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2 Great Tech Stocks to Buy on the Dip Before Q2 Earnings
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Today’s episode of Full Court Finance at Zacks explores where the stock market stands to start Q2 earnings season. The episode then digs into Taiwan Semiconductor Manufacturing Co. (TSM - Free Report) and Netflix (NFLX - Free Report) stock ahead of their Q2 earnings releases on July 18 to see if investors should consider buying these two great tech stocks now or wait until the stocks pull back.
Jay Powell’s dovish turn was the biggest news of the week. Wall Street upped its bets that the Fed will start cutting rates in September. Powell appears convinced that the Fed has done all it can to bring down inflation. The central bank will turn its attention to the other side of its dual mandate and try to prevent higher rates from leading to rising unemployment.
Despite the euphoria ahead of Q2 earnings season, investors should not panic if the market experiences a pullback. Some profit-taking appears due with the Nasdaq trading far above its 21-day and 21-week moving averages and at heavily overbought RSI levels.
The Nasdaq experienced a bit of sell-the-news profit-taking on Thursday after the cooler-than-projected inflation data.
With this in mind, investors should start looking ahead to big tech earnings season and possibly waiting for pullbacks to buy some of the best-in-class tech stock on the dip.
Taiwan Semiconductor Manufacturing Co. ((TSM - Free Report) ), better known as Taiwan Semi or TSMC, is the largest and most dominant global chip manufacturer, proving it a massive moat. Taiwan Semiconductor physically builds the most cutting-edge semiconductors that drive AI and all advanced technologies. Taiwan Semiconductor’s key tech giant clients such as Nvidia and Apple have almost nowhere else to turn for next-gen chip manufacturing.
Image Source: Zacks Investment Research
Taiwan Semiconductor stock is one of the only pure-play chip manufacturers, and it’s actively expanding outside of Taiwan into the U.S. and elsewhere to combat geopolitical tensions. TSMC averaged 18% sales growth between FY18 and FY22, including 29% expansion in 2022, before suffering a cyclical downturn in 2023.
TSMC is projected to grow sales by roughly 21% in FY24 and FY25 to help boost its EPS by 18% and 27%, respectively. TSMC's upward EPS revisions help the stock earn a Zacks Rank #2 (Buy).
Taiwan Semiconductor stock has doubled the Zacks Tech sector over the last 10 years, soaring over 70% YTD. TSM stock trades at a 7% discount to the Zacks Tech sector at 27.5X forward 12-month earnings, 42% below Nvidia, and 19% below its 10-year highs. Taiwan Semiconductor pays a dividend (0.9% yield) and boasts a robust balance sheet. Plus, eight of the 10 brokerage recommendations Zacks has are “Strong Buys.”
Image Source: Zacks Investment Research
Taiwan Semiconductor is one of the most straightforward buy-and-hold options in all of technology alongside the likes of Nivida ((NVDA - Free Report) ) and others because chips are the lifeblood of the economy and TSM is the semiconductor manufacturer. Any near-term pullback down to some of Taiwan Semiconductor stock’s key shorter-dated or longer-dated moving averages could mark a screaming buy signal for long-term investors.
Netflix ((NFLX - Free Report) ) permanently changed entertainment. The streaming TV pioneer has stayed ahead of Disney, Apple, Amazon, and countless others through successful pushes into new content such as reality TV and various other initiatives.
Netflix’s lower-cost ad-based tier is gaining traction and its efforts to cut down on account sharing has helped improve its business. Netflix has also landed live-streaming deals with the WWE and the NFL as it prepares to thrive in the next streaming frontier. Netflix crushed Wall Street subscriber projections the past two quarters, adding over 22 million users during that stretch to close Q1 with 269.60 million paid memberships.
Image Source: Zacks Investment Research
Netflix surprised Wall Street last quarter when it said it would stop providing quarterly membership data starting in the Q1 FY25, several years after it stopped providing subscriber guidance. Netflix will instead report “major subscriber milestones” as it focuses on cash flow, profitability, and more.
Netflix is projected to grow its sales by 15% in 2024 and 12% next year to soar from $33.72 billion in 2023 to over $43 billion in 2025. Netflix is set to boost its adjusted earnings by 52% and 21%, respectively. Netflix’s recently stagnant earnings revisions help it earn a Zacks Rank #3 (Hold), but its overall EPS outlook has jumped significantly over the last six months.
Image Source: Zacks Investment Research
Netflix stock has climbed 940% in the last 10 years vs. Tech’s 350%, Apple’s ((AAPL - Free Report) ) 860%, and Disney’s ((DIS - Free Report) ) 11%. NFLX stock has soared around 280% off its 2022 lows, but it got rejected near its all-time highs recently.
Netflix shares trade at a 90% discount to NFLX’s 10-year highs at 33.4X forward earnings and 50% below its median. As with TSM stock, any downturn to Netflix’s 50-day, 21-week, or other key moving averages could offer long-term investors an amazing buying opportunity.
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2 Great Tech Stocks to Buy on the Dip Before Q2 Earnings
Today’s episode of Full Court Finance at Zacks explores where the stock market stands to start Q2 earnings season. The episode then digs into Taiwan Semiconductor Manufacturing Co. (TSM - Free Report) and Netflix (NFLX - Free Report) stock ahead of their Q2 earnings releases on July 18 to see if investors should consider buying these two great tech stocks now or wait until the stocks pull back.
Jay Powell’s dovish turn was the biggest news of the week. Wall Street upped its bets that the Fed will start cutting rates in September. Powell appears convinced that the Fed has done all it can to bring down inflation. The central bank will turn its attention to the other side of its dual mandate and try to prevent higher rates from leading to rising unemployment.
Despite the euphoria ahead of Q2 earnings season, investors should not panic if the market experiences a pullback. Some profit-taking appears due with the Nasdaq trading far above its 21-day and 21-week moving averages and at heavily overbought RSI levels.
The Nasdaq experienced a bit of sell-the-news profit-taking on Thursday after the cooler-than-projected inflation data.
With this in mind, investors should start looking ahead to big tech earnings season and possibly waiting for pullbacks to buy some of the best-in-class tech stock on the dip.
Image Source: Zacks Investment Research
Taiwan Semiconductor (TSM - Free Report) Stock – Earnings Thursday, July 18
Taiwan Semiconductor Manufacturing Co. ((TSM - Free Report) ), better known as Taiwan Semi or TSMC, is the largest and most dominant global chip manufacturer, proving it a massive moat. Taiwan Semiconductor physically builds the most cutting-edge semiconductors that drive AI and all advanced technologies. Taiwan Semiconductor’s key tech giant clients such as Nvidia and Apple have almost nowhere else to turn for next-gen chip manufacturing.
Image Source: Zacks Investment Research
Taiwan Semiconductor stock is one of the only pure-play chip manufacturers, and it’s actively expanding outside of Taiwan into the U.S. and elsewhere to combat geopolitical tensions. TSMC averaged 18% sales growth between FY18 and FY22, including 29% expansion in 2022, before suffering a cyclical downturn in 2023.
TSMC is projected to grow sales by roughly 21% in FY24 and FY25 to help boost its EPS by 18% and 27%, respectively. TSMC's upward EPS revisions help the stock earn a Zacks Rank #2 (Buy).
Taiwan Semiconductor stock has doubled the Zacks Tech sector over the last 10 years, soaring over 70% YTD. TSM stock trades at a 7% discount to the Zacks Tech sector at 27.5X forward 12-month earnings, 42% below Nvidia, and 19% below its 10-year highs. Taiwan Semiconductor pays a dividend (0.9% yield) and boasts a robust balance sheet. Plus, eight of the 10 brokerage recommendations Zacks has are “Strong Buys.”
Image Source: Zacks Investment Research
Taiwan Semiconductor is one of the most straightforward buy-and-hold options in all of technology alongside the likes of Nivida ((NVDA - Free Report) ) and others because chips are the lifeblood of the economy and TSM is the semiconductor manufacturer. Any near-term pullback down to some of Taiwan Semiconductor stock’s key shorter-dated or longer-dated moving averages could mark a screaming buy signal for long-term investors.
Netflix (NFLX - Free Report) Stock – Earnings Thursday, July 18
Netflix ((NFLX - Free Report) ) permanently changed entertainment. The streaming TV pioneer has stayed ahead of Disney, Apple, Amazon, and countless others through successful pushes into new content such as reality TV and various other initiatives.
Netflix’s lower-cost ad-based tier is gaining traction and its efforts to cut down on account sharing has helped improve its business. Netflix has also landed live-streaming deals with the WWE and the NFL as it prepares to thrive in the next streaming frontier. Netflix crushed Wall Street subscriber projections the past two quarters, adding over 22 million users during that stretch to close Q1 with 269.60 million paid memberships.
Image Source: Zacks Investment Research
Netflix surprised Wall Street last quarter when it said it would stop providing quarterly membership data starting in the Q1 FY25, several years after it stopped providing subscriber guidance. Netflix will instead report “major subscriber milestones” as it focuses on cash flow, profitability, and more.
Netflix is projected to grow its sales by 15% in 2024 and 12% next year to soar from $33.72 billion in 2023 to over $43 billion in 2025. Netflix is set to boost its adjusted earnings by 52% and 21%, respectively. Netflix’s recently stagnant earnings revisions help it earn a Zacks Rank #3 (Hold), but its overall EPS outlook has jumped significantly over the last six months.
Image Source: Zacks Investment Research
Netflix stock has climbed 940% in the last 10 years vs. Tech’s 350%, Apple’s ((AAPL - Free Report) ) 860%, and Disney’s ((DIS - Free Report) ) 11%. NFLX stock has soared around 280% off its 2022 lows, but it got rejected near its all-time highs recently.
Netflix shares trade at a 90% discount to NFLX’s 10-year highs at 33.4X forward earnings and 50% below its median. As with TSM stock, any downturn to Netflix’s 50-day, 21-week, or other key moving averages could offer long-term investors an amazing buying opportunity.