5 Best Tech Stocks to Buy in October 2021

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US tech stocks have been among the best performing asset class over the last decade. However, tech stocks have come off their 2021 highs amid concerns of tightening by the US Federal Reserve.

The Fed has signaled that it is on track to bring down its monthly bond purchases. After the tapering, the US central bank might also consider a rate hike sometime towards the end of 2022. While higher interest rates would make growth tech stocks less attractive, some of them look good buys in October. Here are five of them.

  1. Fastly (NYSE: FSLY)

fastly is a good tech stock to buy

Fastly stock is among the worst-performing tech stock of 2021 and is down almost two-thirds from its 52-week highs. The stock had tumbled after an outage at the company took down several websites and it lost some customers, including Amazon which is among the company’s biggest customers. However, Amazon is reportedly back on the platform. Meanwhile, while FSLY stock has recovered from the lows, it is still below the peaks.

Why is FSLY a good tech stock to buy

FSLY looks like a good tech stock to buy in October as the valuations have become attractive after the crash. The stock now trades at an NTM (next-12 months) EV-to-sales multiple of 13.9x. Wall Street analysts meanwhile don’t seem too bullish on the stock and it has eight buys and three sell ratings. None of the analysts has rated the stock as a buy and its median target price of $36 is a discount of almost 20% from these levels.

That said, the market sentiments could change next month when Fastly releases its quarterly earnings. Overall, FSLY is among the best growth tech stocks that you can buy in October.

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  1. Broadcom (NYSE: AVGO)

Chipmaker Broadcom has gained over 19% in 2021 and still looks among the best tech stocks to buy. There has been a global chip shortage which is now seen extending as far as 2023. The chip shortage has taken a toll on automotive production and even Apple iPhone production would be hit.

avgo is a good tech stock to buy

Goldman Sachs finds AVGO a good tech stock to buy

Meanwhile, Goldman Sachs is bullish on AVGO stock despite the chip shortage situation and concerns over pricing. “Given the increasingly uncertain consumer demand and cost environment, we believe Broadcom’s 1) outsized exposure to cloud/enterprise/telecom spending; 2) pricing power (i.e., industry-leading gross margins) supported by its scale advantage and robust competitive position; and 3) FCF generation (i.e. FY22E FCF yield of 7.6%) and capital return profile, will drive a relative re-rating in the stock,” said Goldman Sachs in its note.

Goldman Sachs upgraded AVGO from a hold to buy and raised its target price from $527 to $589. The median target price for AVGO is $572 which is a premium of 13.7% over current prices. 27 of the 32 analysts covering the stock rate it as a buy. Four analysts have a hold rating while one analyst has a sell rating on the stock.

AVGO is a tech stock with a good dividend yield

According to Goldman Sachs, AVGO “Management’s intense focus on differentiation and leadership shows in the company’s gross margin. Not only does Broadcom generate the highest gross margins within our coverage universe, but it has also done so over the years with little variability … despite the cyclicality that is inherent to the semiconductor industry.”

AVGO has a dividend yield of 2.9% which is over twice that of the S&P 500. If you are looking for a tech stock with a good dividend yield, AVGO would fit the bill.

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  1. Shopify (NYSE: SHOP)

Shopify stock is up over 30% for the year even as Amazon stock has sagged. The stock look among the best tech stocks to buy in October looking at the strong secular growth in its businesses.

SHOP is a good tech stock to buy for the long term

Over the long term, Shopify would benefit from the digitization of the retail market. The platform is popular among merchants and during the second-quarter earnings call it said that during the last year 46,000 partners referred at least one merchant to Shopify, which was 53% higher than the previous year. The company had $7.76 billion as cash and cash equivalents on its balance sheet at the end of June which is a good enough war chest and would help Shopify fuel its growth.

While SHOP stock looks reasonably valued at these prices, it offers strong long-term growth potential. To be sure, Shopify has always appeared overvalued to a section of the market. The same holds true for names like Tesla. However, companies like these bring strong growth and quality management to the table, something that investors are willing to pay a premium for.

Overall, if you are looking for a tech stock that you can own for decades, SHOP would fit the bill.

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  1. Apple (NYSE: AAPL)

Thanks to the rising Services revenues, markets now see Apple as a tech name and not merely a hardware company. The stock has come off its recent highs amid concerns over the chip shortage situation taking a toll on iPhone 13 production. However, the short-term issues notwithstanding, Apple looks among the best tech names to buy in October.

Warren Buffett likes only one tech stock

Berkshire Hathaway chairman Warren Buffett does not have a flair for tech stocks. However, Apple is the biggest holding for the conglomerate even as the Oracle of Omaha sees it as a consumer company and not a tech company. Apple is among those tech stocks which you can hold forever. The company has several growth drivers in the short term as well as the long term.

The valuations also appear reasonable after the recent underperformance and it trades at an NTM PE multiple of around 26.3x. With its impeccable brand, strong cash flow generation capacity, and unrelenting focus on innovation, Apple is one tech stock that should be on your radar in October.

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  1. IronNet (NYSE: IRNT)

IronNet went public through a SPAC merger last month. The company recently released its earnings and maintained the guidance for the year. There was however been a frenzied rally in the stock amid pumping from Reddit traders and it went as high as $47.50. Now, the stock trades near the SPAC IPO price of $10 having tumbled from the peaks. After the crash, IRNT looks like a good tech stock to buy.

IRNT is a good tech stock to play the cybersecurity industry

IRNT is a good tech stock to play the cybersecurity industry. The demand for cybersecurity is set to increase multi-fold over the next decade looking at the growing cybersecurity threats. The stock could be a multi-bagger tech stock over the long-term looking at the positive outlook for the cybersecurity industry.

Analysts are also bullish on the stock and its median target price of $28 implies an upside of over 156% over current prices. Overall, IRNT looks among the best tech names that you can buy in October 2021.

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About Mohit PRO INVESTOR

Mohit Oberoi is a freelance finance writer based in India. He has completed his MBA in finance as a major. He has over 15 years of experience in financial markets. He has been writing extensively on global markets for the last eight years and has written over 7,500 articles. He covers metals, electric vehicles, asset managers, tech stocks, and other macroeconomic news. He also loves writing on personal finance and topics related to valuation.