It is usually hard to find established tech stocks with good growth prospects and that are not overpriced. That’s because growth commands a premium, and tech commands a premium, when compared to normal stocks, thanks to the increase of their earnings and profits.
However, certain tech growth stocks are great bargains right now, with Apple (AAPL) and Micron Technology (MU) being two we especially like. Here’s why:
Apple’s revenue in the initial six months of 2021 has increased by 34% y/y to $201 billion, a large jump over the 5.5% top-line growth it clocked in fiscal 2020 which ended last September.
The iPhone 12 is dominating the 5G market, getting over 30% of shipments in Q1 of 2021. Apple shipped nearly double the shipments of second-place Oppo according to Strategy Analytics.
5G has lifted Apple’s fortunes greatly, driving more shipments and this is unlikely to change with its massive install base of users.
The even better news for the company is that 5G smartphones are still in their early stages of growth. And they have seen just under 40% of smartphone sales in Q1. IDC says that 5G phones will account for almost 70% of overall shipments by 2025.
Apple is off to a solid beginning for 2021, and it will keep winning in the long run thanks to this new technology. That’s why you should look no further for a tech stock with growth potential.
2. Micron Technology
Trading at under eight times forward earnings, Micron Technology stock is very cheap right now for a company that is delivering all around growth. The company’s price-to-sales ratio is at 3.7, which is lower than 2020’s average of almost four, and that is regardless of it growing at a slower pace in 2020.
The computer memory maker’s revenue for the initial six months of the current fiscal year is higher by almost 21% y/y. And this is only the start.
The company expects 31% y/y revenue growth in Q3 to $7.1 billion, while earnings might almost double. Analysts believe the momentum will keep going for the remainder of the year and stretch into fiscal 2022.
Consensus estimates predict 25% revenue growth for fiscal 2021 and over a 31% increase next year. Earnings per share are also expected to almost double in both fiscal years, driven by two trends.
First, the increase in 5G smartphones, for instance, has given Micron’s mobile business huge growth. The sector recorded a 44% y/y revenue growth last quarter and brought in 29% of the company’s total revenue.
Second, the overall memory market looks to put Micron on a long term growth path. Global Market Insights predicts that the market could reach an annual growth of almost 14% through 2026.
Analysts say the company’s bottom-line growth rate will double over the next five years when compared to its last five years. For all these reasons, Micron is another example of a tech growth stock you should consider right now.