The markets haven't shown any sign of slowing down in 2024. The final confirmation that a new bull market is well underway came in January as the S&P 500 set a new record high. It has continued to climb since then, on its way to gaining 10% in the first quarter of the year.
While the broad market is regularly setting new records, several individual stocks are still trading at a discount, especially in the tech sector. Two Motley Fool contributors were asked to take a closer look at two of those discounted tech stocks. They offer their insights and suggestions about 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(NASDAQ: INTC) is losing ground to some key competitors when it comes to designing chips. The company surrendered some market share to Advanced Micro Devices in the central processing unit (CPU) markets for PCs and servers. The company also faces a threat from Arm Holdings in the laptop market.
Even after rallying roughly 43% over the last year, Intel stock is still down 35% from its early 2020 peak. While Intel is making moves to catch up to its key competitors in the CPU market and to expand in 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 actually on track to become far more pronounced. Intel already ranks as the world's third-largest semiconductor manufacturer, trailing behind only Taiwan Semiconductor Manufacturing and Samsung.
In large part, that's because the company manufactures most of its own chips. But Intel looks poised to make massive strides when it comes to producing chips for other companies -- and it's going to get a lot of help from the public sector. What's behind this potentially massive transformation?
Many analysts and geopolitical experts anticipate that China will make moves to gain greater control over Taiwan sometime within the next decade. The ability to source high-performance semiconductors has become a vital economic and national security issue. TSMC is the clear leader in the contract chip fabrication market, and it's even more dominant when it comes to manufacturing high-end chips needed for AI and accelerated computing processes. However, the U.S. and other Western countries can no longer count on undisrupted chip supplies coming out of Taiwan.
In response, Western governments are investing in Intel and helping to position the chip giant as a credible successor to TSMC. Intel's fabrication business looks poised for huge growth over the next decade, and there's a good chance it will have a transformative effect on the stock. With shares still down 44% from their high, now looks like a smart time to build a long-term position in the semiconductor stock.
South Korea's super app
Jeremy Bowman (Coupang): Coupang (NYSE: CPNG) hasn't gotten much attention on Wall Street lately, and it's easy to see why. The stock has been a flop since its high-flying IPO in March 2021 and is now down 65% from its peak set not long after the IPO.
Investors may have moved on to other stocks, but Coupang deserves a second look, especially as the shares look reasonably valued and the stock still has a lot of growth potential.
First, Coupang has drawn a lot of comparisons to Amazon, and for good reason. The company is the dominant e-commerce platform in South Korea, and it employs some of Amazon's most successful tactics. Coupang operates as both a first-party seller and as a marketplace with third-party sellers, allowing it to leverage the strength of the platform and collect fees from merchants using Coupang.
The company also has a Prime-like membership program called Rocket WOW, which offers free shipping and returns, fresh groceries delivered in just a few hours, and same-day delivery on 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 that include 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, Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were $294 million, showing it's growing rapidly and it's profitable.
Given its growth potential and reasonable valuation, taking advantage of the discount in Coupang stock looks like a smart idea.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jeremy Bowman has positions in Amazon. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Coupang, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Intel and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short May 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.
