After an impressive run in recent years, the S&P 500 has seen sharp declines since February highs.
However, Foolish investors embrace volatility as it often means being able to acquire shares of quality companies at reduced prices.
Here’s a handful of stocks that are catching the eye of some of Fool.co.uk’s contract writers today!
Adobe
What it does: Adobe is a software company with products that are used in the creative and digital marketing industries.
By Stephen Wright. Shares in Adobe (NASDAQ:ADBE) have fallen almost 25% over the last 12 months. And that’s enough for me to start taking an interest in it.
Huge margins, strong returns on invested capital, and an ongoing share buyback programme have historically attracted a high price-to-earnings (P/E) multiple. But that’s starting to change.
At a forward P/E ratio of 17, it’s in the kind of territory where I’m starting to take a look at it. Tech isn’t my strongest sector, but there might be enough margin of safety at these prices.
Artificial intelligence (AI) could be either a risk or an opportunity. It might power the company to new heights, or it might give the competition a boost.
I’m not quite sure which I think is the more likely outcome just yet. But I’ve added Adobe to my list of shares to take a closer look at.
Stephen Wright does not own shares in Adobe.
Alphabet
What it does: Alphabet is the parent company of internet search giant Google.
By Ben McPoland. I reckon Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) stock looks attractive after a 22% fall since early February. This leaves it trading at just 18 times forward earnings, which is cheaper than both the wider S&P 500 and ‘Magnificent Seven’ peers.
However, the US Justice Department is trying to dismantle Google’s search dominance by making it sell the Chrome browser. While antitrust lawsuits are an occupational hazard for Big Tech, a forced breakup of the group is still a theoretical possibility and adds risk.
For now though, Alphabet continues to be a money-printing machine. Revenue rose 14% last year to $350bn, while operating profit soared 33% to $112bn.
Search advertising remains the cash cow, but Google Cloud and YouTube exited 2024 at a combined annual revenue run rate of $110bn. Its Waymo robotaxi business is now doing over 200,000 paid rides a week, while Google is making advances in artificial intelligence and quantum computing.
Finally, Alphabet just snapped up cybersecurity group Wiz for a cool $32bn (its largest ever acquisition, assuming regulatory approval).
Alphabet has many avenues of growth left. As such, I think it deserves a place on any investor’s radar.
Ben McPoland has no position in any shares mentioned.
Amazon
What it does: Amazon is a US-based technology company with numerous divisions including e-commerce, cloud computing and artificial intelligence.
By Paul Summers. Despite setting a new all-time high in February, it’s been a rough few weeks for US titan Amazon (NASDAQ: AMZN). The broader tech sector sell-off on fears of a recession has clearly pushed some investors to bank some profit.
There might be worse to come. Consumer sentiment remains fragile and the company has already warned of weaker Q1 sales and higher spending on its artificial intelligence (AI) infrastructure.
All that said, I just can’t see Amazon’s stock cratering given just how diversified this business has become. It remains utterly dominant in online retail and a market leader in cloud computing. And while the frenzy surrounding AI was always destined to moderate at some point, it would be a brave person to say that this investment theme won’t recover its mojo in time.
If the share price does keep falling, I’ll find it hard to resist buying in.
Paul Summers has no position in Amazon.
ServiceNow
What it does: A cloud-based digital workflow automation platform that helps businesses streamline operations and boost efficiency.
By Zaven Boyrazian. With businesses looking to maximise efficiency and bolster profit margins, ServiceNow (NYSE:NOW) has had little trouble attracting customers. The firm offers a varierty of tools to help automate the digital workflow of businesses. And it’s something that’s proving quite popular with over 8,100 clients now relying on its technology – including 85% of the Fortune 500.
Lately, management has been taking things a step further with aggressive investments into AI-powered upgrades like predictive analysis, natural language processing, and virtual agents. Sadly, that also meant the stock got swept up by the AI hype train, making its valuation far too rich.
ServiceNow is not short on competition who are similarly trying to stay ahead of the curve with their own AI investments. And with the company expanding its reach into customer relationship management (CRM), it’ll soon be facing off against industry titans like Salesforce which have far deeper pockets.
Nevertheless, with recent market volatility causing the stock to fall by a third, the temptation to buy is rising.
Zaven Boyrazian does not own shares in any of the companies mentioned.
Super Micro Computer
What it does: Super Micro Computer supplies IT products, including servers and storage systems, to industries including AI.
By Alan Oscroft. Super Micro Computer (NASDAQ:SMCI) has been hit by the big US stock market sell-off. And more that that, we’re looking at a fall of around 60% over the past 12 months.
But I think we could be approaching the end of the big shakeup that saw the stock boom and bust in 2024. An investigation into allegations regarding accounting practices didn’t help. But management sees no need to restate any previous financials, which helps with confidence.
Suspicions have also been aired about supplying Nvidia-powered servers to Malaysia, from where they could end up in China contrary to US export restrictions.
With this going on, what do I like about Super Micro? In short, it’s forecasts and the forward valuations they imply.
Analysts expect earnings to climb steadily in the next few years. And that could push the forward 2025 price-to-earnings (P/E) ratio of 17 down as low as 10.5 in 2026. That looks cheap.
Alan Oscroft has no position in Super Micro Computer.
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