June 9, 2022- Apple Inc. (NASDAQ:AAPL) and Alphabet Inc. (NASDAQ:GOOGL)
See why tech valuations could be even more attractive than the dot-com bust.
Now could be the time to get back into mega-cap tech stocks. If you follow the logic of Fundstrat’s Tom Lee, two of the best stocks to buy now are Apple Inc. (NASDAQ:AAPL) and Alphabet Inc. (NASDAQ:GOOGL).
According to Lee, Nasdaq valuations aren’t only as low as the worst of the dot-com crash. They’re lower.
Today, the Nasdaq 100’s P/E ratio is lower than the Nasdaq 100’s when it declined roughly 80% 20 years ago.
In Lee’s words, “Yup, markets crashed worse than dot-com.”
He’s incredibly bullish on mega-cap FAANG names- Facebook, Amazon, Apple, Netflix, and Google.
More downside risks could persist. Rising rates, inflation, and recession worries remain. However, Apple Inc. (NASDAQ:AAPL) and Alphabet Inc. (NASDAQ:GOOGL) have an enticing risk/reward profile for the 2022’s second half.
Apple is a stock you “own” and “don’t trade,” according to CNBC personality Jim Cramer. This week, it’s making even more waves after entering the booming “buy now pay later” space and revealing new products at its annual developer conference.
Meanwhile, Alphabet, aka the parent company for Google, remains a tech juggernaut. Morgan Stanley recently made bullish comments on the conglomerate with travel demand picking up. It also continues disrupting self-driving cars following its Waymo subsidiary’s deal with Uber Freight.
Both Apple and Alphabet could also have 26.49% and 38.47% of analyst upside, respectively.
The market continues bracing for labor and inflation data to close the week. On Wednesday (June 8, 2022), the Dow dropped 269 points or 0.81%, the S&P closed down over 1.0%, and the Nasdaq dipped 0.73%.
As things get figured out, AAPL and GOOGL are June 9, 2022’s best stocks to buy now.
Apple Inc. (NASDAQ:AAPL)
The world’s most valuable company is 19+% below its highs and preparing to break out.
Apple is the world’s most valuable enterprise by market cap and remains a technology and consumer goods force. Although inflation and supply chain fears have rocked the stock in 2022, Apple’s exciting investors this week.
There are several reasons why AAPL is one of the best stocks to buy now.
What’s Apple up to?
AAPL is considered one of the best stocks to buy now for a straightforward reason. As a Yahoo! Finance headline says, “Apple is finally giving the people what they’re asking for.”
It’s been a big week for the Company. On Monday (June 6, 2022), Apple kicked off its WWDC, the Company’s most significant annual software announcement event. Apple announced the following:
- New iOS 16 iPhone software.
- New Apple M2 chip that’s expected to rival Intel.
- New M2-powered products, including the new MacBook Air and 13-inch MacBook Pro.
- New macOS Ventura software.
- New iPadOS 16 software.
- New watchOS 9 Apple Watch software.
- Apple Pay Later- Apple’s brand new buy now, pay later platform.
Apple- A FinTech company?
While the new products are sexy and what Apple is most known for, the Apple Pay Later is turning heads. In 2020, the global BNPL market was valued at just about $90.69 billion. By 2030, it is projected to explode to roughly $3.98 trillion at a staggering CAGR of 45.7%. While Apple Pay was the Company’s initial foray into FinTech, this new service could put it on a collision course with PayPal, Block, Klarna, and Affirm.
It’s no wonder that many of those stocks tanked after Apple revealed the platform.
Apple Pay Later will integrate with the Apple Wallet. In this platform, customers can split the cost of any purchase made through Apple Pay into four equal payments with zero interest. Customers can also spread fees over four months.
It expects to launch in the U.S. later this year and become a long-term revenue stream. As if you needed another reason why AAPL is one of the best stocks to buy now.
Apple’s making news with automobiles, too.
Apple CarPlay currently serves as little more than an entertainment system for your car. But things could be wildly different in the future.
Apple revealed the newest edition of CarPlay at the WWDC. This new version will allow users to now control the essential functions of their vehicle from their iPhone.
Additionally, from the Company’s perspective, this is a massive jump in its relationship with the world’s largest automakers. Those who witnessed the presentation at the WWDC saw a slide with the logos of 12+ automakers, including Ford, Mercedes, Audi, and Porsche.
The fundamentals paint an even prettier picture.
Apple is also one of the best stocks to buy now because of its rock-solid balance sheet and cash flows that sufficiently cover interest payments.
First, let’s rehash Apple’s Q2 earnings announcement from April 28, 2022. AAPL shattered estimates and broke records. The Company reported a record quarterly revenue of $97.3 billion. This also marked a 9% annual increase, beating consensus estimates by $3.29B. Services revenue also reached new all-time highs in the process. EPS additionally came in at $1.52 and beat estimates by $0.09.
With Apple set to report its subsequent quarterly earnings on July 26, 2022, pay attention to the Company’s moves over the next 1.5 months.
Meanwhile, AAPL continues offering investors a solid dividend yield. It recently hiked its dividend by 5% and could continue to do so over the next few years. Finbox data reports that Apple’s dividend could have a 9.1% 5-year CAGR.
Apple also has outstanding margins reflecting its profitability and efficiency, including its
Apple also has a Piotroski Score of 8 out of 9. This score, developed by Stanford accounting professor Joseph Piotroski, rates a company based on the Liquidity of its Balance Sheets, Profitability, and Operating Efficiency.
Is now the time to buy the dip?
Apple currently sits 19.09% below its highs. Yet even before the stock hit its 2022 low on May 20, 2022, legendary value investor Warren Buffett dumped another $600 million in Apple during Q1 2022. He did it following a three-day losing streak.
At the time, Buffett commented that he wished the stock fell further so he could buy more.
The stock may pull back again, but Apple is not a stock to wait on. Buffet certainly didn’t, and he will likely reap the rewards in the long term.
Further reflecting the Company’s growth prospects, Finbox forecasts Apple’s revenue to see an 11.1% 5-year CAGR.
It’s also expected to see a respectable net income growth forecast of 5.5% and average a 5% growth rate over the next 5 years.
Analysts see AAPL’s upside too.
Judging by data from Tipranks, analysts believe AAPL is one of the best stocks to buy now. Tipranks scores AAPL a STRONG BUY based on 21 out of 27 Wall Street analysts rating the stock a BUY in the last 3 months. AAPL’s average price target is $187.22, with a high forecast of $210.00 and a low forecast of $157.00. The average price target represents a 26.49% upside from June 8, 2022’s closing price of $148.01.
AAPL’s year-to-date low and high are $132.61 and $182.94, respectively.
Alphabet Inc. (NASDAQ:GOOGL)
Bullish statements from Morgan Stanley and consensus analyst upside of 38.47% has this conglomerate looking like one of the best stocks to buy now.
Alphabet Inc. is the quintessential tech play. Something that conventional wisdom would tell you to avoid, like the plague at this time. But Alphabet is trading 22.67% below its highs. It is too mouth-watering of a bargain to not call one of the best stocks to buy now.
Alphabet is a prominent player in the interactive media & services industry. It is first and foremost the parent company of Google.
Think of all the things that Google encompasses and the revenue streams. It’s a search engine, network, cloud provider, service provider, ad network, etc.
Making the story even stronger is the fact that Alphabet also owns YouTube.
Beyond that, there is the Company’s Other Bets segment, which focuses on health technology and internet services.
Source: FourWeekMBA
GOOGL’s next move- autonomous vehicles.
Alphabet’s self-driving trucking subsidiary Waymo announced a strategic partnership with Uber’s Freight business on Tuesday (June 7, 2022). The long-term arrangement will allow future customers to more efficiently deploy autonomous trucks.
While there is no timetable for when the partnership could take effect, this is Alphabet’s latest foray into a disruptive and innovative sector. The partnership could use cutting-edge software to act as a middle man connecting truckers with shippers to reduce shipping costs and increase efficiency. Especially with supply chains bogged down.
GOOGL’s fundamentals point to a well-run company at reasonable valuations.
It’s rare to find a stock of GOOGL’s caliber trading with a trailing P/E Ratio of 20.7x, forward P/E Ratio of 20.6x, and PEG ratio of 0.44.
It is simply undervalued. Especially when you consider its long-term performance.
Alphabet’s outstanding margins make its current valuation look all the more enticing.
Revenue could also see a 23.3% 5-year CAGR.
Morgan Stanley recently had some strong statements on GOOGL.
Morgan Stanley analyst Brian Nowak recently made bullish comments on GOOGL. But interestingly enough, it wasn’t because of anything crazy with crazy tech-related upside, innovations, or autonomous vehicles.
It had to do with travel demand.
Nowak noted that he is OVERWEIGHT on GOOGL because the latest AlphaWise data shows that out of 2,000 Americans, 58% intend to travel in the next 6 months.
He sees GOOGL as uniquely positioned to benefit from travel demand because of travel’s importance to GOOGL’s paid search business. In fact, travel alone makes up roughly 10% of this business segment.
Morgan Stanley currently has a $3,000 price target on GOOGL, representing a 27.99% upside from June 8, 2022’s close.
Other analysts see GOOGL as the best stock to buy now, too.
According to Tipranks, GOOGL is a STRONG BUY. 30 of 30 Wall Street analysts who gave the stock a 12-month price target in the last 3 months rated it a BUY. GOOGL’s average price target is $3,245.48, with a high forecast of $4,118.00 and a low forecast of $2,775.00. The average price target represents a 38.47% upside from June 8, 2022’s closing price of $2,343.88.
GOOGLs year-to-date low and high are $2037.69 and $3030.93, respectively.
