The major indexes soar higher as we near the end of March.
However, the rally is still not widespread. Many stocks, including tech stocks, have been left out. Still, with the economy expected to improve in the back half of the year, it’s wise to think about buying tech stocks.
The major catalyst for tech stocks is expected to be interest rate cuts. Despite many economic indicators that suggest the Fed should keep interest rates untouched, the Federal Reserve Dot Plot suggests one to three rate cuts in 2024, with more in 2025.
And, because tech stocks are growth-oriented, they tend to benefit significantly when the cost of money becomes cheaper. A lot could happen between now and December. But, if the Federal Reserve is true to its word, interest rates are coming down. Before they do, it could be a good opportunity to consider these tech stocks to buy. Following are one large-cap, one mid-cap, and one small-cap stock.
Apple (AAPL)
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It may seem odd for me to include Apple (NASDAQ:AAPL) on a list of tech stocks to buy. AAPL stock has been far from a “magnificent” stock this year. The tech giant is dealing with lower iPhone sales in China, the abandonment of its Apple Car project, and a Department of Justice (DOJ) investigation that threatens its closed-loop ecosystem. Even the company’s launch of its Vision Pro failed to lift AAPL.
In truth, Apple stock is “only” down about 8.5% this year. That could get worse, and probably will, if the company’s next earnings report doesn’t wow investors. However, two potential catalysts could change the company’s fortunes.
First, is the likelihood of an interest rate cut in early summer. Coinciding with that event is the company’s worldwide developer conference. The rumor is that Apple may be introducing new AI features for the iPhone, only available on the IPhone 13 and above. The combination of those events may be enough to move Apple’s user base who haven’t upgraded their iPhone in years off the fence.
Universal Display (OLED)
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Universal Display (NASDAQ:OLED) is the mid-cap stock on this list. The company has successfully developed the technology behind phosphorescent OLED (organic light-emitting diode) displays (PHOLEDs). And in 2023, the company finally launched blue light PHOLEDs, which have been a difficult to produce. That only accounted for a sliver of the company’s revenue in 2023, yet expect more in 2024.
That’s the product side of the equation. The more fundamental case for OLED stock is that it seems undervalued. The company’s revenue and earnings were largely down year over year (YOY) in 2023. But if you go back two years, the top and bottom lines are up sharply. Furthermore, both revenue and earnings are projected to be approximately 16% higher in 2024.
Mid-cap stocks, particularly growth stocks like OLEd, tend to get punished more by higher interest rates. And, higher inflation causes some demand destruction. Nevertheless, this is a company that is poised to move sharply higher as the economic outlook improves.
Sigma Lithium (SGML)
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If you’re looking for a speculative small-cap stock to add to your portfolio, Sigma Lithium (NASDAQ:SGML) may be a name to consider. In 2023, the company transitioned from an exploration company into a full-fledged mining company. Sigma Lithium has started delivering lithium and plans to double output in 2024.
Lithium stocks were trounced in 2023 as the lithium market deteriorated. Unfortunately, SGML was no different. The stock is down 65% in the last 12 months.
However, this looks like a case of “demand delayed” not “demand denied.” Australia’s Office of the Chief Economist (OCE) projects global lithium demand by 40% from 2023 to 2024. The electric vehicle (EV) transition has come too far to see it completely stall out. And lithium is needed in a variety of other applications.
Finally, analysts are bullish on SGML stock with six analysts offering a consensus price target of $32.93, which is 185% higher than the current price. And, five out of those six analysts give the stock a strong buy rating.
On the date of publication, Chris Markoch had a LONG position in AAPL The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
