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3 Giant Tech Stocks to Buy in April and Hold Forever

Today’s episode of Full Court Finance at Zacks breaks down where the stock market stands as Wall Street turns its attention from March inflation data to Q1 earnings. Some major tech names outside of Apple, Microsoft, Nvidia, and the other superstars are set to report during the early weeks of earnings season. We dive into why investors might want to consider buying Netflix (NFLX), Taiwan Semiconductor (TSM), and Cadence Design Systems (CDNS) ahead of their upcoming earnings releases.

The S&P 500 and the Nasdaq fell below their 21-day moving averages again mid-week after the ‘hot’ March inflation report. Many started beating the bearish drum, declaring that the larger pullback was finally at hand.

The bulls quickly proved Thursday they aren’t ready to concede more ground. Apple and Nvidia stock soared on Thursday and Amazon and Alphabet made fresh all-time highs. These are hardly signals that the bears are on the verge of clawing into the driver’s seat.

Taiwan Semiconductor Manufacturing Co. (TSM) Q1 Results on April 18


Taiwan Semiconductor transformed into one of the most important companies on the planet by focusing exclusively on chip manufacturing. TSMC is poised to grow for decades as it physically builds the bedrock of all technology, from data centers to AI and the still to come. Taiwan Semi’s clients include Apple (AAPL), Nvidia (NVDA), and tons of other tech giants.

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Taiwan Semi is almost peerless having built a massive moat at the bleeding edge of chip manufacturing. TSMC dominates advanced global chip manufacturing and it is expanding its manufacturing footprint beyond Taiwan amid geopolitical tensions. 

TSMC averaged 18% revenue growth between FY18 and FY22. The firm topped Q4 FY23 EPS estimates and provided upbeat guidance, “supported by the continued strong ramp of our industry-leading 3-nanometer technology.”

Taiwan Semi is projected to grow its sales by 23% in FY24 and 20% in FY25, following a cyclical down year in 2023. Taiwan Semi’s adjusted earnings are projected to climb by 19% and 24%, respectively.

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Zacks Investment Research

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TSM shares soared 610% in the last decade to double the tech sector, and it surged to new all-time highs in March. Taiwan Semi trades at a 15% discount to tech at 22.3X forward 12-month earnings and 35% below its 10-year highs. Taiwan Semi pays a dividend and it has a strong balance sheet.  

Netflix (NFLXQ1 Results on April 18

Netflix has recaptured Wall Street’s admiration by addressing many of investors’ biggest concerns. The firm’s lower-price ad-supported tier and its crackdown on excessive account sharing are driving growth. The company that transformed entertainment forever has remained at the top of the pile even as Disney, Apple, Amazon, and countless others pour money into streaming, fueled by an array of original content and new efforts such as live sports.

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The firm posted blowout Q4 results, adding 13.1 million net new paid subscribers to beat Wall Street estimates by 50%. NFLX hit 260.28 million total paid subscribers to blow away Disney. Netflix is projected to grow its sales by 15% in FY24 and another 12% next year to boost its adjusted earnings by 42% and 23%, respectively.

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Zacks Investment Research

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Netflix stock is up 1,200% in the last 10 years vs. tech’s 300%. NFLX has climbed around 240% off its lows and 27% YTD, yet it trades 10% below its peaks. The stock is trying to find support at its 21-day moving average right now. The streaming stock trades at a 90% discount to its all-time highs at 34X forward earnings and 50% below its median.

Cadence Design Systems, Inc. (CDNS) Q1 Results on April 22

Cadence’s modeling and computational software help companies design chips and other vital technologies, enabling Nvidia and others to simulate semiconductors before they are made. The growing complexity of semiconductors needed for AI, hyperscale computing, and beyond helped transformed Cadence into an invaluable partner for many and a vital part of the chip ecosystem. 

Cadence provides investors the chance to buy into the booming world of AI and semiconductors. More importantly, Cadence is poised to benefit from AI expansion and beyond no matter who the near-term and long-term winners are. Cadence is one of the few major players in the vital electronic design automation world.

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Zacks Investment Research

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Cadence ended 2023 with a record backlog and a deeper partnership with the likes of Nvidia and Arm. Cadence is set to grow its sales by 12% in FY24 and 13% in FY25 to help boost its adjusted EPS by 15% and 18%, respectively.

Cadence stock is up 2,000% in the last 10 years to blow away Apple, Amazon, Alphabet, Microsoft, and Meta. The stock is also up 45% in the last 12 months, with it trying to find support at its 50-day.

Cadence is hardly a value stock, trading at 60X forward 12-month earnings vs. Tech’s 26X. That said, CDNS trades at a 17% discount to its five-year highs and not too far above its median, highlighting that Wall Street has been very willing to pay up for Cadence’s long-term growth outlook.

[Disclosure: Ben Rains owns TSM.]

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Apple Inc. (AAPL) : Free Stock Analysis Report

Netflix, Inc. (NFLX) : Free Stock Analysis Report

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Taiwan Semiconductor Manufacturing Company Ltd. (TSM) : Free Stock Analysis Report

Cadence Design Systems, Inc. (CDNS) : Free Stock Analysis Report

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