A strange thing is happening on Wall Street: After months of falling stock prices and rising pessimism, some respected analysts are predicting that technology stocks have bottomed. But that's not all. A few brave souls even say that current prices offer investors a "generational buying opportunity."
I'm not willing to say this is the best time to buy stocks in 20 years, but I do think investors should be putting money to work. That's not because I think the stock market has bottomed; after all, timing the market is folly. Rather, I think it's always a good time to buy because, in the long run, that's how to build wealth. It's better to invest regularly, choose great companies, and let time handle the rest.
So let's have a look at three stocks that can help set you up for life.
Image source: Getty Images.
1. Workday
Workday (WDAY -0.42%) is the market leader in cloud-based human capital management (HCM) software. The company provides customers with applications to manage employee feedback and engagement, design contract proposals, and produce financial analyses. It boasts over 9,500 customers, and over 50% of the Fortune 500 rely on Workday for their HCM needs.
On the financial front, Workday is a growth powerhouse. Revenue for the trailing 12 months was $5.4 billion, with quarterly revenue up 22% year over year. What's more, management aims to hit $10 billion in revenue by 2026.
Despite its robust growth rate and rosy outlook, shares have taken a beating over the last year. Workday is down 43%, almost double the Nasdaq Composite's 22% loss. Recession fears have pummeled unprofitable growth stocks, but Workday is on the verge of profitability. Analysts expect it to generate an earnings per share of $3.44 this year and $4.53 next year. What's more, the company generates $5.39 of free cash flow per share -- more than enough to see it through a recession.
2. Snowflake
Snowflake (SNOW 2.53%) reminds me of Workday in many ways, but it's smaller, younger, and has more upside.
Snowflake aims to help its customers through the use of cloud-based data science. This process relies on blending numerous data sources and then building models and predicting outcomes. The benefits are almost endless. Retailers can anticipate customer tastes before store shelves are empty; insurers can set lower rates based on enhanced data analytics; drugmakers can develop life-changing medicines faster and cheaper.
The secular growth story is apparent, but Snowflake is still a new company. It went public in 2020 and crossed the $1 billion revenue mark for the first time this year. It's growing revenues at 85% year over year and plans to hit the $10 billion revenue mark by 2029. The company beat first-quarter expectations with adjusted earnings per share of $0.08, better than the $0.01 consensus estimates.
Nonetheless, shares are down 68% from last year's all-time high. But for investors willing to hold for several years, the recent market weakness is offering an excellent opportunity to accumulate Snowflake shares at a discount.
3. Advanced Micro Devices
It would be wrong to think of Advanced Micro Devices (AMD -0.35%) as just another PC chip company. AMD has diversified away from the personal computer market and operates in three segments:
1) Computing and Graphics
2) Enterprise, Embedded, and Data Center
3) Xilinx
The Computing and Graphics segment is still AMD's largest source of revenue, with $2.8 billion in Q1 2022. However, AMD's Enterprise, Embedded, and Data Center segment was close behind with $2.5 billion in revenue. Moreover, it's growing 88% year over year, compared to 33% for the Computing and Graphics segment.
The enterprise segment's stunning growth is due to AMD's EPYC chips, which power cloud servers run by Amazon, Microsoft, Alphabet's Google, and more. With the cloud revolution in full swing, AMD's chips are in high demand. What's more, AMD's recent acquisition of Xilinx further diversifies AMD away from personal computing and graphics. Xilinx offers a foothold in new high-margin markets such as automotive, industrials, and pharmaceuticals.
This rapid growth is contributing to a healthy bottom line for AMD. Earnings per share for Q1 2022 were $1.13, well ahead of analyst estimates of $0.91. Moreover, the company's free cash flow hit a record $3.3 billion for the 12 months ending on March 26, 2022.
Analysts expect AMD to grow revenues to $26.3 billion in 2022 and $30.1 billion in 2023. Nevertheless, shares are down 48% from last year's all-time high, giving long-term investors a great buying opportunity that might help set them up for life.
