2020 is over, but the old problems hang stubbornly in 2021. With a pandemic, extreme political unrest, an economy still trying to find its way after all this, and a stock market close to records, the reasons for the investment may seem thin.
But there is always the opportunity – especially when negativity is at its peak – to buy shares of quality companies with great long-term prospects. Three Fool.com contributors think Veeva systems 09.30 NYSE: VEEV,, Intel 09.30 NASDAQ: INTC, and Nappers (UTS: NPSNY) it̵
Life sciences race against the door of “digital transformation”
Nicholas Rosolilo (Veeva Systems): The future looks bright for the reserves of life science. For many, 2020 was a big year as pharmaceutical and biotech companies competed to find treatments and vaccines for COVID-19. The fight against the pandemic continues. And new research and development is focused on innovative health treatments and methods of patient care. Every year, trillions of dollars are spent worldwide to improve health outcomes. From a business point of view, there will be winners, but there will also be many losers.
That’s why Veeva Systems is one of my favorite stocks for the vast life sciences industries. Veeva is a way to participate in the growth of the entire universe, instead of trying to bet on which companies developing new treatments and health technologies will be the biggest winners. In particular, Veeva provides cloud-based software and tools for pharmaceutical, biotech and other health-related companies to manage their operations.
In addition to her involvement in the overall increase in life research over time, Veeva focuses on helping these organizations make digital transformations – updating tools and procedures to new digital standards. The software company provides all kinds of functionalities, ranging from clinical trial management to quality control to sensitive data management. It is also constantly expanding its capabilities by recently adding new features to its comprehensive platform such as virtual meetings and AI built into its customer relationship management product. Building on its early success as a partner in software technology for pharmaceutical and biotechnology companies, Veeva is expanding its platform to help consumer goods, chemical and cosmetics companies.
This is a stock with a first-class price with almost 83 times a subsequent 12-month free cash flow (income minus cash operating expenses and capital expenditures), but for good reason. Veeva has been steadily growing its sales at double-digit percentages for years – a rate that accelerated in 2020 during the pandemic and shows no signs of slowing at any time after the need for new digital tools remains. Simply put, it’s a best-in-class business at the intersection of software and health.
This giant microchip has fallen, but not outside
Anders Baylund (Intel): Very few technological stocks seem like great purchases to me right now. The market as a whole seems to be overheated and many of my favorite stocks may target a sharp correction in the not too distant future – especially in the rising technology sector. The semiconductor giant Intel is a rare exception to my unusual bearish analysis of the current market.
Intel shares are now trading at a 24% discount to their 52-week high as Chipzilla struggles to upgrade its production capacity to next-generation 7-nanometer technology. This number puts Intel on its hind legs, as many of its closest rivals produce 7 nm chips with the help of foreign foundries led by Taiwan semiconductor. Investor activist Daniel Loeb wants Intel to consider breaking away from its time commitment to running its own production facilities, suggesting that the company could separate its chip factories as an independent company or even sell them to Taiwan’s Semi and friends.
Whether Intel embraces any of Loeb’s ideas for radical change, Intel is well equipped to return to full health. No one else in the semiconductor industry can handle the company’s huge R&D budget of $ 13.3 billion over the past four quarters. This is more than the cost of R&D Advanced micro devices and Qualcomm combined. Innovation is the lifeblood of any technology company that deserves salt, and Intel is very serious about its future development.
Intel shares are valued for an absolute catastrophe at only 10 times less profit and 14 times free cash flow. This is an absolute theft if you believe that Intel is putting its derailed production upgrades back on track, as I do.
The company needs to report fourth-quarter results in a few weeks, and I think it’s wise to take a few shares of Intel at a cheap price before this business update.
Get the best Chinese company at half price – without investing in China
Billy Duberstein (Naspers): You can’t often invest in a first-tier internet giant at half price, especially in today’s sparkling technology market, but that’s exactly what investors at South African investment company Naspers are currently finding.
Nasper was a South African media company, but in the last 20 years it has generally become a venture capital investor in emerging markets. At the end of 2019, Naspers separated its risky investments, which are basically all its assets, into a separate company called Prosus (OTC: PROSY). As of the last quarter, Naspers owned 72.66% of Prosus.
Prosus’ main asset is the company’s huge 31% stake in the Chinese internet giant Tencent – a share that now costs a whopping 226 billion dollars. Not only that, but Prosus has stakes in other major international food delivery companies, ads and digital payment companies, which analysts say could cost about $ 30 billion.
Remarkably, Prosus’s market capitalization today is only about $ 173.3 billion, or about a 32% discount on the value of its assets. Even more outrageous? Naspers traded only at an estimate of $ 85.4 billion or another 32% below the value of its 72.7% stake in Prosus.
All this is added to Naspers’ market capitalization, which is about half the value of the assets. And while it’s hard to say if and when this asset-to-value gap can be filled, Naspers / Prosus management took advantage by recently announcing a $ 5 billion share buyback program back in November.
Recently, Tencent came under some pressure as rumors circulated that the US government could ban citizens from owning shares in some Chinese companies. For those who want to be exposed to this best-in-class stock of international growth, Naspers offers an indirect way to invest in Tencent without the direct Chinese risk and at a big discount.