September Massive Sales: 2 Best Stocks To Buy Now
Wall Street is increasingly worried about a stock market crash. Goldman Sachs analysts argue that inflated valuations have increased the risk of a correction, while Morgan stanley analysts downgraded their rating on US stocks to underweight them citing risks to growth. There are a few other telltale signs of a potential crash in the maps, all of which threw the S&P 500‘s robust rally out of gear in September.
However, the September liquidation offers a great opportunity for savvy investors looking to invest in solid companies for the long term. Apple (NASDAQ: AAPL) and Nvidia (NASDAQ: NVDA) are two such stocks that investors can consider buying hand in hand in the midst of the ongoing correction. Let’s see why.
Trading at 28.5 times earnings, Apple is trading at a discount to the S&P 500 earnings multiple of 31. This already makes Apple an attractive stock to buy given its impressive growth history and growth. ‘a new sales engine in the form of the iPhone 13, and a massive sale in September gives investors the opportunity to buy it at a cheaper valuation.
The tech giant has seen tremendous growth with revenue increasing 36% year-over-year in the third quarter of fiscal 2021 to $ 81.4 billion, with iPhone accounting for 49% of sales. ‘business. Apple’s iPhone revenue grew 50% year-over-year in the quarter that ended in June, and the iPhone 13 can help the company maintain that momentum by increasing its market share.
For example, the aggressive pricing of the iPhone 13 line in China, which makes it cheaper than the launch prices of the iPhone 12, as well as the lack of competition in the high-end smartphone market from Huawei, should be a tailwind for the device. Apple has reportedly received over 5 million pre-orders for the iPhone 13 in China on various online platforms such as Ali Baba‘s Tmall.com and JD.com.
JD.com reported 2 million pre-orders for the iPhone 13, surpassing the 1.5 million pre-orders received for the iPhone 12 last year. Market research firm Canalys reports that Apple’s share of the Chinese smartphone market rose to 43% in the second quarter of 2021, from 28% a year ago, and the iPhone 13 may increase that number. Additionally, a survey conducted by Strategy Analytics in June found that 70% of buyers plan to upgrade their devices and 90% of respondents want 5G in their next device.
While China is expected to account for 47% of 5G smartphone shipments this year, the iPhone 13 appears to have put Apple in a good position to exploit the same. Meanwhile, the production constraints facing Android original equipment manufacturers will also be a positive wind for the iPhone 13. The shortage of high-end Android devices is expected to help Apple gain more market share. in the USA.
In total, Strategy Analytics estimates that the iPhone 13 can increase Apple’s share of the 5G smartphone market from 29% to 40%. Additionally, investors should remember that the 5G smartphone market is expected to grow rapidly in the future, generating estimated revenue of $ 337 billion by 2025, up from around $ 108 billion this year.
Apple is one of the best bets to take advantage of this opportunity, as the iPhone 13 is expected to further increase its 5G market share. Thus, the iPhone is expected to experience multi-year growth thanks to 5G smartphones, which will increase Apple’s revenue and profit as it drives the business forward significantly.
All of this makes Apple one of the top 5G stocks to buy in the event of a market correction, as it gives investors a ticket to take advantage of a searing, centuries-old growth opportunity.
Nvidia is an expensive stock to buy with a price / earnings ratio of 78. The chipmaker’s rich valuation is justified by the explosive growth it has consistently achieved due to its dominant position in the graphics card and audio market. growing influence in other areas such as data centers and automobiles.
The company’s second-quarter fiscal 2022 revenue increased 68% year-on-year to $ 6.5 billion and adjusted profit jumped 89% year-on-year to $ 1.04 per share. Thus, investors should not miss the opportunity to buy this fast-growing company if its shares fall due to a large market correction, especially given the multiple growth levers it can benefit from.
The video game hardware market is Nvidia’s biggest catalyst, with the segment producing 47% of its revenue in the last quarter. Jon Peddie Research claims that Nvidia controlled 83% of the discrete GPU market in Q2 2021, which is the main reason you might want to buy the stock. Indeed, the size of the discrete graphics card market is expected to grow from $ 29 billion last year to $ 44 billion in 2023.
Thus, Nvidia could generate substantial additional revenue from graphics card sales in the future thanks to its massive market share and huge user base installed in an upgrade window. Meanwhile, Nvidia’s strong position in the nascent cloud gaming market will be a further tailwind. Newzoo estimates that the cloud gaming market could generate $ 6.5 billion in revenue by 2024, up from just $ 669 million in 2020.
Nvidia’s cloud gaming service – GeForce NOW – has already gained 10 million subscribers, which is impressive given that the cloud gaming market is expected to reach 24 million paid subscribers by the end of 2021. Thus, Strong cloud gaming market share can further drive the tremendous growth of the company’s gaming business.
On the flip side, Nvidia’s automotive business has started to pick up steam as the design wins the company has achieved in this segment translate into revenue. The company expects the automotive business to generate $ 8 billion in revenue over the next five years, which portends a nice increase in segment performance from the $ 576 million in revenue generated in the year. last.
And finally, Nvidia is also well positioned to dominate the massive data center market with new chips and software offerings. The chipmaker is said to be sitting on a $ 100 billion addressable opportunity in data centers, which is why revenue in this segment has grown at such a high rate. Nvidia’s data center revenue grew 35% year-over-year in the last quarter, with the company’s graphics cards dominating the supercomputer market and cloud customers purchasing more of its chips.
Ultimately, it’s no surprise why analysts believe Nvidia’s earnings are expected to grow at a growth rate of over 30% for the next five years, which makes buying this growth stock down a no-brainer.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.