The tech sector is always bubbling over with interesting investment ideas, but how do you separate the ones that can truly be strong performers for your portfolio from the has-beens and never-weres? You can start by asking the experts.
So we did exactly that, and asked a handful of your fellow investors here at The Motley Fool to share their picks for the best tech stocks to buy today. Read on to see why they chose Universal Display (NASDAQ:OLED), Micron Technology (NASDAQ:MU), and Shopify (NYSE:SHOP).
The memory specialist
Ashraf Eassa (Micron Technology): My tech stock pick for the middle of May is memory maker Micron Technology. It's one of a mere handful of chip players that manufacture both DRAM and NAND flash memory -- both hot commodities these days as computing devices from smartphones to data center servers are increasingly requiring more of these technologies.
Micron's position in DRAM has strengthened dramatically over the last several years, which has allowed it to really capitalize on a boom in demand. Moreover, based on the technological progress that Micron discussed at its most recent analyst day, its competitive position should continue to improve in the years ahead, positioning it to capture additional share in this highly lucrative market.
Additionally, while most of Micron's revenue comes from sales of DRAM, the computing industry is shifting away from traditional hard disk drives to storage drives based on non-volatile memory technologies. Micron has a strong position in the most common type of non-volatile memory, known as NAND flash, and it's one of only two companies that build 3D XPoint, a type of memory that Micron co-developed with Intel, and which is faster and longer-lasting than NAND flash.
As our data storage needs grow and as non-volatile memory storage supplants mechanical storage, Micron looks extremely well positioned to benefit. And, as icing on the cake, Micron currently trades for around 7.4 times trailing 12-month earnings -- which, frankly, is downright cheap for such a great company.
The misunderstood iPhone component supplier
Anders Bylund (Universal Display): Apple (NASDAQ:AAPL) giveth and Apple taketh away. That's the story behind the huge volatility in Universal Display's stock price over the last year and a half. Currently, the organic light-emitting diode developer's shares are sitting at the lower end of one of those roller-coaster hills.
For all the wrong reasons, I might add.
You see, landing Apple as a major client at long last was certainly a nice bonus, but it wasn't the game-changing event that Mr. Market made it out to be. Share prices nearly quadrupled in less than 52 weeks after the rumor mill started reporting that the iPhone X would launch with a large OLED screen. Then, after Apple experienced component supply issues, and demand for the notch-bearing flagship phone turned out to be a bit lighter than expected, Universal Display crashed right back down. Today, the stock trades 53% below the yearly high it reached in January -- at the peak of iPhone X mania, and just before Apple reported its holiday-quarter results.
However, Universal Display can lean on many growth engines, and Apple is far from the most important one. Android phones from many manufacturers already provide it with a large entry point into the smartphone world, after all. And its greater opportunities include big-screen OLED TV sets and an upcoming foray into everyday lighting products. Letting the fortunes of Apple draw this company's stock chart is a mistake, whether Cupertino's influence happens to be positive or negative.
Right now, though, that market quirk translates into a wide-open buying opportunity.
The fast-growing e-commerce play
Chris Neiger (Shopify): Shopify's e-commerce platform helps businesses of all sizes -- but primarily small ones -- set up and run online stores, accept payments, and even manage shipping. The beauty of its cloud-based software is that it works with popular platforms like Facebook and Amazon.com, making it easy for businesses to sell their products and services on the internet's biggest marketplaces.
Shopify reported its first-quarter results at the beginning of this month, and they show it continuing to grow at a torrid pace. Revenue spiked 68% year over year to $214.3 million, driven by improved sales in both its merchant solutions (up 75%) and subscription solutions (up 61%) segments.
That growth has come from the company's ability to attract new merchants to its platform. Currently, more than 600,000 business use its e-commerce tools, up from 243,000 two years ago. And while small business customers are Shopify's core clientele, it's also doing a great job of adding larger customers. In Q1, Monster Electronics, HarperCollins U.K. and Colgate-Palmolive joined Shopify Plus, the company's high-end service. Because these businesses spend significantly more on the company's platform, Shopify Plus customers now account for 22% of the its monthly recurring revenue, up from 17% in Q1 2017.
It's important to note that Shopify isn't profitable on a GAAP basis right now, but on a non-GAAP basis (excluding expenses like stock-based compensation) it earned $4.2 million in adjusted net income, or $0.04 per share in Q1, up from an adjusted loss of $0.04 per share in the year-ago quarter.
This is still a young company that's growing quickly, and it has only begun to tap into the vast e-commerce market. Investors can expect some volatility from Shopify's stock as the company grows, but once this e-commerce player starts turning sales into hard profits, I think investors could be rewarded nicely.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Anders Bylund owns shares of Amazon, Intel, Micron Technology, and Universal Display. Ashraf Eassa has no position in any of the stocks mentioned. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon, Apple, Facebook, Shopify, and Universal Display. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.