Markets have shown no signs of slowing down in 2024. Final confirmation that a new bull market is underway came in January, when S&P 500 set a new record. Since then it has continued to rise, on track to gain 10% in the first quarter of the year.
While the broader market periodically sets new records, several individual stocks are still trading at a discount, especially in the technology sector. Two Motley Fool contributors were asked to take a closer look at two of those discounted tech stocks. They offer their thoughts and suggestions on whether these two stocks might be worthy of inclusion in your investment portfolio.
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Intel is on the verge of an incredible transformation
Keith Noonan: It's no secret that Intel (INTC 0.91%) is losing ground to some key competitors when it comes to chip design. The company gave up part of its market share to Advanced Micro Devices in the central processing unit (CPU) markets for PCs and servers. The company also faces the threat of Arms in the laptop market.
Even after rising about 43% over the past year, Intel stock is still 35% below its early 2020 peak. While Intel is taking steps to catch up to its key competitors in the CPU market and Expanding into new categories that will help it capitalize on demand for artificial intelligence (AI) and other opportunities, the company will continue to face a challenging competitive landscape in the design space.
On the other hand, one of Intel's strategic advantages is on track to become much more pronounced. Intel is already the third largest semiconductor manufacturer in the world, only behind Semiconductor manufacturing in Taiwan and Samsung.
In large part, this is because the company makes most of its own chips. But Intel appears poised to make big strides when it comes to producing chips for other companies, and it will get plenty of help from the public sector. What's behind this potentially massive transformation?
Many analysts and geopolitical experts anticipate that China will take steps to gain greater control over Taiwan sometime in the next decade. The ability to obtain high-performance semiconductors has become a vital economic and national security issue. TSMC is the undisputed leader in the contract chip manufacturing market, and is even more dominant when it comes to manufacturing high-end chips needed for AI and accelerated computing processes. However, the United States and other Western countries can no longer count on an uninterrupted supply of chips from Taiwan.
In response, Western governments are investing in Intel and helping position the chip giant as a credible successor to TSMC. Intel's manufacturing business appears poised for enormous growth over the next decade, and there's a good chance it will have a transformative effect on the stock. With shares still 44% off their high, now seems like a good time to build a long-term position in semiconductor stocks.
South Korea's super app
Jeremy Bowman (Coupang): Coupang (CPG 1.02%) It hasn't gotten much attention on Wall Street lately and it's easy to see why. The stock has floundered since its high-flying IPO in March 2021 and is now down 65% from its high reached shortly after the IPO.
Investors may have moved on to other stocks, but Coupang deserves a second look, especially since the stock appears to be reasonably valued and still has plenty of growth potential.
First of all, Coupang has drawn many comparisons with Amazon, And for good reason. The company is the dominant e-commerce platform in South Korea and employs some of Amazon's most successful tactics. Coupang operates both as a first-party seller and as a marketplace with third-party sellers, allowing it to leverage the strength of the platform and charge fees to merchants who use Coupang.
The company also has a Prime-like membership program called Rocket WOW, which offers free shipping and returns, fresh food delivered in just a few hours, and same-day delivery of non-fresh items. South Korea is one of the most densely populated countries in the world, which lends itself well to efficient e-commerce operations.
Coupang is also expanding beyond e-commerce with new businesses including food delivery, a streaming service and digital payments, as well as international expansion.
Coupang reported 23% year-over-year growth in its most recent quarter to $6.6 billion. Your adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were $294 million, showing that it is growing rapidly and profitable.
Given its growth potential and reasonable valuation, taking advantage of the discount on Coupang stock seems like a smart idea.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jeremy Bowman It has positions on Amazon. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool ranks and recommends Advanced Micro Devices, Amazon, Coupang, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Intel and recommends the following options: long $57.50 January 2023 calls on Intel, long $45 January 2025 calls on Intel, and short $47 May 2024 calls on Intel. The Motley Fool has a disclosure policy.
