With the number of COVID-19 cases surging in the U.S. and with the global economy in a tailspin, it's understandable that investors are cashing out, waiting for better days.
But for bargain hunters, there's no better time to be an investor. Sure, stocks are whipsawing between gains and losses on a daily basis. And yes, there's a lot of uncertainty as to how the pandemic will play out. But once the dust settles, there are some stocks -- Apple (AAPL -0.35%), Microsoft (MSFT 1.82%), and Snap (SNAP 27.63%) included -- that are poised to gain. Here's why these three tech stocks should be on your radar.
Image source: Getty Images.
1. Apple's 5G iPhone is still on track
On Tuesday, shares of Apple were down 23% year to date, plummeting 30% since February. For good reason. With most of its supply chain in China and with a large consumer base in that region, Apple saw early on what the coronavirus could do to business. It was among the first tech companies to issue a warning and was early to shutter stores and order employees to work at home. Those actions have so far enabled Apple to weather the storm better than some of its rivals, even if its stock hasn't.
In China, Apple stores have reopened, and its biggest assembler, Foxconn Technology Group, recently returned to normal production. By some estimates, Apple saw a 61% decline in iPhone sales in China during February, but there's still strong demand for its devices.
It's also on the cusp of what is expected to be a huge upgrade cycle with the launch of its 5G iPhone. The COVID-19 outbreak may slow the roll-out and adoption of 5G services, but they're not going away. Nor are Apple's plans to launch a 5G iPhone in the fall. Despite predictions Apple would be forced to delay its launch because of the outbreak, Bloomberg reported last week the phone is on schedule for the fall. Also last week, Apple rolled out a new iPad Pro and MacBook Air, showing its ability to churn out new products even in the face of major supply chain disruptions.
While there is a lot of uncertainty as to how the pandemic will play out in the U.S. and across the globe, once it's contained, Apple is poised to grow. Wall Street thinks it can still hit $325 a share, up 28% from where it recently traded. With shares down double digits in 2020, Apple is a real deal amid the pandemic disruption.
2. Snap should benefit from its safe-haven status
Snap may not be a leader in social media, nor does it have billions of users. What it does have is a reputation as a safe place for users to gather, keeping content accurate, reliable, and relevant.
That will benefit the maker of Snapchat, the disappearing messaging app, in the wake of the pandemic. With misinformation and false ads flying across the internet, advertisers want to market where they know it's safe. Users craving a steady stream of information are flocking to social media, and Snap has been more than willing to provide that information. It recently partnered with the World Health Organization and the Centers for Disease Control to provide coronavirus information and launched a filter supported by the WHO promoting tips to stay healthy.
Those efforts could boost engagement on its platform and drive new users and more advertisers, benefiting its already impressive growth. For its fourth quarter, revenue grew 44% year over year with daily active users jumping 17% to 218 million. When reporting fourth-quarter earnings, Snap said advertisers are increasing the number of ads they run.
That increase may have dried up for now amid the pandemic, but once things are back to normal, Snap should benefit. So should its stock, which is down 37% since the start of the year. Wall Street expects shares to reach $19.40 a share, implying 94% upside.
3. Microsoft products are in demand amid COVID-19
The coronavirus is causing millions of people to work at home, which creates a need for new equipment, collaboration tools, and cloud software and services. All of which Microsoft provides.
Like most tech stocks, Microsoft's shares have been under pressure in the wake of the pandemic. With the supply chain breaking down overseas and stores shuttered around the globe, the tech industry is reeling from a slump in demand. That's true of Microsoft's PC business. It recently warned its PC computing unit, which includes Windows OS, won't meet its revenue target because of the virus.
But outside of the PC market, Microsoft is seeing a huge demand for its products, particularly Teams, its collaboration software. Last week, it said Teams had 44 million daily active users, having added 12 million in seven days. That's expected to increase with companies across the U.S. urging workers to stay home.
Microsoft's cloud business has also been booming in recent years. That high-double-digit growth may pause in the next couple of quarters, but it doesn't go away because of COVID-19.
Microsoft's stock has been able to weather the malaise in the market better than some other tech companies and was recently down 14%. Wall Street has a $196.47 price target on the software giant, implying a 43% increase. With a lot of growth opportunities, Microsoft is among the deals for bargain-hunting investors.
