Recent volatility has spooked individual and institutional investors alike, but once the dust settles, it is likely that money will find refuge in strong, consistent companies with businesses that can withstand near-term headwinds.
This might mean that the world’s tech leaders, which have dominated Wall Street over the past several years, are now on sale. Tech has been at the helm of our historic bull market, and it seems likely to remain that way, so long as the bull trudges along.
Of course, this year’s volatility has made some investors hesitant, with bearish traders quick to draw similarities between this latest tech rally and the infamous dot-com bubble of the late 90s and early 2000s.
However, unlike the dot-com bubble, there is real earnings and revenue growth fueling this tech rally. In fact, the average P/E ratio of our “Computer and Technology” sector currently sits at 19.5, which compares favorably to the dot-com era’s average that soared into the 100s for a few weeks.
Another interesting trend in today’s tech rally is that, rather than obsessing over the next big thing, investors seem to rewarding tried-and-true brands for their respectable growth. This means that some of the strongest tech stocks are the household names that consumers already know and love.
With that said, check out these three blue chip tech stocks to buy now:
1. Sony Corporation (SNE - Free Report)
This Japanese electronics giant has a dominant position with many key products, including audio and video equipment, televisions, displays, semiconductors, game consoles, computers and computer peripherals, and telecommunication equipment. Sony is currently sporting a Zacks Rank #2 (Buy) and looks like a promising tech stock for both the near term and in the coming years.
Even with recent selling, Sony shares are up about 12% on the year, but the stock is still reasonably valued. SNE is trading at about 11.4x earnings and has a PEG ratio of 1.1, both of which present discounts to their industry averages.
Meanwhile, management is generating $5.94 in cash per share, which should strengthen the company’s ability to invest in new technologies. Earnings growth is expected to reach nearly 38% this fiscal year, and that should be inspired by revenue growth, as marginal expansion is expected to continue on the top line going forward.
2. Intel Corporation (INTC - Free Report)
Semiconductor stocks have had a rough year as Wall Street eyes the end of the industry’s super cycle. However, many analysts have already suggested that the peak to trough pullback in today’s connected world will be relatively mild, and right there to capitalize is chip behemoth Intel.
Intel has quickly gone on the offensive to win back the market share it has lost to AMD and Nvidia in recent years, and its most recent quarter proved that things are working out. Earnings per share totaled $1.40, crushing estimates and improving more than 38% year over year.
INTC is now sporting a Zacks Rank #1 (Strong Buy), and market-wide selling has its valuation looking attractive. In fact, a Forward P/E of 10.5 and a PEG of 1.3 put Intel at its cheapest level in recent memory.
3. PayPal Holdings, Inc. (PYPL - Free Report)
Traditionally speaking, blue chips are going to have a lot more trading history than PayPal, which debuted as an individual stock just over three years ago. But PayPal had already established itself as the top dog in online payments well before its spin-off, and all the stock has done since then is build one of the most consistent and attractive charts on Wall Street.
Now, PayPal is a household name with a market cap over $99 billion. The stock currently sports a Zacks Rank #2 (Buy) and is projected to see a long-term annual earnings growth rate of nearly 18%. Plus, the stock has a PEG of 1.9, so that EPS growth is coming at a great price right now. PayPal has never missed earnings estimates since it IPO’d and has put together several impressive years.
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