2020 is over, but old problems are persistently going on in 2021. With a pandemic, extreme political unrest, an economy is still trying to find its way in the wake of everything, and the stock market near all times, are the reasons for investment looks slender.
But there is always the opportunity – especially if the negativity gets high – to buy shares of quality companies with long-term prospects. Three contributors to Fool.com think Veeva Systems (NYSE: VEEV), Intel (NASDAQ: INTC), en Naspers (OTC: NPSNY) is worth it at the beginning of the new year.
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Life Sciences chases the “digital transformation” door
Nicholas Rossolillo (Veeva Systems): The future looks bright for life science stocks. For many, 2020 was a big year because pharmaceutical and biotechnology enterprises rushed to find treatments and vaccines for COVID-19. The fight against the pandemic continues. And new research and development is focused on innovative healthcare treatments and patient care methods. Collectively, trillions of dollars are spent annually worldwide to improve health outcomes. From a business standpoint, there will be winners, but there will also be many losers.
That’s why Veeva Systems is one of my favorite stocks for the massive life science industries. Veeva is a way of participating in the growth of the entire universe rather than trying to bet on which companies developing new treatments and health technologies will be the biggest winners. Veeva specifically provides cloud-based software and tools to pharmaceutical, biotechnology and other healthcare-related businesses to manage their operations.
In addition to participating in a general increase in life science research over time, Veeva is focused on helping these organizations make digital transformations – updating instruments and procedures to new digital standards. The software industry offers all kinds of features, ranging from clinical trial management to quality control to sensitive data management. It is also constantly expanding its capabilities and recently adding new features to its far-reaching platform such as virtual meetings and AI built into its customer relationship management product. Building on its early success as a software technology partner for pharmaceutical and biotechnology businesses, Veeva is expanding its platform to also assist consumer goods, chemical and cosmetic businesses.
It is a premium price share that lags almost 83 times the free cash flow of 12 months (income minus cash operating expenses and capital expenditure), but for good reason. For years, Veeva has been growing its sales steadily at a double-digit rate, a rate that accelerated during the pandemic in 2020, and which shows no signs of slowing down at any time, as the need for new digital tools still exists. Simply put, it is a best venture that lies at the intersection of software and health.
This microchip giant is off but not out
Anders Bylund (Intel): Very few technology stocks currently find me very good. The market as a whole seems overheated and many of my favorite stocks could sharply correct in the not too distant future – especially in the rising technology sector. Semiconductor giant Intel is a rare exception to my unusually clumsy analysis of the current market.
Intel shares are already trading at a 24% discount on their 52-week highs as Chipzilla struggled to upgrade its manufacturing facilities to the next generation of 7 nanometer technologies. This issue puts Intel on the back foot because many of its closest competitors produce 7 nm chips using third-party disk casters led by Taiwan Semiconductor. Activist investor Daniel Loeb asks Intel to consider abandoning its former commitment to running its own manufacturing facilities, suggesting that the company could turn its chip factories into an independent enterprise or even sell them to Taiwan Semi and friends .
Regardless of whether Intel adopts any of Loeb’s ideas on radical change, Intel is well equipped to return to full health. No one else in the semiconductor industry can match the company’s huge research and development budget, which has increased to $ 13.3 billion over the past four quarters. This is more than the R & D expenditure of Advanced micro-devices and Qualcomm combined. Innovation is the lifeblood of every technology venture worth its salt, and Intel takes its forward-looking development very seriously.
Intel’s share price is absolutely disastrous, just ten times lower and 14 times free cash flow. It’s an absolute steal if you believe that Intel, like me, is getting its derailed production upgrades back on track.
The company will have to report the fourth quarter results in a few weeks, and I think it’s wise to get some Intel shares cheap before the business update.
Get the best company from China at half price – without investing in China
Billy Duberstein (Naspers): You can not regularly invest at half price in an internet giant of the highest level, especially not in today’s foaming technology market, but that’s exactly what investors are currently finding in the South African investment firm Naspers.
Naspers was formerly a South African media company, but has basically become an investor in emerging markets over the past twenty years. At the end of 2019, Naspers singled out its investments, which are basically all of its assets, in a separate company called Prosus (OTC: PROSY). As of last quarter, Naspers owned 72.66% of Prosus.
Prosus’ main asset is the company’s large 31% stake in Chinese internet giant Tencent – an interest that is now worth at least $ 226 billion. Not only that, but Prosus also has a stake in other major international food delivery, advertising and digital payment companies, which analysts say is worth $ 30 billion.
What is remarkable is that Prosus’ market capitalization today is only worth about $ 173.3 billion, or about a 32% discount to its asset value. Worse yet? Naspers trades only at a valuation of $ 85.4 billion, or a further 32% below the value of its 72.7% stake in Prosus.
This contributes to Naspers’ market capitalization being about half of its asset value. And while it’s hard to say if and when the asset-to-value gap could disappear, Naspers / Prosus management is taking advantage and recently announced a $ 5 billion buyback program in November.
Tencent has recently come under some pressure as rumors have circulated that the US government may ban citizens from owning shares of some Chinese companies. For those who want exposure to this best international growth stock, Naspers offers an indirect way to invest in Tencent without the direct Chinese risk, and at a huge discount.