Usually, it can be challenging to select a good stock. However, with soaring inflation, supply chain disruptions and rising interest rates, investing in companies has become more complex.
Alibaba has been bashed for over a year amid worries about Chinese regulations regarding significant economic power in China. Now that the Chinese government has eased concerns regarding tightening policies for substantial players in the Chinese economy, Alibaba has soared over 30 percent, reaching up from close to its all-time low since its inception in 2014. Regardless of the steep price change in the last week, many analysts still predict Alibaba stock to soar, as it seems highly undervalued from a value investing standpoint.
Now that worries about a possible delisting of significant Chinese companies have eased, investors have calmed down a bit. In addition, investors were worried about China’s involvement in the war, but China has remained relatively neutral and investors are eyeing Chinese companies with extremely low valuations.
Like Alibaba, Meta faces challenging times in the market, as sentiment towards restricted access to the European market brings results down. Last quarter, Meta published results that disappointed shareholders, after which Meta stock fell 26.4 percent, quickly evaporating 230 billion dollars, registering a record daily loss for a US-listed company.
Despite negative news and regulatory challenges for Facebook, Meta has shifted focus toward the Metaverse. In 2021, Meta spent $10 billion building the Metaverse, partially explaining a drop in profits.
Investors should not forget that Facebook has around 2.9 billion active users and is currently building a world that might be considered game-changing. In addition, more prominent companies tend to spend more money to acquire growth as a large majority of the market is already developed. Meta has deliberately emphasized they will focus on the Metaverse and might realize a significant amount of development based on their other supportive businesses to finance a new way of generating revenue.
Meta Platforms’ shares have recently become much more inexpensive. Therefore, it’s worth comparing the internet giant’s price-to-earnings ratio to other social media platforms as now seems to be one of the best times to get into all future developments Meta will bring, as this could be a stock to hold for a long time.
HPQ seems to be a forgotten force among information technology companies and has been showing substantial revenue since PC sales are strong and demand is increasing, according to HP’s CEO. HP notebook, desktop and workstation sales generated 71 percent of total revenue during the last quarter. Still, analysts expect HP to suffer from a post-pandemic lifestyle, while others believe that working from home is here to stay forever.
In addition, HP has shown stable margins consecutively and pays a generous dividend of 3.1 percent. Moreover, valuations are low, which has many investors keen on long-term investments.
HP has shown significant revenue of 15.3 billion dollars, amounting to a profit of 92 cents per share amid the third quarter, and expects personal computer sales to grow steadily. Moreover, post-pandemic revenue might equalize in 2023, making HP a considerable force for a long-term value play.
Apple has built what is considered one of the world’s best brands and is here to stay while innovating in the market and finding ways to increase revenue year to year. In addition, in the past five years, Apple has repurchased 20 percent of their shares, significantly increasing the stake of long-term holders in the company.
Investors especially love Apple for its commitment to technological development. In addition, Apple seems to invest most of their liquidity into growing their own business instead of using acquisitions to grow further. Moreover, Apple pays a stable dividend of 0.5 percent per share.
In addition, Apple has shown they are doing exceptionally well, increasing year-to-year revenue. Last year, Apple’s total revenue increased 11 percent thanks to yearly product development. Apple spent 23 billion dollars on research and development in 12 months and is continuously working to strengthen its position in the market in terms of hardware, software and services.
Netflix has been facing tough times in the market, suffering a loss of over 26 percent in its stock price since the beginning of 2022. Many investors argue that Netflix is suffering from unstable subscriber growth, and if there is one thing investors hate, it’s uncertainty.
Netflix has been able to increase its prices but is showing stagnant growth. Still, more prominent companies seem to have more difficulty growing their user base. Moreover, Netflix appears to have the pricing power to increase prices by over 15 percent and still grow its user base. Even though there seems to be an upside to Netflix’s stock price, investors remain patient. At the same time, many competitors seem to rising in the streaming industry and are outperforming Netflix on growth. Famous examples of emerging streaming platforms are HBO MAX, Hulu and Disney Plus.
In addition, Netflix has reported negative cash flow, but management has stated that it has the cash flow to break even in the first quarter of 2022, followed by consecutive months of positive free cash flow from then on, with which they’ll try to enforce share buy-backs.
A final consideration
It is not an easy time to be an investor. Companies with sky-high valuations are shooting to the bottom, with some growth stocks having dropped over 50 percent. In times of economic downturn, it can be wise for investors to diversify well and remain conscious about exposure to growth and value investment. We believe many of these stocks have low valuations and offer a good starting point for investments during inflationary periods and times of high uncertainty. Some of these companies have low valuations, while others are just stable, growing companies with consecutive dividends and healthy cash flow.