
The company reported solid first-quarter earnings and is a top pick across Wall Street for dividend growth. Broadcom Inc. (NASDAQ: AVGO | AVGO Price Prediction) has an extensive semiconductor product portfolio that addresses applications within the wired infrastructure, wireless communications, enterprise storage and industrial end markets.
Applications for Broadcom’s products in its end markets include data center networking, home connectivity, broadband access, telecommunications equipment, smartphones and base stations, servers and storage, factory automation, power generation and alternative energy systems and displays.
The BofA analysts and many on Wall Street are very positive on the company’s massive $10 billion share repurchase authorization, which represents about 4.2% of the company’s market cap.
Broadcom stock investors receive a 2.91% dividend. The BofA Securities price target is $780, while the consensus target is lower at $677.67. The stock traded at $579.00 early Tuesday.
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HP
Legendary investor Warren Buffett stunned Wall Street last month when Berkshire Hathaway reported a purchase of 121 million shares of the venerable tech giant. HP Inc. (NYSE: HPQ) provides personal computing and other access devices, imaging and printing products and related technologies, solutions and services in the United States and internationally.
HP’s Personal Systems segment offers commercial and consumer desktop and notebook personal computers, workstations, thin clients, commercial mobility devices, retail point-of-sale systems, displays and peripherals, software, support and services.
The Printing segment provides consumer and commercial printer hardware, supplies, solutions and services, while the Corporate Investments segment is involved in the HP Labs and business incubation, and investment projects. It serves individual consumers, small- and medium-sized businesses, and large enterprises, including customers in the government, health and education sectors.
Investors receive a 2.70% dividend. Evercore ISI has a Buy rating and $42 target price on HP stock. The consensus target is $37.27, and shares traded at $37.70 Monday morning.
Juniper Networks
This is another familiar name that could offer among the best total return potential. Juniper Networks Inc. (NYSE: JNPR) designs, develops and sells network products and services worldwide. The company offers various routing products, such as ACX series universal access routers to deploy new high-bandwidth services; MX series Ethernet routers that function as a universal edge platform; PTX series packet transport routers; and NorthStar controllers.
Juniper Networks also provides switching products, including EX series Ethernet switches to address the access, aggregation and core layer switching requirements of micro branch, branch office, and campus environments; QFX series of core, spine and top-of-rack data center switches; and Juniper access points, which provide wireless access and performance.
In addition, the company offers security products including SRX series services gateways for the data center; Branch SRX family provides an integrated firewall and next-generation firewall; virtual firewall that delivers various features of physical firewalls; and advanced malware protection, a cloud-based service and Juniper ATP.
Investors receive a 2.74% dividend. The BofA Securities Buy rating comes with a $40 price target. The consensus target on Juniper Networks stock is $27.53. The shares recently traded at $31.00.
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Microsoft
This is a conservative way for investors to participate in the massive cloud growth, and the company also posted stellar first-quarter results. Microsoft Inc. (NASDAQ: MSFT) manufactures, licenses and supports a wide range of software products. The company has transformed its business model from a component-driven model (personal computer, server) to one driven by the need for cloud capacity.
Many Wall Street analysts agree that Microsoft has become a clear number two in the public or hyper-scale cloud infrastructure market with Azure, which is the company’s cloud computing platform offerings, and which continues growing at triple-digit levels. Some have flagged Azure as the biggest rival to Amazon’s AWS service.
Some analysts maintain that Microsoft is discounting Azure for large enterprises, so that Azure may be cheaper than AWS for larger users. The cloud was big in the 2021 earnings reports so far and will remain a growing part of the software giant’s earnings profile.
The $365 Goldman Sachs price target on the Buy-rated shares is well above the $329.18 consensus target. Microsoft stock traded at $270.80 a share on Tuesday.
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Seagate
This disk drive giant is hitting on all cylinders and looks reasonable at current trading levels. Seagate Technology Holdings PLC (NASDAQ: STX) provides data storage technology and solutions in Singapore, the United States, the Netherlands and elsewhere.
The company offers hard disk and solid state drives, including serial advanced technology attachment, serial attached SCSI and non-volatile memory express products; solid state hybrid drives; and storage subsystems. Its products are used in enterprise servers and storage systems and edge compute and non-compute applications.
Seagate also provides an enterprise data solutions portfolio, comprising storage subsystems and mass capacity optimized private cloud storage solutions for enterprises, cloud service providers and scale-out storage servers and original equipment manufacturers. In addition, it offers external storage solutions under the Seagate Backup Plus and Expansion product lines, as well as under the LaCie and Maxtor brands in capacities up to 16 terabytes.
Shareholders receive a 3.48% dividend. The Seagate Technology price target at BofA Securities is $125. That compares with a $102.90 consensus target and a recent share price of $80.85.
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To be clear, the selling may not be over, and it makes sense to scale buy these five top companies slowly. Buying partial positions now will get you in the game but leave you the ability to add more shares if the selling resumes, which it is likely it will. None of the current issues causing the selling is going away anytime soon, but by later this year it is very possible that they may have calmed down some. In the meantime, the solid dividends will pay you to wait.
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