Due to the COVID-19 outbreak, most of the global businesses got affected. However, the dip in the stock price has created an opportunity to invest. The best tech stocks to invest after COVID-19 include giant technology companies like Microsoft, Amazon, Alibaba, etc.
21 April, 2020, | AtoZ Markets – The COVID-19 outbreak, the novel coronavirus outbreak which originated in China but has gone global. Until today, it has infected over 2.4 million people across the globe, killed nearly 165,000, kept billions of people in their homes, brought the global economy to a screeching halt, and caused most of the worldwide stock markets to fall off a cliff.
Quarantine and Social distancing have created a massive problem for business activities all over the world. All gross domestic product estimates until this point have become useless. The forecast has gone from growth to recession in the blink of an eye. In the meantime, some tech stocks have shown some relative resilience, but still, no business will avoid suffering significant losses this year.
For investing in the COVID-19, some tech industries are the potential for future price growth. Most of the retail investors may join the price rally.
Best Tech Stocks to Invest after COVID-19
Now countries that are accelerating COVID-19 testing, infection numbers are ballooning. Hopefully, death rates will slow down for a weary-eyed society. The medical community is also making significant headway in developing a COVID-19 vaccine and therapeutics to treat the disease.
Based on business activities, there are a few opportunities to consider in the market, such as:
- Amazon Stock
- Apple Stock
- AMD Stock
- Microsoft Stock
- Alibaba Stock
Let us have a look at these:
#1 Amazon Stock
Due to the fear of coronavirus, Amazon stock has fallen in February and March. However, the overall outlook seems well in the Amazon kingdom.
Amazon passed a substantial fourth-quarter number that smashed revenue and profit anticipations with an excellent guide. The e-commerce giant continues to move towards online shopping, and the cloud-based business to dominate the enterprise cloud infrastructure industry. Moreover, the ad business has shown tremendous upside momentum. Revenues and profit margins are running higher at an impressive pace, and there is no sign of slowing of the momentum.
What has changed for the coronavirus outbreak?
Amazon announced that its fourth-quarter sales of 2019 were up 21% to $87.4 billion. The operating cash flow was increased by 25% to $38.5 billion for the trailing twelve months, compared with $30.7 billion for the previous twelve months ended December 31, 2018. Moreover, the free cash flow was increased by $25.8 billion for the twelve months, compared with $19.4 billion for the trailing twelve months ended December 31, 2018.
The net sales also increased by 21% to $87.4 billion in the fourth quarter, compared with $72.4 billion in fourth-quarter 2018. Operating income increased to $3.9 billion in the fourth quarter, compared with operating revenue of $3.8 billion in fourth-quarter 2018. Net income increased to $3.3 billion in the fourth quarter, or $6.47 per diluted share, compared with net income of $3.0 billion, or $6.04 per diluted share, in fourth quarter 2018.
In the second quarter, the business might get some hit. On its cloud migration, consumer shops may decrease with less enterprise dependence. Moreover, merchant advertising might drop during the period. However, all of those impacts may remain short-lived.
Therefore, any positive news regarding the outbreak of COVID-19, decreasing the effect and cure for the disease, would eliminate the risk for Amazon. Thus, Amazon is likely to rebound as soon as the virus outbreak ends.
Overall, in the big picture, long-term winners like Amazon stock.
#2 Apple Stock
Apple has been walloped from several angles due to the coronavirus outbreak.
At first, China got isolated. Therefore, Apple had to close all its activities in China. Moreover, suppliers and hardware producers of Apple were shut down, too. Consequently, it has created a huge demand and supply divergence for Apple.
Later on, the virus has gone global. Therefore, shutdowns and isolation have started to happen everywhere. Across the globe, Apple closed its stores, and its supply chain got disrupted.
Overall, the coronavirus outbreak brought significant issues for Apple. However, all of these are temporary issues.
Around China, the spread of the virus was dismissed, and Wuhan province opened for regular activity. Therefore, Apple re-opened all of its stores. Most of the supply chain has come back in action, as well.
The current return of capital employed of Apple Inc. is 30.10 where the return on invested capital has increased by 26.90%. Moreover, its RoE is 55.92. All these releases are indicating that Apple Inc. is doing a better use of its money.
If we look at the capital structure, the company has generated a Debt Vs Equity of 119.40. Its Total Debt Vs Total Asset is at 31.92 and the Long-Term Debt to Equity is at 17.69. Overall, based on financial data Apple is very strong and this strength might rebound after the effect of COVID- 19.
Apple may re-open its stores and will start its activities around the world. Overall, it is an excellent opportunity for investors to catch the dip that will start to fire on all cylinders again ahead of the 5G iPhone launch.
#3 AMD Stock
AMD stock has plunged due to the coronavirus outbreak that may dampen global chip demand and occur supply chain disruptions in Asia.
Demand could be dampened so long as the outbreak sticks around. The base case is for the outbreak to mainly die down in the next 2 to 3 months. While it does, chip demand will come roaring again, with extra energy than before, due to the fact trade tensions have de-escalated, and there is excess liquidity now than there was in 2019.
Besides, China is already beginning to re-open factories. The higher the outbreak dies down globally, the more significant supply chains throughout the globe will get returned to working at full capability.
4Q 2019 revenue of AMD has come at $2.13 billion, which is up by 18% from the previous quarter. This gain is achieved by a 45% gross margin for Q4 2019, which is AMD’s highest on record. Moreover, the operating income for Q4 was staggering at 1143% from $28 million a year ago to $348 million; therefore, net income was also up by 347% to $170 million. As a result, the EPS came at $0.15, which is up by 275% from a year ago.
Consequently, while the supply/demand state in AMD’s core markets is bothered these days, it gained to be anxious for much longer. Maybe some more months. So, when you see AMD stock down 30% on problems that will only last a few months, that seems like a tremendous long-term investing possibility.
#4 Microsoft Stock
Cloud technology giant Microsoft has tumbled during the last few weeks on worries that the unexpectedly spreading outbreak of coronavirus will kill demand for the organization’s cloud computing products.
However, will that indeed occur?
For a time, sure. Nevertheless, such pain could be temporary. Furthermore, as soon as the virus passes through, businesses will hold on their company cloud migrations, and call for Microsoft’s suite of cloud computing equipment will re-boost up.
Big photo, then, perhaps Microsoft’s variety got barely dinged within the first quarter. There will likely also be some harm in the 2d quarter. However, in the third and fourth quarters, the numbers could be excellent (as they typically are).
According to the financial statement for Q4 of 2019, Microsoft’s revenue was $36.9 billion that was increased by 14% from the previous year. Moreover, its revenue in the business procedure and productivity was increased by 17% to $11.8 billion. The services revenue was the main key driver behind this, which was increased by 10%. In terms of revenue, Microsoft made a massive gain compared to the sector average.
Based on the income statement, Microsoft spent almost $4,070 million in R&D expenditures in Q4, which is almost 50% of overall R&D expenditure in 2019. The reason behind the expenditure is that Microsoft is focusing to deliver hundreds of products, enhancements of services. Therefore, the impact of the R&D is still pending and investors might get the benefit after the COVID-19 outbreak.
From this angle, any near term weakness in Microsoft stock is a golden investing possibility into a company which, way to cloud computing tailwinds, is ready to be a winner for the following several years.
Alibaba stock has held incredibly well these days. That is because China suffered from COVID-19 first, and the results hit BABA stock approximately a month earlier than MSFT and CRM. Investor belief is now that China is over the hardest part of this test. Therefore, its shares are behaving a bit higher. Only time will inform, however, for now, anticipate that Chinese tech stocks are ready to tear. In the meantime, Alibaba co-founder Jack Ma is making humanitarian headlines by supporting the fight against the virus.
The Q4 of 2019 revenue was US$23,192 million, which is an increase of 38% year-over-year. The operating income was US$5,682 million, which is an increase of 48% year-over-year. Alibaba is still strong on cash management with the free cash flow at US$11,244 million.
Overall, Alibaba is one of the best tech stocks to invest that can attract investors since it is far from proving resilient in the hardest of times. Just like the different stocks, its control has also earned the gain of the doubt.
The above- mentioned stocks are the best tech stocks to invest after COVID-19. It has been moving to higher-lows for years, so the trend remains intact while all other major market index trends have broken. Moreover, it is now falling into the support zone dating back to 2017. More often than not, these provide a strong base for a recovery rally.
However, caution is of the essence in any of these three tech stocks. It is not a good idea to take an entire position all at once for as long as we do not know precisely when and from what level sentiment will improve.
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