With the S&P 500 now more than 8% off its all-time high set less than a month ago, many investors now find themselves ducking for cover. But make no mistake: Now is exactly the time for patient investors to search for bargains that have either been punished or held back given the market's weakness.
But where should you look? Given their recent drop over the past month -- and despite what some valuation metrics seem to indicate -- I think NVIDIA Corporation (NASDAQ:NVDA), Amazon.com (NASDAQ:AMZN), and LinkedIn (NYSE:LNKD) all present compelling values right now for long-term shareholders:
Graphics are only the beginning
First, NVIDIA originally made its name selling high-end graphics processing units, which still comprised nearly 80% of last quarter's $1.1 billion in sales. Within that, GeForce GPU sales for gaming machines jumped a solid 10%, which explains why NVIDIA still holds its loyal hardcore gaming customers in high regard.
But keep in mind NVIDIA's business today is about much more than just gaming. NVIDIA's Tesla chips, for example, currently power the world's 15 most efficient supercomputers. Meanwhile NVIDIA's Tegra Processor sales grew 200% year over year last quarter, thanks to its inclusion in more mobile devices and automobile systems. In the latter category, the unique computing power of NVIDIA's veritable Tegra K1 superchip is not only making headway in improving automobile infotainment systems, but it also enjoys a massive opportunity to pave the way for a new era of driverless vehicles down the road.
On top of that, last month, NVIDIA announced a lawsuit against Samsung and Qualcomm, alleging many of Samsung's most popular devices infringe upon seven of its thousands of GPU-centric patents. If NVIDIA finds success in the courts, the resulting royalties could be huge for investors.
As it stands, shares of NVIDIA have fallen 16% from their 52-week-high set in early September, which means the stock trades for a reasonable 15.5 times next year's expected earnings. That's not to mention NVIDIA boasted an incredible $4.39 billion cash hoard at the end of last quarter, and pays a solid dividend with an annual yield of 2%. In the end, for investors willing to wait for this solidly profitable company's long-term prospects to bear fruit, NVIDIA looks like a solid investment.
An e-commerce king
But why Amazon.com? Shares of the online retail juggernaut have come down, but Amazon's lack of profitability based on generally accepted accounting principles makes it look terribly expensive: The $140 billion company currently trades for around 772 times trailing-12-month earnings, and 158 times next year's estimates.
Put another way, however, note Amazon is also trading at an uncharacteristically low price-to-sales ratio of 1.7:
Remember, Amazon consistently, deliberately chooses to forego bottom-line profits, and instead invests its cash in grabbing additional e-commerce market share to build its top line -- a brilliant move to create shareholder value considering discount retail isn't exactly a high-margin business to begin with. At no time was the success of its approach more evident than last quarter, when net sales jumped 23% year over year to $19.34 billion, translating to a net loss of $126 million. Should Amazon ever decide the time is right to stop investing for top-line growth, its cash flow and profits could prove immense.
The business of business networking
Finally, I wholeheartedly agreed with fellow Fool Evan Niu when he wrote in August that LinkedIn was worth every penny. But thanks largely to the broader market pullback, shares of the business networking site have fallen around 11% since then.
Similar to Amazon, that makes sense on the surface considering LinkedIn looks expensive trading around 13 times trailing-12-month sales, and nearly 71 times next year's estimated earnings. At the same time, however, LinkedIn investors can take solace in knowing the company has a stranglehold on its niche, with over 313 million members, making it the world's largest professional network on the Internet.
LinkedIn's efforts to monetize that base are also in their early stages. Second-quarter revenue climbed 47% year over year, to $534 million, which was comprised of 44%+ growth in each of its three segments, including Talent Solutions, a young ad business within Marketing Solutions, and Premium Subscriptions. All told, that's a drop in the bucket considering LinkedIn estimates its immediate addressable market to be around $27 billion.
Combine that with high insider ownership -- chairman and co-founder Reid Hoffman holds a nearly 12% stake, ensuring management's motives are aligned with shareholders -- along with a rock-solid balance sheet with no debt and $2.4 billion in cash, and LinkedIn stock today looks as enticing as ever.
Steve Symington owns shares of Nvidia. The Motley Fool recommends Amazon.com, LinkedIn, and Nvidia. The Motley Fool owns shares of Amazon.com, LinkedIn, and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.