The entire stock market has been hit hard recently. But many technology stocks have taken a tougher turn, as evidenced by the strong techno Nasdaq Compositea 9% decline since October 1st compared with the 6% decline in the S & P 500 index with more equal weighting over the same period. Although some technology stocks had to be corrected, the decline of two large companies may have gone too far.
These stocks are Square (NYSE: SQ) and Apple (NASDAQ: AAPL), which have fallen by 28% and 21% respectively since 1 October. For opportunistic investors, it may be a good time to buy.
Shares of the financial technology company Square have been totally criticized recently. With this 28% drop since October 1st, Square has lost nearly a third of its value. The bearish narrative surrounding the stock extends beyond the general downturn in the technology securities market. The company's shares also fell as Square's CFO Sarah Friar announced plans to become CEO of Nextdoor (a social network for neighbors and communities) and when management released worse-than-expected outlook for fourth quarter earnings.
Although Square's stock has recently declined, its activity has been flourishing. Indeed, the company has just posted a sixth consecutive quarter of acceleration of revenue growth. In the third quarter, Square recorded a 51% increase over the same period last year, compared to 48% in Q2. Adjusted earnings before interest, taxes, depreciation and amortization increased 107% from a year ago to $ 71 million.
For investors who want to hold their positions for the long term, now may be the right time to buy some of the shares of this fast-growing company.
Similarly, Apple's shares have recently been affected by more than one technology sale. Numerous reports of a worse-than-expected demand for the company's latest iPhones have weighed, investors wondering if its most important business sector could continue to grow.
In the last quarter of Apple, iPhone revenues increased 29% over the previous year. But this quarter mainly represents the last full quarter of the iPhone X cycle and the iPhone 8; the iPhone XS only came out in the last weeks of the quarter. Investors worry that the latest iPhones are not able to make difficult comparisons a year ago. And Apple's forecasts for the increase in the total business turnover of 1% to 5% only show that even the management expects the company's growth to slow down.
But the decline in stocks has taken these concerns into account. The shares trade with a P / E of just 15. Although a further decline is still possible, investors buying at this level will probably not regret it in a few years.
Daniel Sparks owns shares in Apple and Square. The Motley Fool owns shares and recommends Apple and Square. The Motley Fool offers the following options: long calls from January 2020: 150 calls on Apple, short calls from January 2020: 155 calls on Apple, and short calls from January 2019: 80 calls on Square. Motley Fool has a disclosure policy.