Tech Stock Roundup: Going Long on Quality Picks

The tech stock space is richly varied. Are investors overlooking names such as Maxar Technologies (TSX:MAXR)(NYSE:MAXR)?

| More on:
Overhead shot of young adults using technology at a table

Image source: Getty Images

For newcomers to investing, tech stocks may have earned themselves a certain reputation in 2020. While this asset type has always been packed with momentum and based on speculative trends, this year has seen the space overheating. However, the tech space is richly varied, spanning everything from reliable and established names to startups and from food delivery to logistics.

Weighing that near-term growth potential

The pandemic has seen the sudden ratcheting up of several trends in tech that were already in existence. Remote learning, home shopping, entertainment, and the streamlining of shipping are a few of these. The “work-from-home” trend is covered by Docebo (TSX:DCBO), for instance. This recent IPO rocketed out of nowhere to corner a gap in the market that barely registered pre-2020.

The problem now, though, is that Docebo is firmly into overvalued territory. The remote training name is overpriced, with around 370% share price growth since this time last year. Ordinarily, this might not matter too much. But upside theses based on short-term conditions do not make for a sustainable high-growth environment. However, the potential for social distancing to outlast the pandemic makes this one to buy on a pullback.

Speculative stocks to buy for the long term

Edge computing is beginning to pick up steam. Names such as Fastly and Cloudflare satisfy a tech growth strategy based on this hybrid of localized cloud computing. Meanwhile, both gaming and AI can be covered by one exemplary stock. Nvidia has already been on the radar of semiconductors investors. However, Nvidia is picking up speed, as investors in artificial intelligence gravitate towards it.

E-commerce investing found its hero early on in Shopify, with Lightspeed quickly following in its footsteps as a hot point-of-sale alternative. The issue with ecommerce names is that they are susceptible to vaccine rallies and often head in an opposite direction to the rest of the market. While this has been great for contrarian investors during the pandemic, a reversal could be forthcoming.

Space technology and satellites can be accessed through Maxar Technology. This NASA-partnered businesses is thoroughly diversified and also pays a dividend. While Maxar currently yields less than 0.5%, its payout ratio in three years is expected to be around 12%. That makes this a top tech name to buy cheap and hold for both share price appreciation and dividend growth.

Tech stocks to buy on weakness

Meanwhile, other tech segments are doing less well. Netflix has barely been out of the headlines, with its share price tumbling 6.4% midweek on a subscription loss shocker. Even the mighty Disney has succumbed to the souring of the content-streaming space.

However, since Netflix and Disney are also both movie studios, an end to the pandemic could see these names rally on a vaccine breakthrough. This effectively puts them in the same class as Cineplex. Gauging risk and reward in a digitalized Hollywood comes down to an investor’s level of bullishness on a recovery, therefore. It also makes any name in this space liable to bounce back.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Victoria Hetherington has no position in any of the stocks mentioned. David Gardner owns shares of Netflix and Walt Disney. Tom Gardner owns shares of Netflix and Shopify. The Motley Fool owns shares of and recommends Fastly, Netflix, NVIDIA, Shopify, Shopify, and Walt Disney. The Motley Fool owns shares of Lightspeed POS Inc. The Motley Fool recommends Cloudflare, Inc. and MAXAR TECHNOLOGIES LTD and recommends the following options: long January 2021 $60 calls on Walt Disney.

More on Tech Stocks

sad concerned deep in thought
Tech Stocks

Tech Stocks Crumble: Is it Time to Buy?

Shopify is coming down from its pandemic highs as its business falters, but BlackBerry's business is just gaining steam.

Read more »

young woman celebrating a victory while working with mobile phone in the office
Tech Stocks

This 1 High-Growth Stock Just Got Irresistible

Despite a challenging macro environment, Lightspeed continues to post strong growth, which could help this high-growth stock stage a sharp…

Read more »

exchange-traded funds
Tech Stocks

Buy the Dip: 3 ETFs That Have Taken a Beating in 2022

Three prominent TSX ETFs trades at bargain prices in 2022 because of their significant exposure to the slumping technology sector.

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Tech Stocks

Lightspeed Stock Gains 10% Post Q4 Results

Lightspeed stock gained on the back of stellar results in Q4 of fiscal 2022. Should LSPD stock be part of…

Read more »

Man data analyze
Tech Stocks

Tech Selloff: 3 Growth Stocks Available at Pre-COVID-19 Prices

Tech stocks such as Shopify and Zoom are trading at a much lower multiple due to the ongoing selloff in…

Read more »

TSX Today
Tech Stocks

TSX Today: What to Watch for in Stocks on Friday, May 20

The ongoing strength in the commodity market could help TSX Composite to continue outperforming its U.S. peers in the near…

Read more »

Question marks in a pile
Tech Stocks

Should You Finally Buy BlackBerry (TSX:BB)?

Is it time to finally buy BlackBerry?

Read more »

grow dividends
Tech Stocks

3 Top TSX Growth Stocks to Buy for Less Than $10

These high-growth TSX stocks are trading less than $10 and have strong potential to beat the broader markets in the…

Read more »