Tech Stock Crash: Time to Buy 3 Stocks at Cheap Prices

Tech stocks worldwide crashed, as Omicron fears smoothened inflated valuations. You can now buy growth stocks at cheap prices.

| More on:
Financial technology concept.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Tech stocks across the globe crashed in 2022, as fears of Omicron increased. This is the third major dip tech stocks have witnessed in the last 12 months. Is this a sign of a tech bubble burst or more profit booking from investors? To answer that question, you need to look at the market and its ability to support growth. Nothing has changed from the long-term perspective. This means the dip is short term, and the tech stocks could bounce back once the Omicron fear eases. With the government fiscal stimulus fading, investors are probably cashing out their risky investments. 

Time to buy three stocks at cheap prices

This is a good time to buy three growth stocks at cheap prices, as they rebounded after a dip in the past three events. 

The above three stocks are leaders in their own spaces and use software solutions to address critical pain points of evolving businesses. The three are not immune to competition, but their strong foundations and market share make them good stocks to buy the dip. 

Constellation Software

Constellation is in a long-term uptrend, growing gradually from $80 in 2012 to over $2,160 in 2022 — a 26-fold increase in 10 years. You may argue that 2010-2020 was the decade of software. Everyone moved to software, which led the way to today’s data-led economy. During this software boom, Constellation acquired over 260 vertical-specific software companies that serve a niche market. The niche market removed the biggest threat software companies face: competition. 

Constellation has built a robust business serving over 125,000 customers in over 100 countries. The company continued to acquire new businesses and maintain a stable revenue growth rate. The pandemic and the overall tech industry impacted Constellation’s share price in the short term, but it could bounce back to its long-term growth trend. The stock fell between 6-9% in the last two dips of 2021, only to rise 16-27% in the following months. 

In the current tech sell-off, Constellation stock fell over 9%. The stock has bottomed out and is now returning to growth. This is the right time to buy a long-term growth stock at a discount. 

Shopify stock

Shopify, the star of the pandemic, is gradually losing its shine, as investors book profits. The shares surged to sky-high valuations, as they saw 10-year growth in a year. All the stimulus money, which inflated tech stocks, is now disappearing, creating a tech downturn. Shopify faced the music, with the stock falling 22% since Christmas. The stock surged 21% in 2021 after rising 169% in 2020. 

The question is, will the stock end the year 2022 in the green? Shopify was in an uptrend in 2019, but the significant surge in 2020 disturbed the smooth line and created volatility. The e-commerce trend is here to stay, and Shopify still enjoys 46% revenue growth in the third quarter, which is slow compared to more than 95% growth it witnessed in 2020. The stock price has hit a ceiling and is likely to hover in the $1,300-$2,200 range. The stock is currently trading closer to the lower range, which makes it a good buy. You can buy the stock now and sell it at a price above $1,900, which is 37% upside. 

Descartes Systems

Descartes Systems shares fell 12% towards the new year countdown, as Omicron-induced lockdown once again impacted some of its customers. The stock surged 33% in 2020 on the back of the e-commerce wave. It surged 40% in 2021 as pent-up demand from economic recovery created a supply chain crisis worldwide. This crisis would likely continue in 2022, creating an opportunity for Descartes Systems to provide supply chain solutions. 

I am bullish on Descartes and expect it to surge another 30% this year. Now is a good time to buy this stock at a discounted price. 

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.

The Motley Fool owns and recommends Shopify. Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool recommends Constellation Software.

More on Tech Stocks

Dividend Stocks

TFSA Investors: Turn $1,000 Into $10,000 in 10 Years

10-fold growth within a decade is rare but not unheard of. You can capture this growth either by predicting a…

Read more »

Growth from coins
Tech Stocks

Got $1,000? Buy These 3 Under-$20 Growth Stocks to Earn Higher Returns

These under-$20 growth stocks can deliver solid returns in the long run.

Read more »

Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks
Tech Stocks

TFSA Investors: 3 TSX Stocks You’ll Regret Not Buying on the Dip

Among wide range of investments allowed in a TFSA, now is the time to invest in stocks.

Read more »

Tired or stressed businessman sitting on the walkway in panic digital stock market financial background
Tech Stocks

2 Stocks That Lost Over 50% in 2022

The recovery of the TSX’s tech superstar and a promising high-growth stock that lost more than 50% in 2022 is…

Read more »

Man holding magnifying glass over a document
Tech Stocks

Why BlackBerry Stock Looks Way Too Undervalued After Q1 Earnings

BB stock hasn’t seen any appreciation lately, despite its continued progress on the IVY platform and early signs of the…

Read more »

A stock price graph showing declines
Tech Stocks

BlackBerry Q1 Earnings: The Declining Revenue Streak Continues!

Will BB stock break below $6?

Read more »

A bull outlined against a field
Tech Stocks

After the Recent Fall, it’s Time to Turn Bullish on 2 TSX Growth Stocks

With the kind of lows these TSX stocks have seen, the negatives appear to be priced in.

Read more »

man sitting in front of 3 screens programming
Tech Stocks

3 Ultra-Cheap Tech Stocks to Consider Buying

Three ultra-cheap tech stocks are interesting picks for their favourable business outlooks and long growth runways.

Read more »