The 3 Smartest Tech Stocks to Buy in 2022 and Beyond

Tech stocks generally fall into two categories: older companies that achieve steady growth through mature technologies, and younger companies that focus on emerging technologies and long-term growth trends.

In recent months, rising inflation and higher interest rates have caused many investors to turn away from younger companies and invest in older blue-chip tech stocks on defensive grounds.

That’s a solid strategy, but investors can also leave a lot of cash on the table by giving up all of their growth stocks prematurely. Instead, they should keep buying promising growth stocks that aren’t overly speculative.

Let’s examine three technology stocks that match this description: Meta platforms (NASDAQ: FB), Veeva systems (NYSE: VEEV), and CrowdStrike (NASDAQ: CRWD) – and why they could all still be smart buys this year.

Image source: Oculus.

1. Meta platforms

Meta Platforms – the parent company of Facebook, Instagram, WhatsApp, and Oculus – is a great investment in the long-term growth of the digital advertising, augmented reality, and virtual reality markets.

A whopping 3.58 billion people, or nearly half the world’s population, use at least one of Meta’s apps every month. This huge audience enabled Meta to build one of the world’s leading digital advertising platforms, which continued to grow despite antitrust investigations, fines, and whistleblower scandals.

Meta still generates most of its revenue from ads, but has likely sold over 10 million Oculus Quest 2 headsets in the past year, which gives it a solid hardware base from which to build its VR metaverse. Horizon Worlds, its VR playground for Quest users, already marks the first big step in the further development of social network platforms from meta to VR experiences.

Meta faces short-term regulatory and platform-related challenges, but analysts are still expecting revenue and earnings growth of 37% and 38% respectively this year. With 23 times forward earnings, Meta remains the cheapest FAANG stock and could rise significantly in 2022 and beyond.

2. Veeva systems

Veeva Systems provides cloud-based customer relationship management (CRM) software, data storage, and analytics services for more than 1,000 life science companies such as GlaxoSmithKline and Modern.

Veeva’s platform helps these companies organize and maintain their customer relationships, store and analyze their data, and keep track of the latest industry regulations and clinical studies. Veeva has no significant competitors in this niche market, which is growing steadily in the wake of intensifying competition between large pharmaceutical and biotech companies.

Veeva’s market dominance enabled the company to grow its sales from fiscal 2016 to fiscal 2021 at an average annual growth rate (CAGR) of 29%. Adjusted net income increased 45% over the period.

But Veeva’s high-growth days are not over yet. The company expects revenue to more than double from $ 1.47 billion in fiscal 2021 to approximately $ 3 billion in the 2025 calendar (which will cover most of fiscal 2026) as there is more cloud -based services on the market and retain even more customers.

Veeva’s stock may seem a bit expensive at 66x future earnings, but its solid growth and dominance in the life sciences CRM market arguably justify its high valuation and make it a smart growth stock.

3. CrowdStrike

Most traditional cybersecurity companies offer their services through on-premise appliances. However, these devices require constant maintenance and can be expensive to scale as a business expands.

CrowdStrike addresses these issues with Falcon, a cloud-native cybersecurity platform that does not require on-premise appliances. Falcon served 14,687 subscription customers in the last quarter, an almost six-fold increase from just 2,516 subscription customers in early 2019.

CrowdStrike’s revenue grew 93% in fiscal 2020 and 82% in fiscal 2021 (which ended that January). Growth of 63% to 64% is expected for the 2022 financial year. Analysts expect revenue to grow another 40% in fiscal 2023. Even on an adjusted basis, the company turned profitable in fiscal 2021, with analysts forecasting 115% growth this year and 55% next year.

CrowdStrike continues to expand as Falcon adds more cloud-based modules, and its dollar-based net retention rate has stayed comfortably above 120% since it went public in mid-2019.

CrowdStrike stock is undeniably expensive, at 220 times future earnings and 22 times next year sales. However, its high growth rates and disruptive cloud-based approach should make it one of the best games in the growing cybersecurity market over the long term.

This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.

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