4 Buy the Dip Tech Stocks

NASDAQ: AAPL | Apple Inc. News, Ratings, and Charts

AAPL – After an unprecedented rally over the past year, technology stocks are finally experiencing a correction. So, this may be an opportune time to buy fundamentally sound stocks like Apple (AAPL), Microsoft (MSFT), Facebook (FB), and Adobe (ADBE). Read on.

The iShares U.S. Technology ETF’s (IYW) 58.7% returns over the past year evidences  the solid performance of technology stocks. Many investors have been waiting to buy solid tech stocks when they witness even a modest correction following their skyrocketing rally over the past year. And it appears that the time is now ripe because many high-performing technology stocks have retreated lately on fears of an overall market pullback in the absence of a stronger economic recovery so far.

The technology sector’s bull run is likely not yet over because the world continues to shift to a digital economy. The urgency for digital transformation was triggered by the spread of the COVID-19 pandemic, but the trends created by lockdown conditions are expected to continue even in the post-pandemic world.

Global technology behemoths like Apple, Inc. (AAPL), Microsoft Corporation (MSFT), Facebook, Inc. (FB), and Adobe, Inc. (ADBE) have exceptionally strong business models. So, buying the dip in these stocks could be rewarding.

Apple, Inc. (AAPL)

In addition to the iPhone, Mac, and iPad, AAPL also offers related software, accessories, networking applications, and third-party digital content. The company has global operations. AAPL has gained 87% over the past year to close Friday’s trading session at $127.79. However, the stock is down 4.7% over the past month.

AAPL  recently launched Apple Fitness+, which is a health and fitness platform built around the Apple Watch. The company has also launched  Airpods Max, which is an over-the-ear style headphone.

For the quarter ended December 26, 2020, the company saw an increase in revenue of 21% compared to the same period last year. Its EPS was up 35% during the same period. Its international sales represented  65% of the company’s total revenue. The company also saw record cash flow of $38.8 billion.

AAPL is expected to see a revenue growth of 31.9% for the quarter ended March 31, 2021 and 21.5% in 2021. Its  EPS is estimated to grow 35.7% in 2021 and at a rate of 14.7% per annum over the next five years.

AAPL’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

It has a B grade  for both Sentiment and Quality. In the B-rated Technology – Hardware industry, it is ranked #19 of 50 stocks.

In total, we rate AAPL on eight different levels. Beyond what we’ve stated above we have also given AAPL grades for Stability, Momentum, Value, and Growth. Get all the AAPL ratings here.

Microsoft Corporation (MSFT)

MSFT is most famous for its Windows operating system and Office suite of software products. In addition,  the company  offers cloud computing services through Microsoft Azure. MSFT has returned 46.3% over the past year, but it declined 1.1% over the past month to close yesterday’s trading session at $236.94.

MSFT recently partnered with Amadeus to leverage cloud technology to  provide better travel experiences. The company’s Azure Front Door platform now has enhanced secure cloud CDN for better threat protection.

For the quarter ended December 31, 2020, the company increased its revenue 17% compared to the same period last year. Its  operating income increased 29% during the same period. Its  net income increased 33% year-over-year. Further, its diluted EPS grew 34% during the same period.

MSFT’s revenue is estimated to increase 17.2% for the quarter ended March 31, 2021 and 14.8% in 2021. Its  EPS is expected to rise 28.5% in 2021 and 16.7% per annum over the next five years.

The POWR Ratings are also high on MSFT. It  has an Overall Rating of A, which translates to a Strong Buy. MSFT has an A grade  for Sentiment and B for Stability, Momentum, and Quality. In the Software – Application industry, it is ranked #12 of 110 stocks.

Click here to see the additional POWR Ratings for MSFT (Growth and Value).

Facebook, Inc. (FB)

FB owns and runs the social media platforms Facebook, Instagram, and WhatsApp. The company is also involved in virtual reality through its Oculus VR subsidiary. FB’s stock has returned 37.7% over the past year and its last closing price was $264.91. The stock lost 7.6% over the past three months.

FB is working on releasing smart glasses later this year. These smart glasses may feature facial recognition technology. FB has reopened its news platform in Australia and has signed payment deals with three news publishers.

FB saw a 33% increase in revenue year-over-year for the quarter ended December 31, 2020. Its  daily active users increased 11% during the same period. Family daily active people grew 15% year-over-year. And its monthly active users grew 12% during the same period.

FB is expected to see a revenue growth of 32.5% for the quarter ended March 31, 2021 and 24.9% in 2021. Its  EPS is estimated to grow 12.3% in 2021 and 21.5% per annum over the next five years.

FB’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary ratings system. FB has an A  grade for Quality and Sentiment and a B grade for Momentum. In the Internet industry, it is ranked #3 of 68 stocks.

Beyond what we stated above we have also  given FB’s grades for Growth, Value, and Stability. Get all the FB ratings here.

Adobe, Inc. (ADBE)

ADBE provides a range of software products including Photoshop, Acrobat, and Lightroom. The company has worldwide operations. ADBE’s stock has gained 36.1% over the past year but lost 6.1% year-to-date to close the last trading session at $469.57.

ADBE recently completed the acquisition of Workfront, a leading work management platform. The company has also partnered with C3.ai and Microsoft to reinvent customer relationship management tools using artificial intelligence.

For the quarter ended November 27, 2020, ADBE  saw a 14%  increase in revenue year-over-year. The company’s Digital Experience subscription revenue grew 14% during the same period. Its cash flow from operations hit  a record high  $1.78 billion. The company repurchased 1.6 million shares during the quarter.

ADBE is expected to see a revenue growth of 21.6% for the quarter ended February 28, 2021 and 18.2% in 2021. Its EPS is estimated to grow 11.5% in 2021 and 16.7% per annum over the next five years.

It’s no surprise that ADBE has an overall rating of B, which equates to Buy in our POWR Ratings system. ADBE has an A  grade for Quality and B for Momentum, Stability, and Sentiment. In the Software – Application industry, it is ranked #20 of 110 stocks.

Click here to see the additional POWR Ratings for ADBE.

The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

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AAPL shares were trading at $126.25 per share on Tuesday afternoon, down $1.54 (-1.21%). Year-to-date, AAPL has declined -4.71%, versus a 4.19% rise in the benchmark S&P 500 index during the same period.


About the Author: Aaryaman Aashind


Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
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MSFTGet RatingGet RatingGet Rating
FBGet RatingGet RatingGet Rating
ADBEGet RatingGet RatingGet Rating

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