If you have 500 dollars there are 2 cheap securities to buy now

William Huston, AIF®, AIFA®

by in Published on January 06, 2022
If you have 500 dollars there are 2 cheap securities to buy now

If you have 500 dollars there are 2 cheap securities to buy now

While growth-oriented stock prices have fallen in recent weeks, the idea that there are very few cheap stocks in the technology sector can be sustained. And even if investors find cheap tech stocks like Intel or Verizon Communications, they may consider them bad investments, despite their low prices.

However, these perceptions may be overlooked, as both companies have made changes to their businesses in recent years, which could increase their earnings significantly over time. This suggests that potential investors may want to consider taking a closer look at Intel and Verizon before the market raises these stocks. Let's learn more about these two cheap $500 stocks.

1. Intel

Intel's P/E ratio is ten times lower than that of competitors such as Advanced Micro Devices and Nvidia, which sell for 44 and 88 times, respectively. Despite this low multiplier, investors do not seem to see many good reasons to buy Intel. With technical leadership lost and lackluster growth, it is natural for investors to dump chip stocks in favor of fast-growing ones.

However, since Pat Gelsinger took over as CEO in early 2021, Intel has made significant changes to improve its competitiveness. One example is the company's $20 billion investment to increase its foundry capacity in Arizona.

One of the goals of this move is to compete with Taiwan Semiconductor Manufacturing, Samsung and others in chipmaking by creating Intel Foundry Services. It was a relief to investors concerned about the semiconductor industry's centralized presence in Taiwan, a country that has historically faced geopolitical threats from China.

According to TrendForce, Taiwanese companies account for about two-thirds of global foundry capacity. In addition, Intel has worked hard to regain its leadership position in the industry. Currently, it has contracted with TSMC to produce the part. In the long term, Intel has also made process improvements that, according to Gelsinger, could bring the chipmaker to the forefront of manufacturing by 2025 and beyond.

The development cycle for fleas takes three to five years. So investors who are buying now can speculate whether Gelsinger will hit that target. In addition, Intel's forecast of $78 billion in revenue in 2021 on a GAAP basis may indicate a slight decline from last year. Also, the fact that the stock was up only 3% in 2021 could be a red flag for Intel's future.

However, Intel still generates more revenue than AMD and Nvidia combined. If Intel can regain its technical lead or gain significant market share in the foundry, its stock could expand several times over.

2. Verizon Communications

Like Intel, Verizon has looked cheap for some reason for years. It has lower subscriber growth than T-Mobile U.S., And with T-Mobile also pushing its prices and AT&T, investors may perceive Verizon's P/U ratio of 10. It's a profit rather than a good Marlet. Unless investors buy Verizon at a 5% yield on its annual dividend of $2.56 per share, it seems that shareholders don't have enough reason to care about the company.

However, Verizon has received the most awards from J.D. A strength for the quality of its network for 27 consecutive years. It also invested $53 billion in C-band last year, more than the two industry players combined, to maintain this advantage.

This could become increasingly important as its massive investment in 5G is not only accelerating its services, but also creating new business that few investors seem to enjoy. Verizon has begun actively promoting Network-as-a-Service (NaaS) services.

NaaS is a data subscription service that allows customers to access network infrastructure on demand. For example, in the retail industry, NaaS can help retailers move network infrastructure between their physical and online operations as needed, just as a homeowner might place a thermostat.

This is an opportunity that does not exist in a 4G environment and could be an additional source of revenue even if pricing pressures on services remain severe. The advantage also extends to other industries. Honda Motor Company has used it to help drive autonomous vehicles, and Arizona State University has applied NaaS to immersive learning applications.

With 5G, Verizon may already be starting to see improvements. Revenue for the first nine months of 2021 was just under $100 billion, up 6% from the first three quarters of 2020. Operating costs are down, interest rates are lower, and income from financial transactions is down. tax burden. As a result, its net income for the first nine months of 2021 was $18 billion, up 32% from the same period in 2020.

Admittedly, it was down 12% in 2021. Verizon made very little profit. . However, the aforementioned P/E ratio of 10 is much lower than T-Mobile's profit ratio of 42. As NaaS increasingly becomes an essential service, Verizon may get the long-awaited recognition.

SOURCE

Healy, W. (2022, January 6). Got $500? 2 Dirt-Cheap Stocks to Buy Right Now. The Motley Fool. Retrieved January 6, 2022, from https://www.fool.com/investing/2022/01/06/got-500-dirt-cheap-stocks-buy-right-now/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article

William Huston, AIF®, AIFA®
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