Some Big Tech Names May Be Bordering on Value Plays

For years, investors have piled into big tech names, like the FANG stocks. Even with the recent weakness in the sector, however, some still see some value in these giant names, which dominate the list of trillion-dollar-plus companies.

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  • That includes other industry-dominating mega-cap companies as well. One value manager sees a number of opportunities in these names today, citing continued growth potential and healthy profit margins.

    Of the companies mentioned, all are industry dominators that have fared well in the past year even without a global pandemic.

    However, one of the more attractive plays right now might just be Amazon (AMZN). Shares have performed about in-line with the stock market in the past year. But growing earnings and revenues point to a company that’s much better on a valuation basis.

    Its price to book and price to sales ratio have declined, as well as its enterprise value to EBITDA. And earnings are up nearly 220 percent over the past year.

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  • That points to a far higher stock price in time, even accounting for the company’s high valuation relative to non-tech names today.

    Action to take: Shares of Amazon are attractive under $3,300. It’s likely a long way off before shares pay a dividend, but most investors can still buy a few shares to profit from the company in the long term.

    For options traders, the September $3,400 calls, last going for about $95, or $9,500 per contract, may be a good buy after a big down day for shares, with an eye towards a quick mid double-digit move higher.

     

    Disclosure: The author of this article has a position in the stock mentioned here, but does not intend to make a trade in this company after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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