The markets were in awe as Reddit retail investors tormented big hedge funds via a short squeeze on GameStop (NYSE: GME), AMC Entertainment (NYSE: AMC), and other stocks investors were betting heavily against. For now, that chapter has closed and another chapter has begun; a chapter that has seen the Street's favorite big tech names take a punch.
Of course, there could be more short squeeze targets in the short term but you’ll want to take advantage of some big tech dippers, here are three to consider:
1. Facebook (Nasdaq: FB)
Market Capitalization: $748.51 billion
The social media giant has seen its stock plunge after it was forced to suspend former President Donald Trump (one of its biggest users) indefinitely for his involvement in the Capitol attack on Jan. 6. As a result, conservatives fleed Facebook in protest of the removal of Trump’s account.
Meanwhile, the stock recovered from then but now finds itself down again after the short squeeze and providing a disappointing outlook in its fourth-quarter financials. For the first quarter, Facebook warned that it could see some disruptions to some of its platforms as a result of smartphone giant Apple’s planned changes to its forthcoming iOS software.
Now, shares of Facebook have recently been under more pressure for blocking news feeds in Australia over a dispute with the nation’s government.
Of course, there are a lot of headwinds now with Facebook but investors would be wise to seize a buying opportunity here, as it earned almost 150% in stock market appreciation in the past five years.
Shares of Facebook are down 7% since Jan. 26. Its PE Ratio now sits at 26.
2. International Business Machines (NYSE: IBM)
Market Capitalization: $107.66 billion
IBM has long been a loser on the Street. Once synonymous with ingenuity, the iconic company has been flailing for over a decade. But, with a plan to reinvent itself, this unervalued and unloved stock has value inestors looking once again. By the end of 2021, IBM said it would be splitting into two separate publicly traded companies. Under the move, it would be spinning off its flailing IT services business in 2021 in an effort to focus on its “hybrid cloud” business of the “New IBM.”
The coming move follows IBM’s focus on cloud growth, while its software sales have slumped. Most notably, IBM made a $34 billion purchase of cloud firm Red Hat in 2018.
While revenue has either dropped or remained stagnant for 10 straight quarters, according to Bloomberg, the cloud space will be key to IBM’s growth going forward.
In the meantime, you might want to buy IBM for its enticing 5.43% dividend, as it looks to expand further into cloud.
Shares of IBM are down 1% since Jan. 27.
3. Apple (Nasdaq: AAPL)
Market Capitalization: $2.14 trillion
In January, I reviewed Apple when it was trading at an all-time high. At the time, Wall Street analysts were expecting a strong fourth-quarter report.
While I’ve been bullish on the smartphone giant in the long run, I did note there could be a little short-term volatility. But it wasn’t for the reason I expected, as nobody was thinking that there would be a big rebellion against the hedge funds.
In addition, Apple was trading 2% lower intraday Monday after Barron’s reported over the weekend that the Bill & Melinda Gates Foundation Trust halved its holdings in the tech giant.
Despite Apple crushing estimates on its top and bottom lines, shares have fallen 11% since Jan. 26.
But now might be a good time to buy at the dip, even if Apple sees more short-term volatility on Democrats potentially passing a corporate tax hike with increased regulations.
If you can get yourself passed short-term headwinds surrounding Apple, there are a couple of potential developments to be excited about.
One, Apple is reportedly working on an electric vehicle project. Two, Apple could see big demand in 2021 from its recently launched iPhone 12, which is the company's first to support 5G capabilities. The new iPhone could help Apple surpass a $3 trillion valuation by the end of the year, according to an analysis posted by Wedbush, as cited by AppleInsider.
In addition, Apple is now the global leader in smartphone shipments again, with nearly 80 million units in the fourth quarter, according to a report from market research firm Gartner. That was the first time it beat all smartphone makers including South Koreas Samsung since 2016.
Currently, at around $127 per share, you should look at buying a slice of Apple.
It’s unclear if there will be another short squeeze attempt by retail investors in the short term but fears on Wall Street have appeared to have quelled down for now.
In recent years, big tech stocks are safer plays when compared with other large or small companies. Technology has become a utility, a lesson Covid-19 put clearly into focus.
While there could be short-term volatility, these big tech stocks will likely be worth the investment in the long run.
CapitalWatch has no business relationship with any company whose stock is mentioned in this article. Information provided is for educational purposes only and does not constitute financial, legal, or investment advice.