2020 is over, but there are still old problems stubbornly in 2021. Due to the pandemic and extreme political turmoil, the economy is still trying to find its way after this, and the stock market is close to the highest point in history, which is why investment may seem trivial.
However, there will always be opportunities (especially when negative sentiment is high) to buy stocks of quality companies with good long-term prospects.Three Fool.com contributors think Veeva system (New York Stock Exchange: VEEV), Intel (Nasdaq stock code: INTC)with Naspers (OTC: NPSNY) It is worth your visit at the beginning of the new year.
Life sciences march towards the gate of “digital transformation”
Nicholas Rossolillo (Veeva system): The future of life science stocks is bright. For many people, 2020 is an important year as pharmaceutical and biotech companies are racing to find treatments and vaccines for COVID-19. The fight against the pandemic continues. And new research and development are aimed at innovative healthcare treatment methods and patient care methods. Globally, trillions of dollars are spent annually to improve health. From a business perspective, there will be winners, but there will also be many losers.
This is why Veeva Systems is one of my favorite stocks in the large life sciences industry. Veeva is a way to participate in the development of the entire universe, rather than trying to bet that companies that develop new therapies and health technologies will be the biggest winners. Specifically, Veeva provides cloud-based software and tools for pharmaceutical, biotech and other health-related companies to manage their operations.
In addition to fully participating in life science research over time, Veeva is also committed to helping these organizations with their digital transformation-updating tools and procedures to new digital standards. This software company provides various functions, from clinical trial management to quality control to sensitive data management. It is also constantly expanding its functions, recently adding new features to its far-reaching platform, such as built-in virtual meetings and AI in its customer relationship management products. Veeva was originally a software technology partner for pharmaceutical and biotechnology companies, and on this basis, Veeva is expanding its platform to help consumer goods, chemical and cosmetic companies.
This is a premium stock that is nearly 83 times the free cash flow (income minus cash operating expenses and capital expenditures) in the past 12 months, but there is a good reason. Veeva has been growing its sales by double-digit percentages for many years. During the pandemic, this rate has accelerated in 2020, and since new digital tools are still needed, there is no sign that sales will slow down immediately. In short, this is a top-notch business, between software and health.
The microchip giant fell, but it has not disappeared
Anders Bylund (Intel): At present, there are few technology stocks that attract me like me. The entire market looks overheated, and many of my favorite stocks may adjust rapidly in the near future, especially in the soaring technology sector. The semiconductor giant Intel is a rare exception to my unusually bearish analysis of the current market.
As Chipzilla has been working hard to upgrade its manufacturing facilities to the next generation of 7-nanometer technology, Intel’s stock price has discounted 24% from its 52-week high. This problem puts Intel in the second line because many of its closest competitors are producing 7-nanometer chips with the help of third-party chip foundries led by Intel. TSMC. Radical investor Daniel Loeb asked Intel to consider breaking away from its long-term commitment to operating its own manufacturing facilities, and suggested that the company could split its chip factory into an independent company or even sell it to Taiwan Semi and friends.
Regardless of whether Intel adopts Loeb’s radical change ideas, Intel has the ability to restore full health. No one else in the semiconductor industry can match the company’s huge R&D budget. In the past four quarters, the company’s research and development budget totaled $13.3 billion.This exceeds Advanced Micro Devices with Qualcomm Combine. Innovation is the lifeblood of every technology company worth paying for, and Intel is attaching great importance to its forward-looking development.
Intel’s stock was priced due to an absolute disaster, its price-to-earnings ratio was only 10 times its tracking earnings, and its free cash flow was 14 times. If you believe like I do that Intel is getting the derailed manufacturing upgrade back on track, it is definitely stealing.
The company will announce its fourth-quarter results within a few weeks, and I think it is wise to snap up a few Intel shares at a low price before the business update.
Get the best company in China at half price-no need to invest in China
Billy Duberstein (Naspers): You usually don’t buy first-class internet giants at half price, especially in today’s booming technology market, but this is exactly what investors are currently discovering in South African investment company Naspers.
Naspers used to be a South African media company, but in the past 20 years, it has basically become a venture capitalist in emerging markets.At the end of 2019, Naspers split its venture capital (basically all its assets) into a company called indictment (OTC: PROSY). As of last quarter, Naspers owns 72.66% of Prosus.
Prosus’ main asset is the company’s huge 31% stake in the Chinese Internet giant Tencent -Now worth up to 226 billion US dollars of shares. Not only that, Prosus also owns shares in other large international food distribution, sorting, and digital payment companies, and analysts estimate that these shares may be worth $30 billion.
What is striking is that the market value of Prosus today is only worth about 173.3 billion US dollars, which is about 32% discount to the value of its assets. Is it more scary? Naspers is valued at only $85.4 billion, which is 32% lower than the value of its 72.7% stake in Prosus.
All these add up to make Naspers’ market value approximately half the value of its assets. Although it is difficult to say when and when the gap between assets and value will narrow, the management of Naspers/Prosus is taking advantage of this advantage and recently announced a $5 billion share repurchase program in November.
There have been recent rumors that the US government may prohibit citizens from owning shares in certain Chinese companies, and Tencent is under certain pressure. For those who want access to this top-notch international growth stock, Naspers offers a way to invest in Tencent indirectly, without direct Chinese risk, and pay a huge discount for it.