3 Oversold Tech Stocks Investors are Buying

For years, high-flying tech stocks have been one of the best ways on Wall Street to grow your portfolio. Until recently, that is.

Tech stocks have been some of the biggest winners in the stock market for investors looking for growth names. From 2016 to the end of 2021, the S&P 500 Technology Select Sector SPDR ETF (XLK) rose more than 230%, while the Dow Jones Industrial Average saw just a 75% gain in the same period.

Growth really took off during the Covid-19 pandemic, with the XLK ETF rising more than 100% from mid-March 2020 to December 2021. But that’s when the trouble started for tech. Tech names began to fall as investors keyed in on inflation and the specter of rising interest rates. And it’s been that way for a few weeks now.

But downturns don’t last forever. Now that the Fed finally announced its interest rate plan, investors no longer have to speculate about what may or may not happen.

Uncertainty always depresses the market. Information fuels the market. And investors have the information they need about interest rates to start making investing decisions now.

So given that information, are tech stocks on a rebound?

Daniel Ives, an analyst at Wedbush, says they are. Ives says that tech stocks are oversold more than they have been at any point in the last five years. And that means there are bargains to be had.

“Since the Fed decision last week we have seen a clear ‘risk on’ mentality starting to take shape as the Street picks up high quality tech stocks at what we would characterize as relative bargain prices.” Ives said.

Here are three tech stocks that appear primed for growth right now.

Tech Stocks to Buy: Apple (AAPL)

I actually wrote recently about Apple, projecting that the smartphone maker will have a great 2022 on the heels of its iPhone SE launch.

Analysts believe that the iPhone SE, featuring a bargain price and all-important 5G technology, will help Apple generate $20 billion in sales this year.

And Wedbush, an unabashed AAPL stock bull, is one of those praising the company. He projects that Apple will sell about 30 million iPhone SEs to people who have put off smartphone purchases. The company appears to be adding 300 bps in market share just in the China region, he says.

Ives predicts Apple is “setting up for a monster growth cycle over the next 12 to 18 that is not baked into shares at current levels.”

Apple stock currently has a consensus price target of $193.53, which represents a 13% increase from current levels.

Tech Stocks to Buy: Tesla (TSLA)

Few stocks scream “growth stock” quite like Tesla. The revolutionary brainchild of Elon Musk saw its stock jump by nearly 1,800% over the last five years.

Even after a 5-to-1 stock split in 2002, Tesla continued to climb. It’s currently back over $1,000 per share, leading to questions that the stock may be primed to split yet again.

Tesla has managed to overcome its early production and quality control issues to become a go-to name in electric vehicles. The company sports a market capitalization today of more than $1 trillion, dwarfing automotive competitors like Toyota (TM), Ford (F) and General Motors (GM).

One of the biggest things going for Tesla today is the conditional approval it won for its European factory, called the Berlin Gigafactory.

Tesla has been waiting for months for approval. But once production launches, it will be able to produce a half million vehicles there every year.

Why is the Berlin Gigafactory so important? Opening production there means Tesla doesn’t have to ship vehicles to Europe from its plant in China. The Berlin Gigafactory will focus on European customers – a huge cost savings just in shipping costs. And Tesla’s China factory can concentrate on making inroads in Asian markets.

Ives is on record projecting that Tesla stock will soon be at $1,400 per share thanks to the Berlin Gigafactory.

Tech Stocks to Buy: Alphabet (GOOG, GOOGL)

Alphabet, the tech conglomerate that is parent to Google, announced plans for this summer for a massive 20-to-1 stock split. If you own one share of GOOG or GOOGL stock on July 1, you’ll get another 19 shares on July 15. And the share price will drop accordingly, of course.

Why is this such a stroke of good news for Alphabet stock investors?

First of all, the split will make GOOG and GOOGL stock more accessible to retail investors. Instead of spending close to $2,800 for a share of stock, investors will be able to pick up shares for roughly $140.

On top of that the split opens the door for more people to use options to trade GOOG stock. Selling puts can be pretty challenging for many investors when they cost $2,800 each.

And finally, the stock split makes it much more likely that the Dow Jones Industrial Average will start including Alphabet. Currently the Dow doesn’t include GOOG or GOOGL because it’s a price-weighted index. And Alphabet stock’s current price would overwhelm the other components of the index.

Analysts have a consensus pre-split price target for GOOG stock of $3,463. That represents 23% upside.

At the time of this writing, Patrick Sanders had a long position in TSLA stock.