The stock market is widely regarded as the best tool out there for individuals to build lasting wealth. Given enough time, small sums of capital can grow into massive gains. With the market still facing some pressure due to ongoing macroeconomic uncertainty, there are some great opportunities to take advantage of.
Many retail investors might assume that they need large amounts of cash to benefit from putting money to work in the stock market. That's just not true. Here are three no-brainer tech stocks to buy right now for less than $120.
1. Airbnb
Airbnb (ABNB 1.16%) had a monster 2022 thanks to strong demand for travel. Nights and experiences booked jumped 31% to 393.7 million. Gross booking value surged 35% to $63.2 billion. Revenue soared 40% last year to $8.4 billion. In addition to this impressive growth, Airbnb has proven to be an incredibly profitable enterprise. Free cash flow totaled $3.4 billion in 2022, good for a ridiculous margin of 40%.
The management team, led by co-founder and CEO Brian Chesky, believes the momentum is set to continue. "And looking forward, we're already seeing some really strong demand in Q1," he said during the earnings call in February. "[C]onsumer confidence to travel remains really high." A recovery in the Asia-Pacific region will boost the company's prospects.
At about $115 per share, investors should seriously consider buying Airbnb stock. Shares are up 37% so far in 2023, but they're still down 47% from their all-time high. And they trade at a price-to-earnings (P/E) ratio of 41. This might appear expensive, but when you consider Wall Street's expectation that sales and diluted earnings per share will rise at compound annual rates of 14.3% and 20.8%, respectively, over the next five years, it's easy to get optimistic.
2. Alphabet
There's no doubt that Alphabet (GOOG 9.90%) (GOOGL 10.14%) has been dealing with a softer digital ad market. Revenue of $283 billion in 2022 was up just 10% year over year, a sharp slowdown from the prior year's 41% gain. What's more, shareholders are spooked by the rising popularity of ChatGPT and its integration with Microsoft's Bing. But it ought to be reassuring for investors that Alphabet is also a leader in artificial intelligence. And according to Statcounter, Google's share of the global search market has increased since ChatGPT launched, so there's no reason to panic.
Alphabet is a dominant internet business that will have no problem weathering any prolonged economic downturn. It has $114 billion of cash, equivalents, and marketable securities, along with $15 billion of long-term debt. Besides being the leader in search, Alphabet also owns YouTube, a top streaming service with 2.7 billion monthly active users. It has Android, which commands over 70% of the worldwide market for smartphone operating systems. And Google Cloud Platform continues to post strong growth.
With Alphabet's stock down 30% from its all-time high set in November 2021, it's selling at a P/E ratio of just over 23 today. That's well below the stock's trailing three-, five-, and 10-year average valuations. At about $105 for a single Class A share, this is a no-brainer investment to make right now.
3. Amazon
With a greater than one-third share of all online shopping in the U.S., Amazon (AMZN 3.12%) is unsurprisingly exposed to the changing confidence of the consumer. And with inflation still at elevated levels, coupled with the threat of a looming recession, Amazon is experiencing a slowdown. Sales of $514 billion in 2022 were up 9.4% year over year, compared to greater than 20% gains in the previous five years.
However, it's not time for shareholders to worry just yet. Zooming out, it's easy to see how Amazon benefits from three powerful secular tailwinds. E-commerce will continue eating away at physical retail in the decade ahead, which will keep propelling this company. Amazon Web Services is the clear leader in the global cloud industry, and it's a huge growth engine and profit center for the overall business. And Amazon is quietly stealing market share from Alphabet and Meta Platforms in the digital advertising arena.
Like both Airbnb and Alphabet, Amazon's stock has been under immense pressure in recent years. After peaking at $186.12 in July 2021, it has been a difficult time for investors, as shares are down 43% since, even though they are up 24% this year. The stock, which sells for roughly $106 right now, trades at a price-to-sales (P/S) multiple of just over 2. This historically cheap valuation makes Amazon a smart buy.
