Summary List Placement
With the Nasdaq coming off of its all-time highs after three days of violent sell-offs, investors are faced with a reckoning over where to put their cash to work as they ride the market’s next leg up.
Even after the recent volatility, technology stocks have outperformed the S&P 500 year-to-date by almost 22 percentage points, noted Sameer Samana, a senior global market strategist at Wells Fargo Investment Institute, on a Wednesday media call.
For investors who still love technology but balk at the frothy valuations commanded by some of the big names, Stifel has asked its equity research analysts to unearth stocks impacted by the COVID-19 pandemic but poised to grow as the economy recovers.
The 16 tech stocks, which are handpicked from the internet, media, and telecom and technology sectors, are considered either “undervalued” or “poised for growth” judging by the degree to which their valuations are reflected in current share prices, according to Stifel.
“These are names that may also benefit from easy comps in 2021, and/or an acceleration in growth due to the potential unleashing of pent up demand over the next 6-12 months,” Stifel said in a Tuesday research note.
To arrive at their target prices for these stocks, the analysts used a discounted cash flow approach to estimate the value of the companies’ future cash flows. They also accounted for macroeconomic risks and idiosyncratic risks that could impede the companies’ growth trajectories.
The stocks are listed below.
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Price Target: $282.73
Comment: “During the most challenging quarter for advertising budgets in over a decade, Facebook’s double-digit y/y growth in 2Q underscored the strength and durability of the company’s advertising engine, which is primarily driven by SMBs rather than large brands,” said analyst John Egbert. “Although lingering privacy and ad market headwinds could modestly impact growth in 3Q / 4Q, we believe easing comps and Facebook’s new tools for SMBs (like Shops and Checkout functionality, which rolled out broadly in August) position the company to return to 20%-plus y/y advertising growth in FY 2021.”
Comment: “We continue to see a long runway for advertising growth ahead of Snap, with potential upside from emerging products like Minis, Maps, and Games,” said Egbert. “Snap is also well-positioned to reach adj. EBITDA breakeven in FY 2021, which could further broaden its investor appeal.”
3. The RealReal
Price Target: $15.26
Comment: “With shelter-in-place orders lifted and capacity constraints resolved, we see a clear path back to positive GMV growth supported by the successful transition to virtual consignment, the reopening of the company’s stores, and the ongoing return to normalcy in several of The RealReal’s key markets,” said analyst Scott Devitt.
“As supply headwinds continue to subside in the coming quarters, we believe the company is well positioned to return to pre-COVID growth rates in 2021.”
Price Target: $233.88
Comment: “Despite Autodesk’s more cyclically-exposed customer-base, …read more
Source:: Business Insider