Investors are apparently shrugging off the risk of recession. Not only is the S&P 500 up almost 8% in 2023, but the Nasdaq 100 has gained nearly twice as much, jumping 15% in the first five weeks of the new year. That’s a marked turnaround from last year’s 33% loss, but you don’t have to assume more risk to ride this new wave of enthusiasm for growth.
While much of the growth for the tech-heavy index this year is being helped along by the performance of electric car stocks — Lucid is up 70%, while Tesla is 54% higher — the segment could face a rocky future with China dropping subsidies for all-electric cars. But some stocks still have solid futures and are attractively priced.
The following two tech stocks are your best bets to buy in February.
Image source: Getty Images.
Apple
Apple (NASDAQ: AAPL) keeps getting written off by analysts, yet it’s riding 18% higher year to date. As the most heavily weighted stock in the Nasdaq 100, it might be having an impact on the index’s performance this year, too — but there’s good reason to think it will still be a long-term winner for investors.
The stock was pummeled last year (down 27%) as fears of a slowing economy, inflation, and rising interest rates took a toll on consumer spending. And on the face of it, these fears were right. In its just-reported earnings report, Apple said revenue fell, missing expectations for the first time in six years. iPhone sales faltered and lingering concerns about China’s COVID crackdown — which saw widespread lockdowns in major cities — impacted market sentiment.
Yet Apple is taking more of its chip design in-house to save money and control, while stating that it plans to be the latest customer of Taiwan Semiconductor Manufacturing (NYSE: TSM) at its new Arizona facilities. That should minimize any supply chain concerns.
Foxconn also reported that its January revenue hit a record $22 billion as operations returned to normal with China easing travel restrictions. Foxconn, of course, is the largest assembler of iPhones for Apple.
The tech giant has 2 billion active devices across all of its products, double what it had seven years ago; it has its enhanced new M2 chip on the market, and services is a growing portion of Apple’s business. With the unique set of circumstances last year that hindered production and supply behind it, look for Apple to continue its long-term growth trajectory while continuing to subvert analyst expectations.
Image source: Getty Images.
Honeywell International
Technology conglomerate Honeywell International (NASDAQ: HON) reported earnings the same day as Apple, but its results weren’t as well received. Despite beating earnings estimates, it missed on revenue, and its forecast for the coming year was comparatively weak.
The same sort of supply chain issues that held up the iPhone maker impacted Honeywell, which it says “remains a gating factor to volume growth.” While that was specific to its aerospace division, it can be applied company wide.
Even so, Honeywell saw organic growth of at least 10% in three of its four operating segments, and both orders and backlog continue to expand. And it’s still generating significant free cash flow, to the tune of some $2.1 billion in the fourth quarter.
Honeywell also continues to return value to shareholders through stock buybacks and dividend payments. Last year it repurchased $4.1 billion worth of shares and paid out $2.7 billion in dividends, while also raising its payout for the 13th time in 12 years.
It remains a strong and diversified company with its thumbprint in some of the most important segments of the economy, and is positioning itself for success in a variety of industries.
Honeywell is a top-notch technology growth stock that is a smart pick for your portfolio in February.
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Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
