Over the last 2 years we have seen massive impetus towards growth stocks, namely tech stocks. From Zoom to Nvidia to Apple many investors saw their investments grow high double digit through out the Trump years & during the pandemic . But all of that came to a halt when the Federal Reserve Bank Of the United States decided in December 2021 that it was time to raise interest rates to curb inflation. Most high growth tech stock have taken a beating in the last 2 months. Some are more than 50% off their highs of 2021. The aggressive stand that the Feds have taken with regards to multiple rate hikes in 2022 led investors to value investing rather than growth investing. Hi P/E ratio stocks are suddenly not attractive.
To top that off, the recent quarterly earnings report for many growth names like Meta (FB), Netflix, Nvidia, Paypal and Amazon were underwhelming to analyst and large investors which have led these names further downtime price chart in recent weeks. Finally, the tension between Ukraine & Russia has added fuel to the fire.
The markets are now at a place where Growth stocks are starting to look like Value stocks as growth stocks (mainly tech stocks) P/E ratios have come down significantly as the stock prices have fallen drastically amidst the monetary policy shift and increasing geo-political risk . For long term investors this is a good time to start preparing your dream list of stocks you always wanted to own but found them to be too expensive. However, we must stress that geo-political tension may weigh in further on stock prices if Russia does decide to invade Ukraine and a full fledge war erupts. If you are a long term investor you may be able to nibble at the stocks little bit at time to minimise this risk and take advantage of falling prices.
However if you are already invested and have been following our blog for sometime now, you should be holding a small cash position to take advantage of lower prices on some big tech names and average down your cost. Here are some tech & non tech names we find are at an attractive price level or close to levels we would consider adding to our portfolio.
Microsoft Corp (MSFT)|USD283.97|18th Feb Closing |Medium to Long Term Investment
MSFT has to be one of any investor's top pick right now. Despite posting better than expected revenues and earnings in their quarterly report on 25th of Jan, the stock has dipped more than 15% since beginning of 2022 due to expected interest rates hikes. It has a growth trajectory of between 20%-25% every quarter. Expect some more volatility in the coming days with political landscape being what it is right now.
Morgan Stanley (MS)|USD95.42|18th Feb Closing|Medium To Long Term Investment
We had to have at least one financial stock in the list given that interest rates are surely going to rise in 2022. Morgan Stanley is our pick and with P/E ratios of above 11 we believe is fair value for its price . Any more downward movement in the stock would be a buying opportunity. We are looking to enter into MS if it dips below 95.00. Analyst have an average price target of USD115.00 on this stock, which is an 20% upside from its current levels.
Advanced Micro Devices Inc(AMD)|USD113.83|18th Feb Closing|Medium To Long Term Investment
This chip maker posted better than expected earnings in its latest earnings call. Furthermore, it has forecasted a strong 2022 sales outlook. Although it trades at a higher P/E than most of our picks here, investors have to remember this semiconductor company has massive demand for its chips from data centres to game consoles. As demand for cloud computing, gaming, computer graphics grows, the demand for AMD chips grow as well. We will be looking to take a position in AMD at price level of around USD110.00.
American Airlines Group Inc (AAL)|USD17.87|18th Feb Closing|Medium To Long Term Investment
As travel restrictions across the borders are easing, airlines are going to be the immediate beneficiaries. AAL reported Q4 FY 2021 earnings that surpassed analysts' expectations. The company reported an adjusted loss per share that was narrower than expected. It reported a better than expected load factor of 80.4% and expects to improve in the months ahead. AAL has an average price target of USD18.67. We will be looking to buy AAL just below USD17.00 and exit around USD19.50
Palantir Technologies Inc (PLTR)| USD11.02| 18th Feb Closing| Medium To Long Term Investment
Palantir provides data analytics and a software platform for many US government agencies and military. It is now trading at a level close to its IPO price of USD10.00. It had a better than expected revenues last quarter but missed on earnings. It has a forecasted revenue growth of 27% per year. We believe it is trading 35% -40% below its fair value. Although we may see some more consolidation in the coming days. Will be watching this one closely.