- The Nasdaq is up 23% from its June 16 low, fueling hopes of a new bull market.
- Several tech titans have made impressive recoveries in recent weeks
- Consider the strong long-term growth potential of Zoom, Snowflake and Crowdstrike
After a rough start to the year, the high-tech Nasdaq Composite is up more than 23% from mid-June lows, bolstering investor confidence that a new bull market could be in the works.
The recovery was fueled by vision that may have peaked, raising hopes that the Federal Reserve will become less aggressive on interest rate hikes.
So here are three tech stocks whose steep declines have created attractive buying opportunities because all of their respective businesses make them solid long-term investments.
Zoom video communications
- Year-to-date return: -40.6%
- Market capacity: 32.6 billion dollars
Zoom Video (NASDAQ:) stock is down 41% in 2022. After hitting an all-time high of $588.84 in October 2021, ZM, which is nearly 82% down from its all-time high, has dropped to $588.84 in October 2021. 79.03 on May 12th. Since then, stocks have rallied 38% in recent months.
In my opinion, Zoom is ready to expand its recovery as the work-from-home and hybrid environment and ongoing digital transformation continue to drive companies to use its video conferencing technology.
Zoom had 198,900 enterprise customers at the end of the first quarter, up 24% from a year earlier. More impressively, it had 2,916 customers with 12-month tracking revenue of $100,000 or more, a 46% year-over-year (yoy) increase.
According to the evaluation models of Professional InvestmentZM could have a 50% advantage over its current market value.
The next big catalyst will be Zoom’s results after the US market closes on Monday.
The consensus predicts a 9.8% year-over-year increase in revenue to $1.12 billion and a 31.6% year-over-year decline in EPS to $0.93. The video conferencing company has beat earnings forecasts in every quarter since going public in the second quarter of 2019, underscoring the strength of its business.
- Performance since the beginning of the year: -50.6%
- Market Capability: $53.1 billion
Snowflake (NYSE:) has seen its valuation plummet in recent months, with its shares down nearly 51% year-to-date amid a broad pullback by many major software companies.
SNOW, which debuted on the stock market in September 2020, hit an all-time low of $110.26 on June 14, but has since recovered about 52%. At current levels, the San Mateo, California-based cloud database provider is still around 61% off its December 2020 record $428.68.
Despite recent volatility, I expect the data warehouse specialist’s stock to rebound given the robust demand for its data management and analysis tools in today’s remote work environment.
It counts nearly half of Fortune 500 companies as customers and its customer base grew 39.5% year-over-year in the first quarter to 6,322. In addition, it had 206 customers with annual recurring revenue (RAR) of $1 million or more, nearly 100% year-over-year increase from 104 customers.
In addition, most analysts generally remain bullish on Snowflake’s stock, according to a survey. investing.com.
Snowflake is expected to post double-digit growth in the second quarter following the close on Wednesday, August 24th.
Consensus expects the cloud-based data storage and analytics provider to post a loss per share of $0.01, decreasing to $0.12 in the prior period.
Revenue is expected to rise 71.8% year-over-year to $467.6 million – its highest quarterly revenue – due to an increase in sales to large companies.
- Year-to-date return: -2.1%
- Market capacity: 46.5 billion dollars
Crowdstrike (NASDAQ:) stock has held steady in recent months, falling just 2.1% year-to-date. However, the stock dropped to $130 on May 9 and has since rallied 54%. Despite this recovery, CRWD is still around 33% off its all-time high of $298.48 in November 2021.
Investors who missed last year’s strong gains should consider buying CrowdStrike at these prices given its status as a premier cloud-based cybersecurity company. As such, I expect CrowdStrike to be a major beneficiary of any increase in cyber spending.
The security software vendor added 1,620 new net subscription customers last quarter, up 57% year-over-year to 17,945.
Of the 32 analysts covering CrowdStrike shares, the consensus recommendation is ‘beaten’ with extremely high conviction and the target price offers 18% upside potential.
CrowdStrike is expected to show explosive growth when it releases its post-close financial results on Tuesday, August 30th. The consensus predicts EPS growth of 145% year-over-year to $0.27 and revenue is expected to jump 52.8% year-over-year to a record $516.2 million.
CrowdStrike has surpassed Wall Street’s expectations for earnings and revenue in every quarter since going public in June 2019, despite a challenging macro environment.
Warning : At the time of writing, Jesse owns shares in Nasdaq QQQ ETF and CrowdStrike. The opinions discussed in this article are solely those of the author and should not be taken as investment advice.