Three Must Buy Tech Stocks
Rahul is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
I have been keeping a close track on the technology sector for quite some time now. While some stocks could be called a clear sell, there are gems that are just lying there to be taken. In this article, we will look at three technology stocks which share a common trait of working in big TAMs with a good net cash position.
Yandex NV (NASDAQ: YNDX)
Deemed to be the Russian Google, Yandex has mitigated its risks significantly in the past few months. While Investors were concerned about Yandex losing user base with Google Chrome using Google as the default browser, such concerns have not taken shape as expected. Yandex still holds the biggest pie in Google Chrome overall searches in Russia according to a statement given by Yandex’s CEO Arkady Volozh. Further, the recent development coming with Google’s deal with Opera also had negative effect on Yandex as it went down following the announcement. We believe that this concern is overhyped and investors don’t need to panic at all as Opera will still have Yandex as the default browser in Russia. While Google as a competitor might be a concern, we believe that Yandex differentiates its services from Google through its local presence and knowhow. In this aspect, we consider Yandex to be a bit similar to Baidu as they both work in underpenetrated markets and have a user base that searches in the local language. There have been increasing rumors about Apple using Baidu as the default search engine in China in a bid to strike at Google. We believe that eventually such a deal might come Yandex’s way also, which might result in incremental market share for Yandex at the expense of Google in Russia. With Yandex working in an underpenetrated market, we believe that Yandex is looking at multiyear growth with the increasing per capita ad spend and hence rate it as a buy.
Microsoft (NASDAQ: MSFT)
While Microsoft has faced a lot of problems in the past as the Android and iOS ecosystem gained traction, we believe that it has done good work to get out of that spiral with the development of its touch capable Windows 8 platform. Though, one would definitely worry about the capability of Microsoft to leverage this opportunity in a market dominated by Apple and Google, we believe that Microsoft can gain high traction in the enterprise segment with its unique Office suite and corporate relationships. We believe that the pen touch interface that is to be provided with Microsoft tablets could gain high traction in office space as it would reduce the need of papers with the capability to carry out digital mark-ups and signatures on documents. Further integration with Skype, cloud functionalities with SkyDrive will make it much more attractive for enterprise users as they get improved communications and access. Additionally, as Microsoft has additional catalysts in place with the launch of Office suite and Windows server expected around 2H12, we rate it as a buy.
Baidu (NASDAQ: BIDU)
Baidu has taken recent hits with Qihoo360 announcing its own search engine in mid-August as the shares have been ~15% down after the announcement. We believe that Qihoo is to Baidu in China as Microsoft has been to Google in the US. Microsoft With all its cash has not been able to overtake Google in its core competency as it was not able to replicate Google’s accumulated data which helps improve the user search experience. We believe that as a first mover Baidu will always have an advantage over Qihoo with its accumulated data and its investments in cloud computing. We believe that the recent sell-off was overblown and the recent weakness provides a window of opportunity to buy.
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TheMoodyAnalyst has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Baidu, Google, and Microsoft. Motley Fool newsletter services recommend Apple, Baidu, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.