Ever since the end of the financial crisis 13 years ago, the stock market has been on an amazing bull run. The primary driver of those gains has been the tech sector, with the tech-heavy Nasdaq Composite gaining nearly 1,000% in value. In comparison, the S&P 500 only added 550%.
Yet the markets stumbled last November as investors rotated away from high-flying tech stocks into more consumer-oriented defensive stocks, and 2022 looked as though it was going to be more of the same. All three major U.S. exchanges tumbled, though none more so than the Nasdaq, which lost over 20% of its value, officially putting it in bear market territory.
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Rampant inflation, rising interest rates, and persistent supply chain snags are causing the idea of "stagflation," or stagnant economic conditions coupled with fast-rising prices, to creep into the lexicon again.
One benefit from the downturn is that previously untouchable tech stocks are now more affordable, and some can even be considered bargains. Although the indexes have rebounded sharply -- the Nasdaq exchange has cut its deficit by more than half -- there are still discounted stocks to be had. If you have $1,000 to put into play today, the following pair of stocks may be the bargains you've been looking for to buy now and hold onto for years to come.
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1. Qorvo
Semiconductor manufacturer Qorvo (QRVO 1.79%) began its decline long before the November sell-off, and after it reported its fiscal third-quarter earnings last month it sold off another 10% again. It's a shortsighted attitude by the market, but one that shrewd investors should take advantage of, as the stock is down 28% over the past year and 35% below its 52-week high.
The main driver for Qorvo is the rollout of 5G networks. Its chips are used by all of the major smartphone makers, from Apple (AAPL -0.35%) to Samsung, and because it's been years since any meaningful improvements to mobile speed have been implemented, analysts are anticipating a major upgrade supercycle is only just getting underway. Apple is Qorvo's biggest customer, accounting for about 30% of its total $4 billion in revenue reported in fiscal 2021.
Earlier this month Apple revealed a bevy of new products, including a new 5G low-cost iPhone SE and iPad Air tablet, which should keep the tech giant's growth trajectory on track. But more than that, Qorvo's DW3000 ultrawideband chipsets provide interoperability for Apple's iPhone and Watch U1 chip, which is basically Bluetooth on steroids. Qorvo will be riding Apple's coattails higher.
At less than 10 times next year's earnings estimates and double-digit sales growth, Qorvo is a discounted chipmaker that is ready to fly.
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2. Netflix
Another beaten-down stock is streaming giant Netflix (NFLX -0.63%), which has lost almost half its value from its recent highs and is down 38% so far this year. It looks like an incredible opportunity for investors to buy into a company with so much growth potential still in front of it, even if that growth doesn't come in the same form the markets have been used to.
With some 222 million global subscribers, growth in its most mature markets, such as the U.S., has pretty much stagnated, especially after the big spikes Netflix saw during the lockdown phase of the pandemic. Even so, the streamer expects to add 2.5 million net new subscribers in the first quarter, which in itself is still an achievement considering the plethora of choices consumers have today for watching streaming content.
And to offset the slower growth in those mature markets, Netflix recently imposed price increases. Most consumers will absorb the higher cost (albeit with some grumbling), so Netflix is able to add to its top line relatively effortlessly without much pushback and nearly double its revenue per subscriber growth rate to 15% this quarter.
Netflix is one of the worst performers in the S&P 500 index this year, yet its price-to-earnings ratio of 33, which might seem elevated, is actually at levels not seen in a decade. Over that time, Netflix has generated 2,000% returns for investors.
Of course, that was with higher subscriber growth rates, so a discount to its historical P/E may be warranted. But with international markets there remains a deep well to be tapped and domestic gains incremental -- but supplemented by higher prices -- Netflix remains a stock to buy in 2022 and hold for another decade or more.
