It's no secret that technology stocks haven't been a great place to put your money over the past six months. But stepping away from tech stocks permanently would be a big mistake, considering that they can be some of the best long-term investments in the market.
For investors who have some time to wait out the market's current downtown, putting $3,000 toward tech stocks like Roku (ROKU +0.79%), Take-Two Interactive (TTWO +1.50%), and Apple (AAPL +0.80%) -- and holding the stocks for five or more years -- could end up being a great decision. Here's why.
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1. Roku
Roku was a so-called pandemic stock that experienced huge gains when everyone was stuck inside their homes. But ever since vaccines became widely available and the U.S. lifted nearly all restrictions on social gatherings, some investors have sold off their shares.
That's probably a mistake. Consider that in the company's first quarter, Roku's active accounts increased 14% from the year-ago quarter, reaching 61.3 million. Not only is the company getting more people to use its streaming platform, but they're also spending more time using it as well, with 21 billion hours streamed in the first quarter -- up 14% year over year.
NASDAQ: ROKU
Key Data Points
And finally, Roku has proved that it's more than just a pandemic play because the company has very successfully increased the amount it earns per user. In the most recent quarter, average revenue per user jumped 34% to $42.91, which helped boost net sales by 28% from the year-ago quarter.
There's no guarantee that Roku will continue on its current trajectory, of course. But the company's latest financial results do prove that this tech stock is still producing well and it deserves strong consideration for your portfolio.
2. Take-Two Interactive
Take-Two is a video game developer and publisher that owns popular titles including Grand Theft Auto and NBA 2K22.
Like Roku, video game stocks boomed during the height of the pandemic, but have cooled down since then. That was inevitable, given the demand for at-home entertainment during that time, but writing off Take-Two would be a bit premature. Here's why.
First, the company has proved that it can create uber-popular gaming titles that help it tap into the fast-growing gaming market -- which will balloon into a $314 billion industry by 2026. Case in point is NBA 2K22, which was released late last year and has already sold more than 10 million copies.
NASDAQ: TTWO
Key Data Points
That's impressive, but to stay ahead of the gaming competition Take-Two knows that it will need additional hits as well. Which is why management has said that the company will release 69 new titles over the next three years.
And finally, Take-Two just recently completed its acquisition of the mobile gaming giant Zynga. The purchase will add a significant increase to Take-Two's bookings, and management believes it will help the company "take our business to an even greater level of scale and profitability."
To help put into perspective just how big the deal is for the company, Take-Two had $3.3 billion in bookings in fiscal 2021 and Zynga had $2.8 billion. Increasing bookings should help Take-Two eventually achieve higher profitability, which has been a big focus for management over the past several years.
3. Apple
With Apple's stock price down about 15% year to date, I understand why some investors may be hesitant to snatch up shares of the company right now. But focusing too much on the stock's current fall and ignoring the company's continued long-term potential could be a mistake.
First, Apple is currently benefiting from demand for 5G devices. Recent data from Counterpoint Research showed that Apple took 45% of all global smartphone revenue in the first quarter of this year. Apple had $50 billion in smartphone sales, compared to its next-closest competitor -- Samsung -- with just $21 billion.
The data showed that the percentage of 5G shipments reached an all-time high of over 48% in the quarter "thanks to the success of Apple's 5G devices" as well as a shortage of 4G chips.
The key takeaway is that Apple still dominates the smartphone industry, and it's doing so during a powerful upgrade cycle as consumers transition to 5G devices.
NASDAQ: AAPL
Key Data Points
Of course, that's not where Apple's opportunities end. The company also continues to expand its services business, which reached $19.8 billion in sales in the second quarter, up 17% year over year. Not only is this segment growing quickly, but it's also very profitable, with 72.6% gross margin in the most recent quarter.
And finally, Apple could be on the cusp of another transitional product. Bloomberg recently reported that the company showed its board of directors a new augmented reality (AR) and virtual reality (VR) headset in mid-May. The device has been rumored for years, but showing it off to its board suggests the company could be close to unveiling it to the public, possibly as early as next year.
Some estimates put the combined AR/VR market size at an estimated $766 billion by 2025, representing a huge opportunity for Apple. I wouldn't buy Apple's stock solely based on the AR/VR device coming out, but when you pair it with the company's strong lead in 5G smartphones and its impressive services growth, Apple's long-term potential looks well intact.
