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Top 10 Tech Stocks To Invest In Right Now

For better or worse, growth stocks are notoriously volatile. But for astute investors who can manage to recognize timely buying opportunities, they can be a fantastic way to generate outsized gains over the long term.

So we asked three top Motley Fool investors to each discuss a growth stock that they think investors should consider buying now. Read on to learn why they like following stocks.

 

Top 10 Tech Stocks To Invest In Right Now: Twitter, Inc.(TWTR)

Twitter (NYSE:TWTR) added to its 47% spike in 2017 to gain over 80% so far this year. The micro-blogging platform isn’t logging anything near the user growth or the profit boosts that peer Facebook has managed. However, Twitter did post a 21% sales improvement in the most recent quarter as growth accelerated sharply from the prior quarter’s 2% uptick. Looking ahead, shareholders are hoping that CEO Jack Dorsey and his team can significantly boost the user base from its current level of 336 million. As its content trends toward high-margin video, meanwhile, advertising income should help Twitter log another year of earnings improvements as it works toward achieving annual profitability.

Top 10 Tech Stocks To Invest In Right Now: Hess Corporation(HES)

While red-hot oil prices helped fuel Hess’ gains this year, it was far from the only catalyst. Hess and its partner ExxonMobil announced three more offshore discoveries near Guyana, bringing the total to eight. The partners now plan to develop three phases of that field, which could produce more than 500,000 barrels of oil per day by late 2023. In addition to that, Hess continued cleaning up its portfolio and balance sheet by selling its joint venture in the Utica Shale and paying off more debt. Meanwhile, the company has used the excess cash generated by higher oil prices to buy back stock, authorizing a $1.5 billion repurchase program, enough to retire nearly 10% of its outstanding shares. The company could expand that program even further later this year given the uptick in crude prices.  

Top 10 Tech Stocks To Invest In Right Now: Red Hat, Inc.(RHT)

This is a rare opportunity to pick up shares in a red-hot growth stock at a serious discount.

The Linux and open-source software veteran had seen its share prices double in 52 weeks, heading into June’s first-quarter report. In that report, Red Hat exceeded its own guidance targets across the board and also stomped Wall Street’s expectations. Yet, the stock took a 12% nosedive the next day and has stayed down ever since. Today, Red Hat shares are trading 23% below those pre-earnings highs.

Analysts took one look at Red Hat’s modest second-quarter guidance, ignoring optimistic full-year targets, and punished the stock with a slew of downgrades and target-price cuts.

It’s true that Red Hat shares were trading a little high before this correction, as the market cap amounted to 112 times trailing earnings and 36 times free cash flows. But Red Hat has earned its druthers by posting a long string of fantastic high-growth results. In the first quarter, earnings rose 24% year over year on 20% higher sales.

The growth story hasn’t changed — analysts simply overreacted to a strong seasonal swing. Right now, Red Hat’s stock trades at 27 times free cash flows — quite comparable to larger and slower-growing enterprise software rivals SAP (NYSE: SAP) at 33 times FCF and Microsoft’s (NASDAQ: MSFT) price-to-FCF ratio of 23.

This sale won’t last. Grab Red Hat’s stock while the discount is hot.

Top 10 Tech Stocks To Invest In Right Now: Apple Inc.(AAPL)

Successful investors know the value of a company that generates cash and has a durable competitive advantage over the competition. If you combine those with growth you get a stock with home run potential. That’s why after all these years of the stock going up, Apple is still a great buy today. 

The chart below shows that Apple is still a growth company, increasing revenue by 45% over the last five years and generated over $53 billion of net income in the past year. 

AAPL Revenue (TTM) Chart

AAPL REVENUE (TTM) DATA BY YCHARTS.

What Apple has going for it is an engrained ecosystem in smartphones that will be nearly impossible for competitors to penetrate. The iPhone may only have 15.6% of the global smartphone market, according to IDC, but it’s the premium portion of the market and generates far more value than competitors. iPhone is also the center of the ecosystem, which expands to Macs, Apple TVs, AirPods, and other products that work seamlessly with Apples apps and services. 

For investors, the earnings you see above are returned in the form of a dividend, currently yielding 1.6%, and share buybacks using the $145.4 billion of net cash on the balance sheet. With a new plan to be "cash neutral," that could mean hundreds of billions in share buybacks over the next decade, $100 billion of which is already authorized by the board of directors. Whether you’re looking at earnings, cash on the balance sheet, or a company with a wide competitive moat, Apple fits the bill. 

Top 10 China Stocks To Buy Right Now

Investing in gold stocks can be risky. Mining for gold is expensive, and cash flow gets crimped if mines shut down or production expenses go over budget. Often, gold miners operate in parts of the world with unstable governments, and labor disputes are common, too. Even worse, projects can fail to pan out altogether. Finally, profitability depends significantly on gold prices, which can fluctuate for any number of reasons.

Nevertheless, there are reasons why investors might want to consider adding gold mining stocks to their portfolios in 2018. Gold stocks can provide investors a healthy dose of diversification, which may come in handy following the market’s multiyear run-up, and because global gold supply is limited, they can benefit if global economic expansion causes inflation.

If these reasons have you interested in adding gold mining stocks to your portfolio, a few top companies to consider are these stocks.

Top 10 China Stocks To Buy Right Now: Cintas Corporation(CTAS)

Based on the statistics mentioned above, it would seem nearly impossible for any company to keep pace with Facebook. Shockingly, one company that has kept pace is on the complete opposite end of the business spectrum: uniform rental and facility services company Cintas.

It seems bizarre to think that such a business could produce the kind of stock price returns reserved for Sillicon Valley tech giants. Here’s the crucial thing, though. Even though Cintas will never post gaudy revenue growth numbers, it is a high-margin, recurring revenue businesses. That in and of itself has led to impressive earnings growth over time. Unlike Facebook, which can plow billions into new developments, the industry in which Cintas operates is a mature one, so there is a limit to how much it can invest and expect a certain rate of return. With few other options for its cash, Cintas’ management has for years elected to manufacture per-share returns with rising dividends and stock buybacks that have outpaced Facebook.

Here’s how this works: Over the past decade, Cintas has grown net income by 120%. That’s good, but when you combine it with Cintas’ share buybacks that have reduced its share count, its earnings-per-share jumped 210% over that same time frame. Sprinkle in a dividend that has grown 13% annually, and you get a stock posting returns better than Facebook.  

Cintas is a boring, reliable business that’s been around for a long time and has generated great returns for its investors. I can’t imagine an investor who wouldn’t be attracted to this kind of stock.

Top 10 China Stocks To Buy Right Now: Lumentum Holdings Inc.(LITE)

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Lumentum Holdings Inc (NASDAQ: LITE) is a specialty company that focuses like a laser beam on, well, laser beams.

It’s an optical and photonics company — one of the biggest in the world — that is taking over the 3D sensing sector.

Essentially, 3D sensing is basically the gesture sensing that we all have become accustomed with in our mobile devices, screens in our cars, etc. It is one of the most ubiquitous aspects of our interactive age and one of the key parts of the Internet of Things (IoT) concept.

What’s more, LITE is also a major player in the optical networking space that makes the infrastructure that makes our world “smarter,” operating in as close to real time as possible. It’s crucial for the next generation of cloud computing and network operations.

Its laser division helps build the next generation of equipment that makes all this possible.

Top 10 China Stocks To Buy Right Now: Brookfield Asset Management Inc(BAM)

Brookfield Asset Management (NYSE:BAM) is one of the largest renewable energy investors in the world and it uses Brookfield Renewable Partners and TerraForm Power as vehicles for most of that investment. The company owns a controlling interest in both companies and has proven the ability to operate them in a way that generates great dividends as well as growth for long-term investors. 

Brookfield Renewable Partners was a yieldco before the word "yieldco" became popular, assembling 16,000 megawatts (MW) of renewable energy assets, primarily hydro plants, around the world. Unlike newer yieldcos, the company doesn’t rely on using its shares to fund acquisitions. Instead, it grows organically by keeping some of its cash available for distribution to fund acquisitions. Management aims for 5% to 9% organic dividend growth using this strategy. 

Cash flow is backed by long-term contracts to sell electricity to utilities, averaging a term of 15 years as of last quarter. Management even says that hydro plants rolling off contract soon will also have the opportunity to increase prices because current contracts are below market. This could help increase cash flow and fund dividend growth beyond the 6.4% the stock yields today. 

TerraForm Power is Brookfield Asset Management’s newest yieldco, purchased from the bankrupt SunEdison. The company owns over 2,600 MW of wind and solar assets, primarily in the U.S., backed by long-term contracts to sell electricity to utilities. The average remaining life of its contracts is 14 years. 

On top of existing assets, TerraForm Power recently announced the acquisition of Spanish yieldco Saeta Yield, which management says will increase cash available for distribution by 24% per share. That cash can fund an increased dividend, pay down debt, fund acquisitions, or a combination of all three. With the yield already standing at 6.9%, this is a dividend with a lot of room for growth. 

Brookfield Asset Management has both the incentive and the resources to keep both Brookfield Renewable Partners and TerraForm Power growing for the long term. It proved that by backstopping the Saeta Yield acquisition and having that kind of support for future deals should help stabilize operations of both yieldcos for investors. 

Top 10 China Stocks To Buy Right Now: Hess Corporation(HES)

 In April 2017, Hess Corp. (NYSE:HES) spun off various midstream infrastructure in the Bakken shale as a new master limited partnership: Hess Midstream Partners. Since then, Hess Midstream Partners’ share price has declined about 20%, which makes it an intriguing stock for income investors to buy.

Looking through a magnifying glass at three rows of coins that have plants sprouting on top of them.

IMAGE SOURCE: GETTY IMAGES.

Hess Corp. owns over 550,000 Bakken shale acres and currently, it accounts for almost all of Hess Midstream Partners gathering, processing and storage, and terminaling business. The Bakken shale is one of the most prolific shale formations in the U.S., and Hess Corp.’s plans to increase production there should provide tailwinds that allow Hess Midstream Partners to deliver on its goal of annualized distribution increases of 15% per year.

In Q1 2018, a 12% year-over-year increase in Hess Corp.’s Bakken net production, to 111,000 barrels of oil equivalent per day (BOE/D), helped Hess Midstream Partners report throughput volume growth of 27% year over year. Hess Corp. plans to add a fifth rig in the Bakken in Q3 2018 and a sixth rig in Q4 2018, so there should be plenty of production growth to support Hess Midstream Partners’ results over the coming year. 

The MLP also has an opportunity to tap into growth from other independent oil and gas companies. Its contracts with Hess Corp. are long-term, fee-based deals that include minimum volume commitments and annual inflation escalators. As a result, Hess Midstream Partners has clarity into its cash flow that it can leverage to acquire or construct additional midstream assets that are attractive to other producers.

Overall, the company’s healthy 6.5% forward dividend yield and its business clarity due to Hess Corp. makes me think it’s a high-yield stock on sale that can be added to income portfolios.

Top 10 China Stocks To Buy Right Now: Cue Biopharma, Inc.(CUE)

Tremendous progress has been made in the past few years in the fight against cancer. One of the most promising recent technologies in that fight has been immunotherapy — training a person’s own immune system to fight cancer. It has already shown promise in treating some cancers, and research is continuing on ways to increase the type of cancers and patient profiles that it works for.

One bold research company, Cue Biopharma, is working to develop an immunotherapy platform to treat a broad range of cancers, not just the tightly targeted types treatable by it today. It’s an incredibly audacious goal, but one that, if achieved, could put us much closer to making cancer a much more effectively combated disease.

To be perfectly clear, Cue Biopharma’s research is still in early stages, and the company is currently hemorrhaging cash as it invests in that research with no revenue to support it. That makes an investment in its shares incredibly risky and highly speculative. After all, it not only needs to develop a platform that actually works, it also needs to be able to take that platform through the costly and time-consuming FDA approval process before it starts to see revenue.

That said, if it’s successful and can actually develop, gain approval for, and bring to market a platform that can enable broad-scale cancer immunotherapy treatment, its possibilities are astronomical. Cue Biopharma’s growth in that scenario could easily put Netflix’s returns to shame.