3 Best Tech Stocks to Buy Long-Term

One of my favorite pairs when looking for new investments to buy is the simple matching of low prices and high expected revenue growth.

In today’s market, we have no shortage of this investment style to choose from – particularly in the tech sector.

Consider the following chart for three stocks that were once considered darlings of the tech scene.

ROKU data by YCharts.

Now that they’re trading at deep discounts, it’s time to revisit our investment thesis for each stock and see how adding them can help fund early retirement.

A small child holding hands with a teddy bear while sitting on the floor watching TV.

Image source: Getty Images.

1. Roku

If you think viewers will keep switching from linear to telecast while advertisers are doing the same with their huge budgets, Rocco (ROKU 1.39%) Long-term stocks can be just the ticket to you.

While the company is more commonly associated with Roku-enabled gamers and TVs, it generates 81% of its sales from platform revenue, with only the remaining 19% coming from hardware.

These platform sales come from advertising, content distribution, media spending, and entertainment merchandising. Together, these sources generate an attractive gross profit margin of 60.5% – along with a gross profit margin of 28.4% for the players sector amid supply chain issues.

Led by the success of this booming platform segment, Roku’s stock price rose nearly 2,000% after its initial public offering in 2017, but has seen that price drop more than 70% in just the past six months.

Partially withdrawing from sympathy for the suddenly declining number of users in the former parent company, NetflixRoku is now trading at just 5.2 times sales – its lowest level since late 2018.

ROKU PS . ratio chart

ROKU PS ratio data by YCharts.

However, one difference between Roku and Netflix shows why the former may be a step forward in the streaming space.

During the first-quarter earnings call, Netflix and CEO Reed Hastings hinted at the idea of ​​offering a lower-price, ad-supported category on its platform — and it’s chasing a floppy disk that’s slipping into where Roku is already waiting.

If nothing else, this looks like a vote of confidence for Roku’s promising business model.

Reaching an estimated 80 million people in the United States during the fourth quarter, the ad-supported Roku channel doubled its total broadcast hours over the year, highlighting the rapid adoption of ad-supported, free, linear streaming television.

Buoyed by this growth, look to Roku to continue achieving gains in its average revenue per user (which grew 43% in 2021) and build on its newfound profitability.

ROKU Net Income Chart (Quarterly)

ROKU net income data (Quarterly) by YCharts.

With this emerging profitability, analysts’ forecasts of 40% sales growth in 2022, and giant trends underpinning its platform operations, Roku appears poised to remain an integral part of the broader streaming industry.

2. Shopify

Entrepreneurship Empowerment Shopify (store -3.71%) Trading down more than 73% in the past six months, it makes sense for investors to fear their investment thesis has been messed up — but that concern couldn’t be further from the truth.

Conversely, Shopify’s suite of offerings and a comprehensive ecosystem of businesses have cemented their position in the e-commerce industry, despite the market selling off shares amid slower growth rates.

Riding the huge trend of a decades-long shift toward direct-to-consumer purchases, Shopify amassed a market share of 10.3% of e-retail commerce in the United States in 2021.

While the 2021 sales growth rate of 57% was already a slowdown from 86% in 2020, the fact remains that Shopify has tripled its revenue since 2019.

Shopping Revenue Scheme (TTM)

Shopping revenue (TTM) data by YCharts.

Best yet for investors, total earnings closely followed this sales growth, positioning investors for solid profitability as the company matures.

To highlight Shopify’s impact on the e-commerce landscape, consider that the company now has seven clients that have gone public on the stock market – a feat considered the pinnacle of success for many startups.

With its full suite of business solutions — including its apps, shipping, point of sale, payments, capital, and fulfillment offerings — Shopify has begun to focus on international markets through its partnership with e-global online.

With the huge potential of this global expansion, analysts’ forecasts of 40% sales growth in 2022, and the huge long-term direct-to-consumer trend working for stocks, Shopify makes for a great lifetime contract.

A person celebrates by raising their arms in the air after winning a computer game.

Image source: Getty Images.

3. Sea Limited

A multi-faceted powerhouse of e-commerce and gaming sea ​​ltd (SE -2.29%) He seems ready to show how valuable discretion and diversification can be in the long run.

The company’s investors (including me) were on a road trip. Amid the tech sell-off and Sea (Garena) gaming console in trouble thanks to India’s ban on its Free Fire game over privacy concerns, Sea’s stock has fallen more than 75% in the past six months.

However, Sea’s e-commerce unit, Shoppee, is expected to report positive EBITDA this year in its core geographic markets of Southeast Asia and Taiwan. Furthermore, sales of its fintech unit, SeaMoney, grew 711% during the fourth quarter of 2021, and cash flow is expected to be positive by 2023.

These expectations are enormous for Sea shareholders as they will help remove reliance on Garena to be the company’s cash machine for financing growth.

Before we even dealt with the gloom surrounding Garena, fourth-quarter bookings and quarterly paying users continued at 7% and 6%, respectively, despite challenges in 2021.

Thanks to this continued success at Garena and the emerging profitability of Shoppee and SeaMoney, the company is beginning to see significant efficiencies flow through its operations.

SE Revenue Chart (TTM)

SE Revenue (TTM) data by YCharts.

With gross profits rising four times faster than sales in the past three years, watching this margin expansion over the coming quarters would be great.

This Sea pairing boosted profit margins along with analysts’ forecasts of 61% sales growth in 2022, putting the company in an excellent position to generate massive cash flows as it matures over the long term.

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