I have to admit that being a follower of technology can be really difficult. Every day there seems to be something new going on. But that shouldn’t discourage an investor who wants to invest into these kinds of companies. After all, technology is all about adapting to changes and making the best of all the unique opportunities in the space.
To do this can be pretty difficult, so I have identified 3 companies that investors should stay the course in.
You can’t lose faith in this company
You have to buy Apple Inc. (NASDAQ:AAPL). Not because it is easy, but because the company’s brand, product quality, and the quality of the management team merit it. The company trades at a cheap valuation (10.8 earnings multiple), with analysts on a consensus anticipating the company to grow earnings by 20.88% on average over the next 5-years. The high rates of growth aren’t fully priced into the stock.
In its most recent quarter Apple Inc. (NASDAQ:AAPL) was able to grow sales by 30% in in its iTunes segment. Consumers remain heavily loyal to the Apple Inc. (NASDAQ:AAPL) brand, and this is likely to continue. The 30% growth backs the assumption that the Apple Inc. (NASDAQ:AAPL) customer is piling up music, and paid for applications that cannot be transferred over to Android or Windows 8. The increasing loyalty of Apple Inc. (NASDAQ:AAPL)’s customer base should help to reduce fears of a declining user base. If that is the case, then the 10.8 earnings multiple is in all actuality pretty cheap.
Believe it or not this search engine giant is huge on growth
I am hugely optimistic about Google Inc (NASDAQ:GOOG). I predict that the worldwide base of internet users will grow to about 5 billion people by 2020. Currently 3 billion people have access to the internet, which means that the potential market for Google Inc (NASDAQ:GOOG)’s free search service has even more room to grow. Google Inc (NASDAQ:GOOG)’s advertising revenues have grown by 21% year-over-year in the first quarter of 2013. The business has more momentum, with analysts on a consensus basis anticipating the company to grow earnings by 15.8%.
App Annie (an analytic firm) believes that Google Inc (NASDAQ:GOOG)’s app store revenue are currently 38.5% of Apple’s, which is a fairly solid gain from when it was just at 10% of Apple Inc. (NASDAQ:AAPL)’s a year ago. That being the case, the company is expected to catch up to Apple in the foreseeable future, which should contribute several billion dollars in revenues to the company. Adam Analys, a Chief Analyst at Canalys, believes that Google will overtake Apple by 2016 in app sales. This should be interpreted to mean that Google Inc (NASDAQ:GOOG) you will be filthy rich.
Ignore the death of PCs
Microsoft Corporation (NASDAQ:MSFT) naysayers haven’t pinned me down yet. We can all agree that the decline in PC shipments is a problem, but just because the desktop computer and laptop computer is going to decline in sales doesn’t mean investors have to lose hope in this humongous technology company. The Windows division currently represents 25% of the company’s revenues, but the company has 5 other segments that are all growing at fairly healthy rates.
Desktop computers aren’t going to be disappearing off of the surface of this earth. Desktop and laptop computers are likely to remain the most common content generation tools. You can’t create research reports, write articles, and do high-level work on a smart phone–imagine writing a college dissertation on a Research In Motion Ltd (NASDAQ:BBRY)! Likewise, the death of the computer isn’t likely. But what is likely is a temporary decline in sales, which is perfectly okay, as Microsoft Corporation (NASDAQ:MSFT) has a wide variety of businesses that it can fall back on.
Analysts on a consensus basis anticipate Microsoft Corporation (NASDAQ:MSFT) to grow earnings by 8.74% on average over the next 5-years. The company also compensates its investors through a 2.63% dividend yield. The company is safe, stable and growing. Likewise, the 18 earnings multiple is reasonable considering the diversified business portfolio that Microsoft Corporation (NASDAQ:MSFT) has.
Conclusion
Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Google Inc (NASDAQ:GOOG) are known to go Rocky Balboa against each other in an attempt to steal market share from one another. The three giants do an unbelievable job of playing poker with each other, and I think the three companies will be staying at the poker table together for a really long time.
The article You Have To Love These Three Tech Giants originally appeared on Fool.com and is written by Alexander Cho.
Alexander Cho has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. Alexander is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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