There is still room for this type of business.
Tech stocks have rallied over the past year, making it harder for growth investors to find good deals.Many popular members are in high demand. Nasdaq Composite Indexup 10% year to date in 2024 after surging last year.
One great way to minimize the risk of overpaying for stocks in this environment is to lengthen the horizon. Investing with 10 years or more in mind helps you avoid short-term volatility and the inevitable ups and downs in market returns.
With this long-term focus in mind, let's take a look at two tech stocks that, while not cheap, have the potential to help improve your portfolio's returns over time.
1. Garmin
If you decide to take over apple (AAPL 0.86%) Current inventory is slow growing, so consider owning it garmin (GRMN -2.03%) Instead. The technology equipment specialist saw its sales increase by 13% last quarter, compared to Apple's 2%. Garmin also expects strong demand for fitness watches and GPS-enabled smartwatches. “We enter 2024 with strong momentum,” CEO Cliff Pemble said in a press release.
It's true that Garmin's sales are skewed towards hardware, and hardware isn't as profitable as software services. This is a major reason why Apple's operating profit margin is 21%, compared to Apple's 31%.
Still, Garmin still generates strong profits and impressive cash flow. The company generated $1.2 billion in free cash flow last year, representing nearly 25% of sales. You can also buy it at a deep discount, even though the stock has risen over the past year. Currently, Garmin can be owned at his 5.5x sales premium compared to Apple's 6.9x sales premium.
2. Metaplatform
meta platform (meta -2.15%) The stock price will likely fluctuate around the April 24th earnings release, but investors don't have to wait until then to get their hands on this great business.
Meta's core engagement metrics are strong heading into its launch. The social media giant last reported that its daily user base reached 3.2 billion by the end of 2023. And a whopping 80% of monthly users log on to the company's family of apps, centered around Instagram and Facebook, every day.
The meta is monetizing its usage much better than before. Last quarter, the company increased its average revenue per user by more than $10, thanks to an increase in the amount of ads it shows in its feed.
We hope Meta finds a way to increase average ad rates in upcoming earnings reports, which could accelerate further revenue growth. However, the momentum at this point is already quite strong. Operating profit soared 62% last year to $46 billion, representing 35% of sales.
Next year may not be as impressive as Meta has chosen to invest heavily in areas such as data centers, artificial intelligence capabilities, and virtual reality hardware. But notice that CEO Mark Zuckerberg and his team emphasize the impressive returns this spending could generate over the next decade or more. That's the same long-term focus investors should have for this stock, as that's probably the best way to ensure it weathers the volatility following the meta's massive rise over the past year.
Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool's board of directors. Demitri Kalogeropoulos has positions at her Apple and meta-her platforms. The Motley Fool has positions in and recommends Apple, Garmin, and Meta platforms. The Motley Fool has a disclosure policy.
