The past year has been brutal for tech companies. That’s true of both early-stage small-cap stocks or large-cap established names. But for those who have been patient, this year’s selloff has set the stage for a future rally – meaning it may be time to start buying in tech.
Investors can start by buying the big-cap names. These are the companies that have the cash flow and market share to thrive right now, and aren’t as dependent on market conditions as smaller stocks.
Among some of the biggest tech names is Amazon (AMZN). The company has become the first in history to lose over $1 trillion in market cap. But that loss can be a gain for investors today.
Improvement in the company’s retail operations and its ongoing cloud services market domination have brought Amazon’s share valuation closer to reality in the past year. The stock, which rather famously doesn’t focus on earnings, is now trading for 20 times EV/EBITDA, down from over 400 last year.
Action to take: Investors can start accumulating shares under $95, using down days to add to their position. While the stock doesn’t pay a dividend, it’s still growing in a number of ways, and will likely make up for its decline in 2022 in the year ahead.
For traders, the March 2023 $105 calls, last going for about $5.00, could leverage a move higher in the coming months for mid-to-high double-digit gains.
Disclosure: The author of this article has a position in the company mentioned here, and may further trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.