Tech stocks have rallied in the past year, making it harder for growth investors to find good deals. Demand is high for many popular members of the Nasdaq Composite Index, which is up 10% so far in 2024 after soaring last year.
One great way to minimize your risk of overpaying for a stock in this environment is to have a longer time frame. Investing with a decade or more in mind will allow you to look past short-term volatility and the inevitable ups and downs of market returns.
With that long-term focus in mind, let's look at two tech stocks that, while they aren't cheap, have a good shot at helping boost your portfolio returns from here.
1. Garmin
If you've decided to pass on Apple (AAPL 2.84%) stock right now because of its slow growth, consider owning Garmin (GRMN 0.64%) instead. The tech device specialist expanded revenue at a 13% rate last quarter, compared with Apple's 2% uptick. Garmin saw robust demand for its fitness watches and its GPS-enabled smartwatches, too. "We are entering 2024 with strong momentum," CEO Cliff Pemble said in a press release.
It's true that Garmin's sales are more heavily tilted toward hardware, which isn't as profitable as software services. That's a big factor behind its weaker operating profit margin of 21%, compared with Apple's 31% rate.
Yet Garmin is still generating ample earnings and stellar cash flow. The company produced $1.2 billion of free cash flow last year, translating into nearly 25% of sales. It's available at a decent discount, too, even though shares have rallied in the past year. You can own Garmin for 5.5 times sales today, compared with Apple's premium of 6.9 times revenue.
2. Meta Platforms
Meta Platforms (META -2.92%) stock will see volatility around its April 24 earnings report, but investors don't have to wait until then to snap up this stellar business.
Meta's core engagement metrics are solid heading into that announcement. The social media giant last reported that its base of daily users hit 3.2 billion through late 2023. And a whopping 80% of its monthly users log on to its family of apps, anchored by Instagram and Facebook, every day.
Meta is monetizing that usage much better than in the past. Last quarter, average revenue per user crossed $10, thanks to the higher volume of ads the company is showing in feeds.
I'll be looking for Meta to find a way to increase average advertising rates in the upcoming earnings report, which could unlock even faster earnings growth. But its momentum at this point is already quite strong. Operating income jumped 62% last year to reach $46 billion, or 35% of sales.
The next year might not be nearly as impressive because of Meta's choice to invest heavily in areas such as data centers, artificial intelligence capacity, and its virtual reality hardware. But look for CEO Mark Zuckerberg and his team to highlight the stellar returns that this spending could generate over the next decade or more. That's the same long-term focus that investors should have for this stock, since it's the best way to ensure that you can weather the volatility that's probably following Meta's huge rally over the past year.
