SHOP - Discounted Tech Stocks: Should You buy?
Recent volatility has resulted in some stocks declining sharply. Chief among those are some highly discounted tech stocks. Here’s a look at some of those stocks and whether they should be in your portfolio.
The e-commerce titan
It would be impossible to mention one or more discounted tech stocks and not mention Shopify (TSX:SHOP) (NYSE:SHOP) . The e-commerce titan has seen phenomenal growth over the past few years, matching the superb growth of its platform.
By way of example, millions of businesses run Shopify’s platform around the world. Over US$200 billion has traversed the platform across 175 countries. That growth is continuing at an impressive pace. In fact, Shopify recently surpassed Amazon in terms of online traffic.
Incredibly, Shopify is trading down over 50% year to date and 30% just in February. This handily qualifies Shopify as one of the highly discounted tech stocks. But should you buy Shopify right now?
That dip can be attributed to inflation concerns. Consumers buying fewer products through online channels will eventually take a bite from Shopify’s platform. That risk, coupled with growing volatility in the market overall, has some long-time holders taking profits.
The fact that some analysts see Shopify’s sales growth slowing by nearly a third this year as a reason to jump as well.
Fortunately, there’s a massive upside to Shopify. The company continues to invest in growth initiatives, and there’s little reason to doubt the company won’t continue to grow.
If you’re looking to hold Shopify for those long-term gains, this could be a good time to buy .
The one-time king of the smartphone
There was once a time when BlackBerry owned the smartphone market. Today, the company doesn’t sell phones anymore. Instead, BlackBerry focuses on software and security.
This isn’t the same BlackBerry that churned out millions of small-screen phones and generated billions in revenue each quarter. This new BlackBerry is smaller, leaner, focused on cybersecurity. The company is also investing heavily in autonomous vehicle development.
BlackBerry’s QNX platform stands to be a key driver of that market (pun intended). Unfortunately, that initiative remains several years out, which can be worrying for long-term investors looking for something sooner.
The company has also struggled to attain profitability over the past decade. That’s no doubt a key factor in the stock’s slide into discounted tech stocks territory. BlackBerry is currently down 28% year to date and a whopping 39% over the trailing six months.
Unfortunately, unlike Shopify, BlackBerry has no (profitable) platform to fall back on, and its growing reliance on cybersecurity revenue will help but not save it from further losses.
In my opinion, BlackBerry is one stock best left to watch from the sidelines.
The IoT heavyweight
Sierra Wireless (TSX:SW) (NASDAQ:SWIR) is one of the discounted tech stocks that long-time investors should recall. Sierra is frequently mentioned as one of the darling IoT stocks, with massive growth potential.
For those unfamiliar with Sierra, the company manufacturers the hardware and software necessary for IoT devices to connect to the cloud and with each other. Demand for 4G and 5G device connectivity has the stock witnessing a boom in recent months.
In fact, over the trailing two-year period, the stock has surged nearly 130%. That’s not all! That growth is still accelerating. In the past month, the stock has soared over 30%. A primary driver behind that recent bump is the announcement of Sierra’s first profitable (non-GAAP) quarter in over two years.
So, why is Sierra on a list of discounted tech stocks?
Remember that increasing demand for chips that are in everything from electronics to automobiles? Those are the types of radio chips that Sierra manufactures. Sierra recently expanded its manufacturing capacity in Mexico as well as bolstered production elsewhere. In total, the company boasts three factories working full time to meet that demand.
That demand could lead to Sierra seeing revenue rise a further 20% by the end of the year. That factor alone makes this, along with Shopify, a discounted stock to own.
The post Discounted Tech Stocks: Should You buy? appeared first on The Motley Fool Canada .
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Demetris Afxentiou has no position in any of the stocks mentioned. The Motley Fool owns and recommends Shopify. The Motley Fool recommends Amazon.
2022