Maxim Manturov, Head of Investment Research at Freedom Finance Europe, discusses why tech companies could offer retail investors a safe haven as a recession looms
Over the last few months, there has been increased uncertainty within the global economy. In the UK, there is talk of a recession, which could impact businesses hard. Despite this, there is hope for tech companies, with Markets Insider predicting that the tech sector will grow by 20% this year. As a result, there should now be an emphasis on investing in safe stocks. Anyone looking to diversify their portfolios should look to the tech sector. But what companies should retail investors keep an eye out for?
Top tech shares in the stock market
Medtronic (NYSE: MDT) is a global leader in medical technology, services, and solutions. In the near future, it intends to separate its patient monitoring and respiratory research businesses to ensure steady revenue growth. Medtronic also specialises in robotics and artificial intelligence technology. Its shares have come under pressure from high inflation and a zero-tolerance COVID-19 policy in the Peoples Republic of China (PRC) in 2022. However, the movement of their quotes will be driven by strategic changes and cost factors. The stock is currently undervalued by multiples, and its moderate debt burden adds to its appeal. The dividend yield is 3.8%.
CDW Corp. (NASDAQ: CDW) is an information technology company. Recently, it reported their customers are not turning away from their services, despite cost optimisation programs. We have seen an increase in performance driven by the active development of its service segment, offsetting a decline in equipment sales. CDW’s third-quarter results exceeded expectations and cross-selling and profitability are actively increasing thanks to the purchase of Sirius Computer Solutions. CDW is a quality defensive asset in the IT sector, showing stable growth due to portfolio diversification, leadership positions, and steady dividend growth with a current yield of 1.1%.
Li Auto (NASDAQ: LI) is a leader in China’s new energy vehicle market, attracting investors with its non-dependency on the state of the US economy, as well as the prospect of pent-up demand following the easing of quarantine in the PRC causing a major increase in its value. Li Auto is breaking sales records for hybrid electric vehicles despite the need to reduce selling prices and high margins will allow the company to reach the break-even point ahead of its nearest competitors. Furthermore, the increased range of Li Auto vehicles gives it a dominant position over competitor products in new markets with poorly developed infrastructure.
Pinterest (NYSE: PINS) the visual discovery search engine, had a strong end to 2022, beating expectations for turnover and earns per share (EPS). Revenue increased 8% to $685 million, driven by revenue momentum in the United States and Canada. In other regions of presence, Pinterest’s revenue grew 36% to $24 million. Despite the challenging macro environment, the company has also been offering advertisers fairly favourable terms and efficient use of budget, reaching users at all levels of the sales funnel. Pinterest is set to grow its shares in the advertising market this year as the sector continues to improve.
