The S&P 500 has shot up by more than 75% since the stock market’s coronavirus-induced crash hit bottom on March 23. Almost a year later, the upswing is continuing, but investors shouldn’t ignore the possibility that another major correction could strike sometime soon…
That isn’t to imply that one should sell out of stocks in fear of such an occurrence. But savvy investors should be prepared to take advantage of such an opportunity if it arrives, with a watch list of companies they would want to buy on the dip.
Three hot stocks — Apple (NASDAQ:AAPL), Micron Technology (NASDAQ:MU), and NVIDIA (NASDAQ:NVDA) — could turn into particularly attractive buys if a broad market crash sends them tumbling. Let’s take a look at why you should keep an eye on them.
1. The iPhone upgrade supercycle could unlock terrific growth for Apple
The revenue-generating machine that is Apple has shifted into a higher gear thanks to the debut of its 5G-enabled iPhone 12 models. The tech giant’s revenue soared 21% year over year in its fiscal first quarter (which ended Dec. 26) to a record $111 billion, and earnings jumped 35% to $1.68 per share. Analysts expect Apple’s revenue to grow by 21% this fiscal year to $333.6 billion, while earnings per share are projected to increase nearly 36% to $4.45 per share.
The company could easily hit those estimates this year, as iPhone sales are expected to improve substantially over 2020 levels. Daniel Ives of Wedbush Securities (via AppleInsider) predicts that Apple could ship a record 250 million iPhones in 2021 — surpassing the 231 million units it shipped in 2015 — driven by the intense demand for the iPhone 12 models.
Ives’ projection is based on the estimate that there are 350 million iPhones in an upgrade window, and the 5G-enabled offerings from Apple will kick off a massive upgrade cycle as consumers will want to make the jump to the new, much-faster, wireless standard. This should pave the way for solid top-line growth at Apple, as the iPhone produced nearly 59% of its total revenue last quarter. What’s more, Apple’s iPhone revenue shot up 17% year over year during the quarter despite the new devices reaching the market later in the season than usual.
The iPhone 12’s success catapulted Apple to the top of the smartphone sales chart in 2020’s fourth quarter, according to IDC. It looks all set to stay there thanks to competitively priced devices that could help it corner a big slice of the booming 5G smartphone market and unlock a multiyear growth opportunity.
Apple stock currently trades at 36.5 times trailing earnings. That’s expensive considering its five-year average price-to-earnings (P/E) multiple of 19.4, but investors could get a better deal on Apple shares in the event of a stock market crash.
2. Tailwinds for Micron Technology
Micron Technology is being lifted by favorable trends in the memory market, where a shortage of chips is boosting prices. The contract price of dynamic random access memory (DRAM) increased 5% year over year in January — the first month those prices had risen since May. Further incremental growth appears to be in the offing, based on the spot pricing trends.
DRAMeXchange reports that the spot price of the benchmark 8 GB DDR4 DRAM chip jumped to $3.93 earlier in February, up nearly 55% from the spot price of $2.54 in August. Higher DRAM spot prices should ideally lead to an increase in contract prices, which are negotiated on a monthly or quarterly basis.
Micron gets 70% of its revenue from selling…
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