Cloud stocks are divided into three categories: the cloud owners, the cloud arms merchants, and the cloud users.

The five Cloud Czars — Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Amazon.Com (NASDAQ:AMZN) and Facebook(NASDAQ:FB) — all built clouds with cash flow from existing businesses. Apple and Facebook still run this way.

Clouds are built on open source software and commodity hardware. They’re meant to give their biggest benefits to users. Companies built using the cloud can become huge, like Netflix(NASDAQ:NFLX), Intuit (NASDAQ:INTU), Adobe (NASDAQ:ADBE) and Salesforce.com(NASDAQ:CRM).

Then there are the cloud arms merchants, companies whose main business is providing hardware and services to cloud owners. These include Nvidia (NASDAQ:NVDA), Intel(NASDAQ:INTC), Cisco Systems (NASDAQ:CSCO) and Dell Technologies (NASDAQ:DELL).

Analysts have lately become enamored of cloud arms merchants as large enterprises build their own data centers on the cloud model, creating the “hybrid” cloud. That’s the first place to seek cloud growth today.

Here’s how to get your share.

Microsoft (MSFT): The Unpunished Czar

Source: Shutterstock

Elizabeth Warren says she wants to break up the Cloud Czars, saying that they’re too powerful.

All but one: Microsoft (NASDAQ:MSFT).

Why not break up Microsoft, especially since it’s now the most valuable company on the board, a market cap of over $900 billion, supporting 2018 revenues of $110 billion — nearly one-third of which it turned into operating income?

Maybe it’s because Microsoft pays its taxes, including almost $20 billion worth last year. But it’s also because Microsoft has already been visited by the antitrust police, 20 years ago. It paid dearly, losing its monopolies in PC operating systems and applications and then drifting for over a decade, held down by lawyers and fear.

Satya Nadella relaunched Microsoft as a cloud player in 2014, though Microsoft’s Azure cloud isn’t a monopoly. Nothing Microsoft does is a monopoly any more. Sony (NYSE:SNE) bests it in gaming  and its Edge browser and Bing search engine are considered also-rans.

But Microsoft is competitive in every cloud niche, it has a dividend yielding 1.6%, its trailing price-to-earnings ratio sits at under 30 and its public profile is low enough to stay well away from regulators. It is once-burned, twice-shy — a sadder but wiser cloud company.

International Business Machines (IBM): Big Blue Lays it All on Red

Source: Shutterstock

International Business Machines (NYSE:IBM) has bet its future on buying Red Hat(NYSE:RHT) for $34 billion and making itself into a private cloud play.

Since the deal was announced in October, IBM shares are up 25%, well over the 16% gain of the Nasdaq. The shares are still cheap, sporting a P/E ratio of under 15 with a $1.57-per-share dividend paying a yield of 4.5%. Its market cap is just 1.5 times its sales, also cheap for a technology stock.

IBM was late to the cloud party because its older businesses did not need the cloud to operate. Mainframes were sort of clouds before clouds existed, and IBM has monopolized that business for decades. But clouds are slowly sinking that business, and IBM was run out of its old niches in PCs and minicomputers by Chinese competition, eventually selling most of its hardware units to Lenovo (OTCMKTS:LNVGY).

Instead, IBM sank its cash flow into the dividend. It bought a small cloud player called Softlayer, but wasn’t big enough to compete in public cloud. The idea behind the Red Hat deal, as the press release on it stated, was to transform IBM into a “hybrid cloud” provider.

The strategy is simple to describe. Red Hat software, including its Linux operating system and OpenShift (which lets companies put their own software into clouds as self-contained “containers”), will be offered by both Red Hat and IBM’s existing programmers. Enterprises can replace their aging data centers with small clouds, then quickly scale customer services compatible with those internal systems on public clouds.

If the strategy works, the value of IBM stock could easily double from here within a year, as it becomes a premier cloud merchant. But there is a lot of competition. It’s your cheapest speculation in the cloud.

Palo Alto Networks (PANW): Securing the Cloud

Palo Alto Networks (NYSE:PANW) has gone from zero to $22.5 billion in market cap since 2005 on the back of cloud security.

Originally a “next-generation firewall” company, providing security products to keep bad guys out of data centers, Palo Alto has spent over $1 billion on acquisitions in the last two years. Most recently it bought Demisto, an Israeli security company, for $560 million. Demisto is in the business of “orchestrating” or automatically organizing a company’s security efforts using machine learning.

All this has given Palo Alto a cloud-like valuation. That $22.8 billion market cap supports just $2.2 billion in fiscal 2018 revenue. It should grow to $2.5 billion in fiscal 2019, which ends in July. Fast growth means all that money goes back into the business. There are no profits. But operating cash flow has grown consistently and will blow past $1 billion this year.

Palo Alto’s move to cloud is transforming the revenue mix into monthly subscriptions instead of one-time payments, making it a favorite among analysts.

The company is in a key niche, security, and leading with today’s key customers, those with clouds.

ServiceNow (NOW): Automating Workflows in the Cloud

ServiceNow (NYSE:NOW) may be the biggest software company you’ve never heard of, thanks to the cloud.

ServiceNow is in the business of automating workflows. Its cloud-based platform organizes the movement of information among employees and customers. It started within computer departments in 2004, and has since expanded into serving entire enterprises, both internally and externally. The concept is that “work is the killer app,” and its latest update, dubbed Madrid, applies this to the mobile world as well as the desktop.

Shares rose 43% over the last year, despite the tech wreck. More important, they’re up almost 300% over the last five years. The $43.8 billion market cap is held up by $2.6 billion in 2018 revenue, up from $1.9 billion a year earlier. That’s growth people will pay for, even absent profits, and the company came close to break-even last year, losing just $26 million.

That computer workflow management piece of the company includes cloud management, making it a key competitor in the hybrid cloud world. It works with Microsoft but also Amazon’s AWS and VMware (NASDAQ:VMW).

ServiceNow has 37 analysts following it now, 28 of whom give it buy ratings . It’s expected to finally become profitable in 2019, to the tune of $3.10 per share.

VMWare (VMW): Essential Infrastructure

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In addition to commodity hardware, two key technologies were required to make the cloud work.

First comes virtualization, a virtual operating system that runs on top of applications and lets them all run regardless of the operating system they’re written for. Then comes distributed computing, in which jobs can run on part of one computer, on several, or on thousands at once.

So before there could be clouds, there was VMware, serving up virtualization. In the last decade it was the more-profitable spin-off of EMC, and 80%-owned by that company, which makes large data storage systems. Today EMC and VMWare are part of Dell Technologies but its tracking stock still trades, and since its new parent went public at the end of 2018 it’s up 33%.

VMWare is a prize for analysts, investors and Michael Dell, who paid $67 billion for EMC (and its 80% stake in VMware) in 2015,  because it is a lean, mean profit machine. Revenues have gone from $6 billion in fiscal 2017 to $8 billion in 2018 and to $9 billion for the 2019 fiscal year, ending Feb. 1, with net income rising to $2.4 billion last year. That means VMWare trading at “just” 8.5 times sales, which is considered affordable for the growth.

For the world of hybrid cloud, VMWare now offers its own operating system, Cloud Foundation,which runs on EMC hardware . This lets companies easily connect their existing VMWare data centers to public clouds like Amazon’s. It has also signed a partnership with Microsoft to converge their previously competitive hypervisors , the software that makes virtualization possible, bringing some of its customers to the Microsoft cloud.

VMWare already is where IBM wants to be.

Dana Blankenhorn is a financial and technology journalist. He is the author of a new mystery thriller, The Reluctant Detective Finds Her Family, available now at the Amazon Kindle store. Write him at danablankenhorn@gmail.comor follow him on Twitter at @danablankenhorn. As of this writing he owned shares in MSFT, AAPL and AMZN.

Source: Investor Place

All across the U.S. these days, retail stores are very much like the Walking Dead.

Ironically, on paper at least, this would seem to be an ideal time to operate a retail store.

After all, we are in the best jobs market we’ve seen in more than 40 years, and the economy remains in great shape. Virtually across the board, high-tech firms have been reporting stellar fourth quarter results.

Retailers, not so much…

But even chain-store firms who managed to beat Wall Street’s forecasts can’t seem to defy the steady shift in power to the web and well-run e-commerce portals.

Consider that the Foot Locker Inc. (NYSE: FL) recently reported its growth more than doubled expectations in its most recent quarter. And yet, just days ago, the sports chain said it will shutter 165 stores.

That was part of a series of store closings that totaled 465 in just 48 hours.5

With that in mind, today I’m going to reiterate a stock I have recommended many times as one that will benefit from the shift from brick-and-mortar retail to e-commerce.

And of course, it’s a firm with market-crushing gains…

Check it out…

Shopping Carnage

The carnage in the shopping landscape actually shows no signs of slowing down. We can see that by the firms that have announced store closings. Besides the Foot Locker, there are:

1. The Gap Inc. (NYSE: GPS) is closing 230 stores after reporting that during the Christmas holiday, quarter same-store sales fell 7%.
2. Victoria’s Secret, which is privately held, said same-store sales fell during the holidays by 3%. It’s closing 53 stores this year.
3. J.C. Penny Co. Inc. (NYSE: JCP) said it is closing 18 of its 850 stores. But analysts expect more closures in the near future.

And let’s not forget that a company that was once the top retailer of its day recently filed for bankruptcy protection from its creditors.

Sears was America’s original “everything” store. Between its actual physical locations and its massive catalogue operations, it offered consumers the opportunity to buy hundreds of goods, covering everything from clothes to tires to furniture.

But like many other retailers, Sears simply failed to keep up with the times. Today’s consumers can buy just about anything they need in a matter of minutes online from the convenience of their computers or mobile devices.

Indeed, data compiled by Statista shows e-commerce continues to ramp up sales with a high compound growth rate.

Total sales for the sector are expected to hit $735.4 billion by 2023. That’s a 64.5% increase from the $446.8 billion level set in the base year of 2017.

Changing the Game

Amid all this chaos, one firm stands out as the preeminent e-commerce firm in the world today. It’s making so much money online that it can now afford to challenge physical retailers at their own game.

When you look on how massive and profitable Amazon.com Inc. (Nasdaq: AMZN) has become, it’s hard to believe that it started off in 1994 with a simple mission of selling physical books over the Web.

Today, the firm continues to deliver growth rates that make regular retailers green with envy. In fact, I think the Amazon stock price could soon reach $2,000 per share.

Consider that at the start of the current decade, Amazon had $34 billion in sales. By next year, that figure should surpass $325 billion. That’s nearly 1,000% growth.

I’ve been watching this firm for years, and was one of the first people to tell you that the share price would handily pass the $1,000 mark. That finally happened in 2017, and now in the early days of 2019, the $2,000 mark is fast coming into focus.

What Doesn’t Amazon Sell?

Of course, Amazon is still a massive bookseller, but now it sells so much more.

We could spend a lot of time talking about all of various kinds of things you can buy through Amazon. It’s likely easier to think of what Amazon doesn’t sell.

Of course, the real secret to Amazon’s success is not based on the stocking and shipping of hard goods. Instead, it’s an uncanny use of technology that touches on everything the firm does.

Take cloud computing as an example. Amazon began to realize that it had built such an impressive global computing platform that it could save massive sums by running its business on its own massive cloud platform.

Soon enough, Amazon began selling its cloud-based web services to others, and that’s now a business that will be bringing in $71 billion in revenue by 2022, according to banking firm Jefferies & Co.

AI Will Help Propel the Amazon Stock Price to $2,000

Amazon has also deeply embraced artificial intelligence (AI). Today, AI brings a lot of smarts to Amazon’s Alexa assistant. And Amazon has big plans to extend AI throughout every one of its business units.

All of these growth areas have enabled Amazon to generate so much cash that it can afford to buy its way into whole new lines of business.

The firm made a high profile 2017 purchase of healthy grocer Whole Foods for $13.7 billion. Now, it’s using the know-how it picked up to make an even deeper push into the grocery market through a chain of stores separate from Whole Foods, according to the Wall Street Journal.

When you consider that Amazon knows how to make a profit where others fail, I have no doubt that the move into groceries will become highly lucrative for Amazon – and its investors.

Simply put, Amazon has the Midas touch. It becomes dominant in every new category it enters. That’s by design, not accident. Amazon only enters into a new category when it knows it has the resources and skills to succeed – on a massive scale.

It’s of no use to examine where this stock has been. You only need to know that its tried-and-true business savvy will help it succeed with each new market it enters.

That’s why this is truly a stock to hold for the long haul, as Amazon adds more growth from its hybrid sales approach.

Source: Money Morning

Most tech stocks have staged impressive comebacks so far in 2019. However, in the next few weeks, we might witness a battle between investors and traders, where there will be considerable profit-taking in several of Wall Street’s tech darlings, including Netflix (NASDAQ:NFLX), PayPal(NASDAQ:PYPL) and Snap (NASDAQ:SNAP).

Like most tech stocks, NFLX, PYPL and SNAP are high momentum stocks. In other words, when the broader markets go up or when the company’s earnings beat expectations, both investors and momentum traders tend to hit the ‘buy’ button fast, expecting superior gains within days or weeks.

However, if markets suffer a decline or if the company cannot keep up with the rising expectations, investors’ risk appetite decreases fast and these stocks can fall much harder than less volatile stocks.

I am expecting some stock price weakness in the near-term in all these three stocks. If you already own any of the Netflix, PayPal or Snap stock, you might want to hold your position. However, within the parameters of your portfolio allocation and risk/return profile, you may consider placing a stop loss at about 5-7% below the current price point. Expect nearer-term trading in these stocks to sell to be choppy at best.

If you are an experienced investor in the options market, you may want to protect your portfolio with a covered call or possibly a put option spread with a 3-month time horizon. If you do not yet hold any of these stocks, you may want to wait several weeks to buy into the shares at the next dip.

With all of that in mind, here’s a deeper look into why these tech stocks might join many other “stocks to sell” lists in the upcoming days.

Netflix (NFLX)

Many investors have put Netflix in their sights as a possible stock to sell soon, as various headwinds have hammered down the positive sentiment surrounding its longer-term outlook.

Specifically, the price of NFLX stock went from an intraday low of $233.68 on Dec. 24 to an intraday high of $371.49 on Feb. 25. Netflix’s quarterly release on Jan. 17 showed that the company beat earnings with earnings-per-share of 30 cents per share. Although its overall numbers were strong, the company cut revenue projections for 2019.

Over the past decade, the company has increased annual revenues from $1.6 billion in 2009 to $15.8 billion in 2018.

With a trailing price-to-earnings ratio of 137, Netflix is a growth stock as well as a speculative stock. Analysts value NFLX stock on the expectation of continued high revenue growth that would lead to future profits. But whenever Wall Street fears the company is failing to meet growth or profit expectations, NFLX stock gets penalized. Hard.

Currently, the most critical metric investors pay attention to is Netflix’s subscriber growth. This number needs to remain strong every quarter to justify the high valuation. For the first quarter of 2019, NFLX is expecting to add 8.9 million paying subscribers.

However, new competitors, including Disney (NYSE:DIS), Amazon (NASDAQ:AMZN) and AT&T(NYSE:T), are increasingly entering the content distribution space. Before too long, the market might become oversaturated.

The upcoming competition from Disney is particularly daunting. Its new streaming service Disney+ will launch by the end of the year and include original movies and TV shows from Disney’s brands, including Marvel and Pixar. The platform is expected to concentrate largely on offering content for families. In preparation for this service, Disney is expected to pull its movies off Netflix. Both companies know that content is king.

Netflix’s current focus is on original content development as well as international expansion. Original content production is a costly business, as it requires the company to part with upfront cash and thus it contributes to Netflix’s negative cash flows. Therefore, as Netflix has to constantly borrow to keep on growing, it faces demanding pressure to ensure that it meets its growth targets. Otherwise, it cannot pay its debts easily.

If NFLX cannot keep up with the aggressive growth assumptions or increase its prices, especially in international markets, then its margins and the stock price would suffer. As these competitors make their mark in the marketplace in 2019, investors may decide to have a wait-and-see attitude, pressuring the recent price gains.

Disney’s ESPN+ platform — the DTC sports entertainment video service — already has over 2 million subscribers. On Apr. 11, Disney will hold an investor day when it will provide a first look at Disney+ and its original content. Meanwhile, on Mar. 25, Apple will also hold an event, where the company is expected to announce its new TV service to rival Netflix. Around both dates, I am expecting volatility in NFLX stock.

Shorter-Term Technical Analysis: Year-to-date, the NFLX stock price is up over 33%. Shorter-term momentum indicators, which describe the speed at which prices move over a given period, have become extremely overbought as a result.

Although these indicators can stay overbought for quite a long time, it would not be not surprising to see some profit-taking following the earnings report.

In other words, the excessive uptrend we have witnessed over the past month, cannot possibly be sustained. The level I’d be watching is $335. If Netflix stock approaches this level, I’d take it as an early warning that price risk is likely to increase.

If you believe in the fundamental bull case for Netflix stock, you might consider waiting for a better time to go long, such as around the low-$300’s or even upper $280’s.

For now, NFLX remains one of the top tech stocks investors are likely to sell in the upcoming weeks.

PayPal (PYPL)

Global online payments company Paypal is also one of the tech stocks that will likely be joining investors’ stocks to sell lists soon.

The price of PYPL stock went from an intraday low of $76.7 on Dec. 24 to an intraday high of $99.45 on Mar. 1.

As fintech competition is heating up, this pioneering company in the digital payments sector still dominates the first-person payments sphere. It has 267 million customer accounts, 21 million of which are merchant accounts. Unlike Netflix, PayPal is a cash generating machine.

When PayPal reported earnings on Jan. 30, it met revenue expectations for the quarter which rose 13% to $4.23 billion. Its adjusted earnings came at 69 cents per share, up 26% from a year ago. The growth in total transaction volumes and in the number of active users was behind the impressive numbers. However, its revenue forecast for 2019 was about 1% below analyst’s estimates and thus, PYPL stock went down the next day.

As a digital wallet, PayPal’s profitable business model depends on processing personal and merchant customer transactions on its global suite of payments platforms. In 2013, when PayPal acquired Braintree, which specializes in payment systems for e-commerce ventures, it also became the owner of Venmo, a peer-to-peer (P2P) mobile payment app. Sending money electronically peer-to-peer with a few taps has taken off among U.S. consumers.

In this market, which is expected to grow by double-digits in the next few years, Venmo has almost 25 million users and is ahead of its closest competitors. According to the latest quarterly report, Venmo processed approximately $19 billion of total payment volume, up 80% year-over-year. Through Venmo, PayPal is reaching a younger customer base.

However, PYPL stock may fundamentally suffer in the coming months if negative global economic and political conditions dominate the headlines. In January, the International Monetary Fund (IMF) warned of a global economic decline as China — the world’s second-biggest economy — has been slowing down considerably.

Likewise, German markets have been particularly worried about the stall in the Chinese economy, as Germany exports heavily to China.

Furthermore, if we do not have a resolution to the U.S.-China trade war in early 2019, the markets may throw in the towel in frustration and another selloff might begin.

Finally, on Mar. 29, the United Kingdom is set to leave the European Union. The U.K. now finds itself without a clear path forward on Brexit. The U.K. and European financial markets are increasingly edgy about the outcome we may have on that day.

In other words, risks for the financial markets are skewed to the downside and in case of a global slowdown, the demand from PayPal customers may soften, denting the price of PYPL stock.

Shorter-Term Technical Analysis: YTD, the PayPal stock price is up over 15%. As in the case of the Netflix technical chart, shorter-term momentum indicators are overbought, signaling potential profit-taking in the shorter term.

In the next few weeks, I do not expect any substantial positive momentum to push the PYPL stock price over the psychologically significant $100 level. Even if it goes over $100, it is not likely to stay up for long.

The two levels I’d be watching are first $95 and then $85. If PayPal approaches $85, then there is likely to be further selling.

If you believe in the fundamental bull case for PayPal stock, you might consider waiting for a better time to go long, such as around the low-$80’s or even upper $70’s.

Snap (SNAP)

Snap Inc joins this list of tech stocks to sell in March as it is also demonstrating signs of near-term volatility. But the possible pain in SNAP stock can be attributed to reasons other than those that affect NFLX and PYPL.

The price of SNAP stock went from an intraday low of $4.82 on Dec. 21 to an intraday high of $10.29 on Feb. 25.

Since its Initial Public Offering in March 2017, SNAP investors have not had much reason to be pleased with the performance of SNAP stock. After an IPO price $17, and a subsequent high of almost $30, it has not rewarded its early shareholders.

However, when SNAP reported earnings Feb. 5, investors welcomed the revenue increase of 36%. Meanwhile, it posted a loss of 4 cents per share, vs. an expected loss of 7 cents a share; its net loss also improved by $158 million to a loss of $192 million. The next day, the price of SNAP was up over 30%.

Now, analysts seem divided as to what is next for the company from a fundamental standpoint. Will it be able to continue its positive growth trend and increase its user numbers? Or will it once again disappoint investors who fear that SNAP does not have a viable business model where it can monetize the app’s popularity?

In other words, Wall Street is currently debating whether every “cool” app will become a successful publicly traded company.

I believe it will take at least a few more quarterly reports to fully appreciate the fundamental story of Snap. But until we have a better picture of the execution of management in 2019, I expect SNAP stock to be volatile.

Shorter-Term Technical Analysis: YTD the price of SNAP stock is up over 80%. In the next few weeks, I do not expect any substantial positive momentum to push the stock price over the psychologically significant $10 level once again. Even if it goes over $10, it is not likely to stay up for long.

If you believe in the fundamental bull case for Snap stock, you might consider waiting for a better time to go long, such as between $7-$8.

As of this writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities.

Source: Investor Place

The biotech industry has been on a tear in 2019, up 25% through the first two months of the year. That’s great. But niche gene therapy stocks are performing even better.

Source: Shutterstock

The rally has been fueled by a strong combination of merger announcements, positive news from the FDA and the continued development of breakthrough therapies. Headlines have been popping up nonstop over the last week, and today I’d like to recap some of the highlights.

Spark Therapeutics (NASDAQ:ONCE), a small-cap biotech that focuses on gene therapies, was purchased by pharmaceutical giant Roche (OTCMKTS:RHHBY). On a per-share basis, the $4.8 billion purchase price equated to $114.50 — a huge 122% premium over ONCE’s previous close. Spark investors are now looking at 190% gains in 2019 alone.

The same day, CRISPR Therapeutics (NASDAQ:CRSP) announced that human trials had begun for its CTX001 gene therapy drug. A patient suffering from beta-thalassemia had been dosed. And in just a few months, the same drug is expected to be tested on patients with sickle cell disease.

CTX001, which is based on the CRISPR/Cas9 gene editing technique, is currently undergoing Phase I/II trials. Typically, the first dose in such a trial would not be a headline. But this was the first time that CRISPR technology had ever been used on a human. The news sent CRSP up more than 20%.

A few days later, gene therapy stock Sarepta Therapeutics (NASDAQ:SRPT) released impressive results for its muscular dystrophy drug. And in the same press release it announced the $165 million purchase of privately-held gene therapy company Myonexus. The stock rallied on the news and is now up 34% so far this year. But even with the acquisition news, SRPT has long been rumored as a takeover target for larger pharmaceutical companies.

Finally, micro-cap gene therapy stock MeiraGTx Holdings (NASDAQ:MGTX) announced an $80 million private placement. This is important because its lead investor is the private arm of Johnson & Johnson (NYSE:JNJ). MeiraGTx is already up a whopping 67% in 2019.

Get in Position for Life-Changing Profits from Gene Therapy Stocks

There is absolutely no question that there is money to be made in the gene therapy stocks over the long term. However, because the sector is still in its infancy, we have to expect increased volatility. What we’re seeing now is a very strong upswing.

Gene therapy is on track to save countless lives. It’s also on track to make you life-changing profits as long as you can weather the ups and downs that are simply the nature of early-stage mega-trends.

Matthew McCall is the founder and president of Penn Financial Group, an investment advisory firm, as well as the editor of Investment Opportunities and Early Stage Investor. He has dedicated his career to getting investors into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA), +1,044% in Tesla (TSLA), +611% in Liquefied Natural Gas Limited (LNGLY), +324% in Bitcoin Services (BTSC), just to name a few. If you’re interested in making triple-digit gains from the world’s biggest investment trends BEFORE anyone else, click here to learn more about Matt McCall and his investments strategy today.

Source: Investor Place

If investors have learned anything over the last few months, they have learned that seemingly unstoppable tech stocks have their limits. Even popular equities such as Amazon (NASDAQ:AMZN) and Netflix (NASDAQ:NFLX) saw shares plummet as investors dumped tech equities in droves.

Many stocks have seen a significant recovery since Christmas Eve. However, few have returned to pre-October highs. Many of these equities became victims of overselling. Pessimism can often take stocks down to low price-to-earnings (P/E) ratios. Such metrics usually indicate that some have become stocks to buy on sale rather than equities investors should put up for sale.

Many prominent tech stocks have likely reached that point. These five teck stocks offer both reasonable valuations and a commanding position within their niche of tech:

Apple (AAPL)

Source: Shutterstock

Admittedly, even when Apple (NASDAQ:AAPL) supported its $1 trillion-plus market cap, it was not considered expensive from a P/E standard. However, sales of the iPhone have failed to keep up with growth expectations, and AAPL stock still plunged as a result. Now, the company must make its way forward without the iPhone driving a majority of its revenue.

Apple appears positioned to make that change. Even if it fails to innovate on its own, AAPL holds $245 billion in cash, more than the gross domestic product (GDP) of all but 45 of the world’s countries. This gives AAPL the power to buy what it cannot create, though it already may have found the next growth niche. Former Apple CEO John Sculley believes that the healthcare-related features of the Apple Watch will become the company’s most significant innovation since the iPhone.

While investors wait for healthcare or another innovation to drive revenues, they can buy AAPL stock at a reasonable valuation. Thanks to the drop in the stock price, the forward P/E stands at 13.7. Moreover, the double-digit growth that suddenly turned negative in 2018 should return this year.

I do not expect an immediate recovery for Apple. Investors will need to see a new product category take hold before interest in Apple stock returns. However, with a low valuation and double-digit earnings increases in store for AAPL, the stock price should move higher over time.

Baidu (BIDU)

Source: Shutterstock

Despite negligible involvement with the United States, the U.S.-China trade war, as well as a general slump in tech stocks, took its toll on Baidu (NASDAQ:BIDU). As the Chinese-language counterpart to Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google search engine, the company conducts little direct or indirect activity outside of its home country. Nonetheless, BIDU stock has fallen about 43% from its 52-week high.

Despite this slump, the company beat earnings estimates in its last report and raised guidance. Moreover, the drop from last year has taken the forward P/E to about 12.8. Analysts predict profit growth will come in at a modest 2.7% this year. However, they also expect to see a 25.6% increase in earnings next year.

BIDU stock comes with some risk. Since American investors cannot buy shares directly in China-based companies, Baidu stock buys one into a Cayman Islands-based holding company entitled to a share of the company’s profits. Moreover, while the U.S.-China trade war could end soon, the uncertainty will linger until both countries come to an agreement.

Still, with Google blocked and Baidu serving as the primary search engine for China’s 1.39 billion population, I think the recovery of BIDU stock becomes only a question of when.

Facebook (FB)

Source: Shutterstock

In 2018, Facebook (NASDAQ:FB) suffered through its worst slump since soon after the 2012 IPO. Allegations related to enabling election interference as well as privacy concerns have weighed on the stock. The drop hit a crescendo with the single-largest one-day market cap loss in stock market history last summer. Moreover, Facebook’s failure to protect private data as well as compliance issues in the midst of the E.U.’s General Data Protection Regulation (GDPR) have also weighed on FB stock.

Despite these attributes, the buy case for FB stock remains. Even though FB has begun to recover from the 2018 slump, the stock trades at about 18.3 times earnings. Profits will probably see a modest decline this year. However, analysts forecast a 17.2% surge in profits in 2020, and further double-digit increases in subsequent years.

Moreover, FB stands out among tech stocks as the only mega-cap social media stock. It owns four of the six apps boasting one billion or more users. Furthermore, no site in this industry has challenged Facebook’s dominance. Twitter (NYSE:TWTR) will likely not venture beyond its microblogging niche. Snap’s (NYSE:SNAP) popularity among youth faces a serious challenge from the Facebook site Instagram.

Facebook will have to address its political and privacy-related challenges. However, with its dominance of the social media space unchallenged, FB stock will find itself slowed but not stopped by recent controversies.

Nvidia (NVDA)

Source: Shutterstock

Until the last quarter of 2018, Nvidia (NASDAQ:NVDA) appeared unstoppable. Having parlayed its gaming capabilities into data center, artificial intelligence (AI) and virtual reality (VR) applications, it supplanted Intel (NASDAQ:INTC) as the most important of the tech stocks in the semiconductor space.

However, once the crypto craze died off, the air of invincibility around NVDA stock died with it. Too many chips flooded the market, and NVDA plummeted along with most other tech stocks. The 2016-18 bull market in NVDA also had reached extremes. The P/E ratio had approached 60, and profit growth, while impressive, did not back up that growth.

Still, even without crypto, Nvidia’s involvement in AI, VR and gaming still make it arguably the most critical equity in the semi space. As our own James Brumley points out, Nvidia chips power the world’s fastest supercomputers. Their tech has also moved ahead of peers on the AI front.

Nvidia’s financial metrics have also become more favorable for buyers. The forward P/E ratio has fallen to a more reasonable 21.5. Profits will shrink this year as the industry continues to work off the oversupply in chips. However, they also believe the end of the chip glut will bring a 32.8% increase in profits next year. Although profiting from NVDA stock will take time, I think a wider adoption of data centers, AI and VR will help NVDA surpass its 2018 highs.

Qualcomm (QCOM)

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Over the last few years, Qualcomm(NASDAQ:QCOM) has become better-known for its patent disputes with Apple and its failed attempt to buy NXP Semiconductor (NASDAQ:NXPI) than for smartphone chips. However, amid its controversies, it still collects royalties on its 3G and 4G chips. Now, the Snapdragon 855 looks poised to help Nvidia profit from the rollout of 5G phones powered by Android.

5G will force phone upgrades over the next few years. Also, because 5G will enable more Internet of Things (IoT) devices, revenues and profit growth could go well beyond predicted levels.

Moreover, thanks to the failed merger, Qualcomm will buy back $30 billion worth of QCOM stock this year. If a smaller supply is not enough to persuade buyers, QCOM also includes a 4.7% dividend yield. Also, this payout has risen for eight straight years, even amid the patent dispute and the failed buyout.

Several other metrics favor buyers. As a result of last fall’s slump in tech stocks, QCOM trades at 12.2 times forward earnings. Wall Street expects tepid growth this year. However, they forecast 12.4% earnings growth in 2020, and double-digit increases in future years. Due to its critical involvement in 5G, Qualcomm will play a crucial role in upgrades over the next few years. The growing revenues and profits from these purchases should upgrade the price of QCOM stock as well.

Source: Investor Place

Each year I read about the promise of virtual reality / augmented reality (VR/AR) and how this is THE year for the technology to take hold. Most of these predictions center around either gaming or the ability to watch live sporting events in a VR/AR environment. In other words, you can sit at home on your couch, but also be courtside at a Lakers game, and at halftime you can play Fortnite in a VR environment with friends around the world.

And, while I believe the technology, as well as the supporting marketing, infrastructure, and necessary consumer buy-in, will eventually converge and become a major industry, as they say, the key is in the timing. 5G will be a major boon to this industry, and as the new network technology rolls out in the next few years, VR/AR will be one of the major beneficiaries.

When most investors think of VR/AR the first thing that comes to mind is Facebook (Nasdaq: FB) and its Oculus Rift, or newer Oculus Go. Or, Lenovo (NYSE: LNVGY) the world’s largest AR headset maker. But, there is another ecosystem of VR/AR that is flying largely under the mainstream investment community radar with its focus on gaming.

Industry 4.0, shorthand for the connectivity and digitization of manufacturing, which includes increased use of digital tools for manufacturing, training, and marketing, is one area where VR/AR is making an impact. Another is the use of VR/AR to enhance capabilities in high pressure, high stakes professions, such as doctors, pilots, and soldiers. And in yet one more part of this ecosystem, are VR/AR capabilities to enhance safety and security for consumers. An example being the use of VR/AR in autonomous vehicles.

Each of these fast growing areas are already being aided by VR/AR technology to either enhance current systems, provide institutional memory and training for an increasingly nomadic workforce (see my previous article on the gig economy), or to increase the safety of the public and our military. These are a few of the companies that are employing a VR/AR solution today, and not waiting for next year.

Elbit Systems (Nasdaq: ESLT)

Elbit Systems is an Israeli based aerospace and defense company which has been working on an AR cockpit for both commercial and military use. Elbit, known for its HUD (head-up display), which can display flight information to the pilot without the need to look down, purchased Universal Avionics last year. Universal brought a flight management system (FMS) to the merger.

Late last year, Elbit introduced a new product, combining the HUD with the functionality to operate the FMS. This was truly science fiction type technology only a few years ago. The fully functional product can be both retrofitted to older aircraft, without a complete rewiring of the aircraft, as well as built into new aircraft.

Using the system, a pilot can program and change their flight path, select or change a runway, and select and update waypoints, all with just their eyes. The system is also integrated with technology mounted on the outside of the aircraft, which allows for a virtual projection of terrain onto the cockpit window. This makes for a safer and more accurate depiction of reality in bad weather or low altitude flying.

Elbit is using AR not only in the air, but on the ground as well. One of the dangers faced by tactical spotter teams, forward observers that locate and identify military targets, is that an enemy will be able to see and counter their moves when they use a laser to “paint” a target. Using a combination of AR and other technologies, late in 2018 Elbit introduced the HattoriX system, which provides an AR overlay providing command and control capabilities (C2). This allows the forward spotter team to identify a target and feed coordinates to the necessary team delivering a payload on the target, without endangering the forward team by using a laser to paint the target.

Both of these technologies, the HUD VR cockpit, and the ground based forward spotter HattoriX system, make the jobs of their users safer and more efficient. They provide great examples of using VR technology in combination with platforms that are already in place. And, give an idea of what an acceleration in VR use is capable of. I fully expect Elbit to introduce more and more VR based products, and believe now is the time to buy the stock.

Elbit is a solid company expected to grow earnings next year over 14%, with a long term 5 year projection of an average 11% earnings growth per year. And, the company currently pays a 1.42% dividend.

Lumentum (Nasdaq: LITE)

Lumentum has three main areas of business. First, their photonic division works to move the growing amount of data generated each day more efficiently over networks. Second, they produce lasers which are used in precision manufacturing to make sure parts are manufactured to exacting specifications.

And third, and the area I’m interested in today, is a 3D sensing technology that can be placed in mobile devices and autonomous vehicles to provide a virtual reality picture. Lumentum is the largest supplier of 3D laser sensors globally.

These 3D diode lasers produced by Lumentum are more accurate and reliable than radar and camera based technologies, which still play a role in producing a 360 degree picture around an autonomous vehicle. As I’ve pointed out in a few different articles over the past month, a regulatory structure is of paramount importance to the autonomous vehicle market. To enact this structure, vehicles must have extremely reliable and accurate instrumentation with the ability to measure and predict the movement of objects around the car.

Related: Buy These 3 Driverless Car Stocks

In mobile applications, 3D sensors are used for facial recognition, robotic sensing, and IoT (Internet of Things) applications, to name a few. Lumentum provides not only the lasers to perform 3D sensing, but a complete turnkey solution which can be placed in any manufacturer’s mobile device. With a likely expansion into most, if not all future smartphones, robotics, the IoT, and autonomous vehicles, Lumentum may be on the cusp of an earnings explosion. Lumentum occupies a great position at the convergence of emerging 5G networks, with smartphones and the IoT.

Lumentum currently has a PE of 7.88 and is projected to grow earnings in the coming year at over 21%. And, with cash on hand of almost $12 a share, the company has the necessary capital to build out production in an expanding market. Lumentum was caught up in the issues with Apple (Nasdaq: AAPL) last quarter, which resulted in a drop in the stock. But, I believe slowing iPhone sales could accelerate an expansion in its customer base, which would be in addition to the customer base expansion from autonomous vehicles, IoT, and robotics. This pullback could represent a great buying opportunity in the stock.

PTC Inc. (NYSE: PTC)

PTC is on the cutting edge of helping industrial companies convert to digital. With an array of offerings in AR, 3D printing, IoT, and industry 4.0, the company is moving large industrial giants into the future.

Using their Vuforia virtual reality platform the company provides the tools and software to record a manufacturing or business process. The software then creates an AR view of that process that can be used to teach new employees, provide the best training possible around the world, or have established experts within or outside the company review and improve the process without ever entering the manufacturing facility.

“We delivered another strong [quarter of] growth with AR bookings growth,” stated Jim Heppelmann, PTC CEO in its latest conference call last week. “Another strong quarter with AR bookings growth of over 75% versus Q1 of 2018. The main use cases for AR in the industrial world are service and maintenance work instructions, factory operator Instructions, and virtual product demonstrations. While it’s still early, AR commercial adoption within the industrial market is broadening.”

Unlike in the gaming world, where VR is still largely a gimmick, in the industrial world real products are being used by massive companies to drive productivity growth. PTC is well positioned, and now is a great time to get in on this burgeoning trend.  PTC’s customers include John Deere (NYSE: DE), British based BAE Systems (NYSE: BAE), Sinotruk (OTCMKTS: SHKLY) automotive in China, and Sony (NYSE: SNE) in Japan. The addressable market for PTC products is basically any company that manufactures or sells products, or provides a service which can be demonstrated via AR.

PTC stock pulled back slightly last week when Mr. Heppelmann said they were seeing some softness globally, but not enough to lower 2019 estimates. This pullback offers a better entry into the stock, which is expecting over 50% earnings growth in the upcoming year, and is projected to grow earnings over the next 5 years at an average 36%.

Growth in the AR/VR market is already taking place. Whether it is in aerospace and defense with Elbit, in safety and security with Lumenum, or in manufacturing with PTC, you can take advantage of the growth in this market today by adding these names to your portfolio.

Source: Investors Alley

Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) is a behemoth tech company and after the fourth-quarter selloff, investors are wondering if now is the time to buy Google stock. Let’s explore a few reasons why it may be time to pull the trigger.

Balance Sheet

Let’s start with its balance sheet, quietly one of Alphabet’s top assets. While some companies like Apple (NASDAQ:AAPL) have opted to buyback loads of its own stock, Alphabet has let its cash hoard grow and grow. As of last quarter, it has about $106 billion in cash and short-term investments and just under $4 billion in long-term debt.

In other words, Alphabet is sitting on a $100 billion pile of cash. This gives the company staying power in a recession, as well as flexibility to invest in itself or via M&A.

Google Stock Has Assets

Let’s not forget the company’s assets either. Alphabet owns the world’s most popular website, Google.com, as well as the second most-popular website in YouTube.com. Owning those two properties in the internet world is like owning Park Place and Boardwalk in Monopoly.

However, its investments have paid off too. For instance, its self-driving car unit Waymo was valued as high as $175 billion. It owns Android, the most popular smartphone operating system in the world. Its collection of Google assets, Google Drive (think Docs), Gmail, Maps, Chrome, etc., have more than a billion users each.

Growth, Valuation and Google Stock

This next part is a two-part catalyst: Growth and valuation.

For 2018, analysts are calling for sales growth of 23% to $136.5 billion. That goes along with 29.6% earnings growth, with estimates calling for earnings per share of $41.80. In 2019, analysts expect 19% revenue growth to $162.8 billion and earnings growth of 13%.

These are solid numbers from a company this big, with Alphabet toting a market cap of $750 billion.

That said, some investors may balk at its valuation of 25 times earnings. But why? Investors continuously buy shares of Procter & Gamble (NYSE:PG), Walmart (NYSE:WMT), Clorox(NYSE:CLX) and others with P/E ratios near or north of 20 because they’re “safe” plays. That’s despite sluggish growth and pressured margins too.

I don’t have a problem paying 25 times earnings for GOOGL, a blue-chip technology company with the internet’s best assets, strong growth and a rock-solid balance sheet.

Trading GOOGL Stock

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There are a lot of common-sense reasons to like Google stock, but what do the charts say? Fortunately, investors can still get Alphabet stock at a good price today.

As we have laid out at least a dozen times here on InvestorPlace, GOOGL stock remains a strong buy at the $1,000 level. Since hitting this mark in December, we’re only $85 per share off that level. If investors are debating a long-term position in Alphabet, I wouldn’t hesitate to initiate a position on a slight pullback here. That’s even with earnings coming up in early February.

Shares are riding short-term uptrend support higher (black line) and are back above the 50-day moving average. Remember, GOOGL stock has a 52-week high near $1,300.

The way the stock is bouncing between $1,200 and $1,000 does make me a little hesitant (green and red circles). That said, this is a long-term winner and I do not bet against GOOGL over the long-term.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AAPL and GOOGL.

Source: Investor Place