Stocks and other assets plunged in the post-Thanksgiving trading session as the World Health Organization (WHO) announced a heavily mutated strain of the COVID-19 virus that is a matter of concern. The WHO said, “Preliminary evidence suggests an increased risk of reinfection with this variant, as compared to other VOCs.” The WHO has designated B.1.1.529 as a VOC, named Omicron.

Investors were already treading with caution due to the spike in COVID-19 infections in Europe. And the emergence of the new strain of COVID-19 has left them further spooked. Global markets plunged as initial reports suggested that this variant could be more transmissible than the Delta variant. Tech stocks had driven the market indexes higher in 2020 due to an unexpected surge in digitization and work-from-home arrangements. The tech industry is further expected to grow in the foreseeable future due to the increasing applications of tech solutions across several sectors, and the continuing hybrid working trend. According to Forrester’s report, the U.S. tech spending is expected to expand by 7.4% in 2021 and 6.7% in 2022.

Given this backdrop, we think it could be wise to scoop up quality large-cap tech stocks Microsoft Corporation (MSFT), Alphabet Inc. (GOOGL), and Broadcom Inc. (AVGO). They are currently trading below their respective 52-week highs. However, they have immense growth potential and could offer stable returns even if the market remains volatile.

Microsoft Corporation (MSFT)

Famous technology company MSFT has a market capitalization of $2.47 trillion. The Redmond, Wash.-based company develops and supports a range of software products, services, devices, and solutions. The company operates in the Productivity and Business Processes; Intelligent Cloud; and Personal Computing segments.

On November 17, 2021, MSFT announced its collaboration with Bayer AG (BAYRY) to develop digital tools and data science capabilities for agricultural businesses and associated industries. The collaboration is expected to provide internet-based products to help farmers and initiatives related to agriculture become more efficient and sustainable.

For the fiscal first quarter, ended September 30, 2021, MSFT’s revenues increased 22% year-over-year to $45.31 billion. The company’s non-GAAP operating income increased 27% year-over-year to $20.23 billion, while its non-GAAP net income increased 24% year-over-year to $17.21 billion. Also, its non-GAAP EPS came in at $2.27, up 25% year-over-year.

Analysts expect MSFT’s EPS for its fiscal year 2023 to increase 14.5% year-over-year to $10.53. Its revenue for its fiscal year 2022 is expected to increase 17.1% year-over-year to $196.75 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past six months, the stock has gained 31.1% in price to close Friday’s trading session at $329.68. It is currently trading 5.7% below its 52-week high of $349.67, which it hit on November 22, 2021.

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

It has a B grade for Stability, Sentiment, and Quality. It is ranked #20 out of the 168 stocks in the Software – Application industry. Click here to check the ratings of MSFT for Growth, Value, and Momentum.

Click here to check out our Software Industry Report for 2021

Alphabet Inc. (GOOGL)

With a market capitalization of $1.89 trillion, GOOGL. In Mountain View, Calif., is the holding company for Google and other bets. The Google segments include Google Services and Google Cloud. Its products and platforms include Android, Chrome, Gmail, Google Drive, Google Maps, Search, and Youtube.

On November 17, 2021, GOOGL’s Waymo announced that it is expanding its partnership with United Parcel Service Inc. (UPS) to move freight using autonomous trucks between two of its Texas facilities. As driver shortages become acute, autonomous trucks are expected to come to the fore, especially during the holiday season.

GOOGL’s revenue for the fiscal third quarter, ended September 30, 2021, increased 41% year-over-year to $65.11 billion. The company’s operating income increased 87.5% year-over-year to $21.03 billion, while its net income increased 68.3% to $18.93 billion. Also, its EPS increased 70.6% year-over-year to $27.99.

For fiscal year 2021, GOOGL’s EPS and revenue are expected to increase 85.4% and 39.2%, respectively, year-over-year to $108.69 and $254.11 billion. It surpassed consensus EPS estimates in each of the trailing four quarters. The stock has gained 62.3% year-to-date to close Friday’s trading session at $2,843.66. It is currently trading 5.8% below its 52-week high of $3,019.33, which it hit on November 19, 2021.

GOOGL’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.

It has an A grade for Sentiment, and a B grade for Quality. It is ranked #3 out of 77 stocks in the Internet industry. To check the other ratings of GOOGL (Growth, Value, Momentum, and Stability), click here.

Broadcom Inc. (AVGO)

AVGO designs, develops, and supplies a range of semiconductor and infrastructure software solutions. The San Jose, Calif-based concern operates through the semiconductor solutions and infrastructure software segments. Also, it has a market capitalization of $224.98 billion.

On November 8, 2021, AVGO announced its 100G/lane PAM-4 DSP PHY families with integrated trans-impedance amplifier and laser driver—the Jesko BCM8741x, and Gemara BCM8781x optimized for 400G DR4/FR4, and 800G DR8/2xFR4 module applications, respectively. The high-performance, power-efficient chips are expected to serve the industry’s multi-generational needs in the future.

For its fiscal third quarter, ended August 1, 2021, AVGO’s revenues increased 16% year-over-year to $6.78 billion. The company’s adjusted EBITDA increased 23.3% year-over-year to $4.12 billion, while its non-GAAP net income increased 28.3% year-over-year to $3.12 billion. Its non-GAAP EPS increased 28.9% year-over-year to $6.96.

Analysts expect AVGO’s EPS and revenues to increase 26.1% and 14.8%, respectively, year-over-year to $27.94 and $27.41 billion for fiscal 2021. It has surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past three months, the stock has gained 12.5% in price to close Friday’s trading session at $546.59. It is currently trading 5.3% below its 52-week high of $577.21, which it hit on November 19, 2021.

AVGO’s strong fundamentals are reflected in its POWR Ratings. It has an overall A rating, which equates to a Strong Buy in our proprietary rating system. It has a B grade for Growth, Momentum, Stability, Sentiment, and Quality.

In the A-rated Semiconductor & Wireless Chip industry, it is ranked #1 out of 102 stocks. Click here to see AVGO’s rating for Value as well.

Recently the Reitmeister Total Return Portfolio (RTR) closed a winning trade in AVGO for a 25% gain. Learn more about the RTR service here.

Click here to checkout our Semiconductor Industry Report for 2021

MSFT shares were trading at $338.04 per share on Monday afternoon, up $8.36 (+2.54%). Year-to-date, MSFT has gained 53.26%, versus a 25.61% rise in the benchmark S&P 500 index during the same period.

About the Author: Dipanjan Banchur

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...

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