We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Time for Long-Term Investors to Buy these Beaten-Down Tech Stocks?
Read MoreHide Full Article
The Nasdaq is up 15% through the middle of February. Wall Street’s risk appetite grows as investors price in cooling inflation and a near-term earnings bottom. Tesla, Nvidia, Meta Platforms, and others have all soared over 50% to start 2023.
The tech-heavy index is now comfortably back above both its 50-day and 200-day moving averages (and its 50-week and 200-week). Plus, the Nasdaq still trades about 25% below its peaks and technology will without a doubt keep on dominating our lives and the economy.
Still, some investors might be nervous to chase these stocks, and perhaps rightfully so, as their valuations get stretched further. Thankfully, many strong technology stocks have underperformed the Nasdaq and the S&P 500 YTD and aren’t yet overheated.
The two stocks we dive into today operate rather unique businesses within the wider technology ecosystem that should help them continue to expand for years to come.
Both stocks are also financially sound and sit at somewhat attractive entry points that should help investors with long-term horizons feel comfortable buying even if the market and tech stocks face near-term selling pressure after the huge rally.
Intuit Inc. (INTU - Free Report) and Garmin Ltd. (GRMN - Free Report) both report their earnings results during the week of February 20.
Let’s dive into why investors might want to buy these stocks, or at least put them on their watchlists to scoop up depending on how their reports and guidance shake out.
Image Source: Zacks Investment Research
Intuit Inc. ((INTU - Free Report) ) – (Reports Q2 FY23 Results on Feb. 23)
Intuit is the software titan behind TurboTax, as well as various accounting software, and small business money management tools. Intuit spent the last several years deepening its roster to make it more attractive to a wider swath of consumers and business clients. INTU bought Credit Karma in December 2020 and Mailchimp in November 2021.
Alongside TurboTax, accounting, and other financial services, Inuit now provides email marketing, digital-ad services, customer-relationship-management tools, credit scores, and other personal financial services. Intuit, which currently boasts over 100 customers worldwide, grew its revenue between 11% and 32% during the past seven years and posted only two tiny YoY sales dips over the last 25 years.
Image Source: Zacks Investment Research
Zacks estimates call for Intuit’s sales to climb another 11% in both FY23 and FY24 to help lift its adjusted EPS by 15% and 13%, respectively. Intuit’s consistent double-digit growth highlights how essential its software is and everyone knows taxes, accounting, and marketing aren’t going anywhere no matter what the future holds.
INTU lands a Zacks Rank #3 (Hold) and its earnings outlook has held up rather well. It also boasts a strong history of earnings beats.
Intuit has easily doubled the Zacks tech sector over the last 10 years, up 515% vs. 210%. Intuit’s outperformance is even more pronounced during the last 20 years, blowing away Microsoft and others. Intuit got hit hard alongside all things growth, with it trading 40% from its peaks.
INTU is up around 6% YTD to help it climb above its 50-day and 200-day. INTU is also sitting right at neutral RSI levels even as the Teslas of the world reach overbought territory. Intuit trades at 43.1X forward earnings. This is hardly cheap, but it matches its own eight-year median and marks a 50% discount to its own highs.
Image Source: Zacks Investment Research
The software power has a strong balance sheet, pays a dividend, which it raised by 15% last summer, and it had $3 billion remaining on its share repurchase program at the end of last quarter.And Wall Street remains extremely bullish on the stock, with 16 of the 18 brokerage recommendations Zacks has at “Strong Buys.”
Garmin is likely best known for its consumer-centric GPS systems, having been at the cutting-edge of the modern consumer-focused GPS movement and market for years. The firm’s in-car navigation systems, fitness wearables, smartwatches, and more are staples in our connected world. Garmin also makes far more high-tech offerings that go way beyond the everyday consumer.
Garmin sells high-end fish finders, advanced radars and systems for airplanes and boats. GRMN even has deals to supply science fiction-sounding tech to flying taxis companies.
The Switzerland-based firm’s diverse and compelling offerings helped GRMN post six-straight years of revenue growth, with double-digit expansion in the trailing three years. Fiscal 2021 was Garmin’s best showing in over a decade, posting 19% revenue expansion.
Image Source: Zacks Investment Research
The boom times couldn’t go on forever and the firm is taking its lumps as its sales “continue to normalize following two years of pandemic-driven growth.” Garmin’s adjusted 2022 earnings are projected to slip 15% YoY as it comes up against a very difficult to compete against stretch on 3% lower revenue that would see it hit $4.85 billion (vs. $3.35 billion in FY18).
Garmin is then projected to bounce back and post 4% higher sales in FY23 to top FY21 and 6% stronger earnings. Garmin’s earnings revisions have held up well recently to help it land a Zacks Rank #2 (Buy) at the moment. GRMN has topped our EPS estimates for nearly five years running outside of one small miss.
GMRN boasts a strong balance sheet with $7.62 billion in assets, including $1.5 billion in cash and equivalents and only $1.75 billion in liabilities.
Image Source: Zacks Investment Research
GRMN shares have climbed 180% in the past 10 years to slightly outpace the S&P 500. Despite the long-term strength, Garmin currently trades 45% under its all-time highs at around $97 per share. Garmin has popped 6% YTD and it recently found support at its 50-day moving average.
The selling, mixed with Garmin’s stable outlook has it trading below its 10-year median at 18.4X forward earnings. Plus, Garmin’s dividend yields 3% and it trades 16% beneath its average Zacks price target.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Time for Long-Term Investors to Buy these Beaten-Down Tech Stocks?
The Nasdaq is up 15% through the middle of February. Wall Street’s risk appetite grows as investors price in cooling inflation and a near-term earnings bottom. Tesla, Nvidia, Meta Platforms, and others have all soared over 50% to start 2023.
The tech-heavy index is now comfortably back above both its 50-day and 200-day moving averages (and its 50-week and 200-week). Plus, the Nasdaq still trades about 25% below its peaks and technology will without a doubt keep on dominating our lives and the economy.
Still, some investors might be nervous to chase these stocks, and perhaps rightfully so, as their valuations get stretched further. Thankfully, many strong technology stocks have underperformed the Nasdaq and the S&P 500 YTD and aren’t yet overheated.
The two stocks we dive into today operate rather unique businesses within the wider technology ecosystem that should help them continue to expand for years to come.
Both stocks are also financially sound and sit at somewhat attractive entry points that should help investors with long-term horizons feel comfortable buying even if the market and tech stocks face near-term selling pressure after the huge rally.
Intuit Inc. (INTU - Free Report) and Garmin Ltd. (GRMN - Free Report) both report their earnings results during the week of February 20.
Let’s dive into why investors might want to buy these stocks, or at least put them on their watchlists to scoop up depending on how their reports and guidance shake out.
Image Source: Zacks Investment Research
Intuit Inc. ((INTU - Free Report) ) – (Reports Q2 FY23 Results on Feb. 23)
Intuit is the software titan behind TurboTax, as well as various accounting software, and small business money management tools. Intuit spent the last several years deepening its roster to make it more attractive to a wider swath of consumers and business clients. INTU bought Credit Karma in December 2020 and Mailchimp in November 2021.
Alongside TurboTax, accounting, and other financial services, Inuit now provides email marketing, digital-ad services, customer-relationship-management tools, credit scores, and other personal financial services. Intuit, which currently boasts over 100 customers worldwide, grew its revenue between 11% and 32% during the past seven years and posted only two tiny YoY sales dips over the last 25 years.
Image Source: Zacks Investment Research
Zacks estimates call for Intuit’s sales to climb another 11% in both FY23 and FY24 to help lift its adjusted EPS by 15% and 13%, respectively. Intuit’s consistent double-digit growth highlights how essential its software is and everyone knows taxes, accounting, and marketing aren’t going anywhere no matter what the future holds.
INTU lands a Zacks Rank #3 (Hold) and its earnings outlook has held up rather well. It also boasts a strong history of earnings beats.
Intuit has easily doubled the Zacks tech sector over the last 10 years, up 515% vs. 210%. Intuit’s outperformance is even more pronounced during the last 20 years, blowing away Microsoft and others. Intuit got hit hard alongside all things growth, with it trading 40% from its peaks.
INTU is up around 6% YTD to help it climb above its 50-day and 200-day. INTU is also sitting right at neutral RSI levels even as the Teslas of the world reach overbought territory. Intuit trades at 43.1X forward earnings. This is hardly cheap, but it matches its own eight-year median and marks a 50% discount to its own highs.
Image Source: Zacks Investment Research
The software power has a strong balance sheet, pays a dividend, which it raised by 15% last summer, and it had $3 billion remaining on its share repurchase program at the end of last quarter.And Wall Street remains extremely bullish on the stock, with 16 of the 18 brokerage recommendations Zacks has at “Strong Buys.”
Garmin Ltd. ((GRMN - Free Report) ) – (Reports Q4 FY22 Results on Feb. 22)
Garmin is likely best known for its consumer-centric GPS systems, having been at the cutting-edge of the modern consumer-focused GPS movement and market for years. The firm’s in-car navigation systems, fitness wearables, smartwatches, and more are staples in our connected world. Garmin also makes far more high-tech offerings that go way beyond the everyday consumer.
Garmin sells high-end fish finders, advanced radars and systems for airplanes and boats. GRMN even has deals to supply science fiction-sounding tech to flying taxis companies.
The Switzerland-based firm’s diverse and compelling offerings helped GRMN post six-straight years of revenue growth, with double-digit expansion in the trailing three years. Fiscal 2021 was Garmin’s best showing in over a decade, posting 19% revenue expansion.
Image Source: Zacks Investment Research
The boom times couldn’t go on forever and the firm is taking its lumps as its sales “continue to normalize following two years of pandemic-driven growth.” Garmin’s adjusted 2022 earnings are projected to slip 15% YoY as it comes up against a very difficult to compete against stretch on 3% lower revenue that would see it hit $4.85 billion (vs. $3.35 billion in FY18).
Garmin is then projected to bounce back and post 4% higher sales in FY23 to top FY21 and 6% stronger earnings. Garmin’s earnings revisions have held up well recently to help it land a Zacks Rank #2 (Buy) at the moment. GRMN has topped our EPS estimates for nearly five years running outside of one small miss.
GMRN boasts a strong balance sheet with $7.62 billion in assets, including $1.5 billion in cash and equivalents and only $1.75 billion in liabilities.
Image Source: Zacks Investment Research
GRMN shares have climbed 180% in the past 10 years to slightly outpace the S&P 500. Despite the long-term strength, Garmin currently trades 45% under its all-time highs at around $97 per share. Garmin has popped 6% YTD and it recently found support at its 50-day moving average.
The selling, mixed with Garmin’s stable outlook has it trading below its 10-year median at 18.4X forward earnings. Plus, Garmin’s dividend yields 3% and it trades 16% beneath its average Zacks price target.