5 Blue-Chip Tech Stocks to Buy as the Market Collapses
This week has seen some of the wildest market action ever enacted. Down one day, up the next -- you can never be sure where the Dow or the S&P 500 is going next.
The one thing that's clear is that you'll see plenty of top-shelf investing opportunities before the markets calm down again. You should be buying stocks right now.
Let's dig into a few blue-chip tech stocks that never looked as temptingly cheap as they do now.
IBM (NYS: IBM)
The bluest chip of them all takes care of its shareholders -- in good times or bad.
Big Blue has paid dividends without interruption since 1916 and has increased the annual payout for 16 consecutive years; the eight most recent lifts were of the double-digit variety. On top of that, IBM recently added another $8 billion to its share buyback program, which will come in handy for juicing returns when share prices are low.
Those shares have dropped more than 9% since the beginning of August, in turn kicking up the dividend yield to a similar degree. If you want investments to be big, safe, and unperturbed in the long run by market shenanigans, IBM is for you. While the dividend-adjusted S&P 500 benchmark has been flat over the past five years (which includes this week's credit-rating worries and the panic of 2008), IBM has more than doubled with a 20% annualized return after factoring in those juicy dividends.
If two world wars and innumerable market panics couldn't stop IBM in its tracks, let alone bring the dividend to its knees, I don't see how anything thrown at it these days could make much of a difference. This company knows how to adapt to changing markets, and makes sure that shareholders make it safely to the new paradigms as well.
In fact, Intel carries the rare distinction of being an official Income Investor recommendation as well as an Inside Value pick. Income-and-value combinations like that are as rare as snowboarding parties in Miami. Only seven stocks shared the distinction of being recommended by both services.
My own portfolio contains a small position of written Intel puts, started before this meltdown. What was meant to generate some low-risk income is on its way to becoming a stock holding as Intel's shares careen toward the seemingly impossible strike price of $18 per share. And you know what, I'd be perfectly happy buying Intel at a price like that -- or even the levels we have today.
Tablets and smartphones based on competing technology from ARM Holdings (NAS: ARMH) and its scores of chip-design customers do pose a threat to the processor giant, but I think those fears are wildly overblown today. Check back in 10 years, and Intel will be bigger and better than it is today. Also, its investors will be richer.
EMC (NYS: EMC)
Fellow Fool Eric Bleeker just put some real cash into this storage giant, which also harbors a large exposure to red-hot virtual-computing giantVMware (NYS: VMW) .
EMC is the far-and-away leader in the market for enterprise-class storage systems, and data collections are growing bigger and more essential to business than ever. The company is currently on a 46% annual earnings growth trajectory, and that's in a supposedly cool enterprise computing market. Imagine what EMC and its VMware cohort can do when the good times come rolling back.
Taiwan Semiconductor Manufacturing (NYS: TSM)
Fab-less chip design is in vogue, and TSM is the leading third-party chip manufacturer that turns all those paper designs into real silicon.
Here's a fun fact: In spite of Intel's and IBM's shareholder-friendly policies, TSM sports the biggest dividend yield of them all at 3.7%. It's actually one of the richest yields in the technology sector, coupled with a leading market share in an absolutely essential niche. And the lower TSM goes, the better your yields will look because you're starting from a lower cost base.
Google (NAS: GOOG)
If you don't know what Google does, I guess you can go Google it. Already an integral part of the average Internet user's online experience, Big G is also making its mark on smartphones and sprawling into all sorts on connection-less ventures.
Looking back at Google's early days from 2100 or so, the search-and-advertising platform will look as quaintly basic as IBM's early forays into typewriters. This company is going places not named cyberspace, and investors don't give it enough credit.
Down 9% from recent highs, Google shares trade for a measly 20 times trailing earnings. In my mind, that's a mind-boggling discount to Google's true value.
This is exactly the wrong time to panic and the right time to get greedy. Pounce on these blue-chip investments while they're cheap, because the discounts won't last long. You can take that fact to the bank.
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At the time this article was published Fool contributor Anders Bylund owns shares of Google and has written puts on Intel, but he holds no other position in any of the companies discussed here. The Motley Fool owns shares of Google, IBM, and EMC. The Fool owns shares of and has bought calls on Intel.Motley Fool newsletter serviceshave recommended buying shares of Google, Intel, and VMware, as well as creating a diagonal call position in Intel. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. You can check outAnders' holdings and a concise bio, follow him onTwitterorGoogle+, or peruseour Foolish disclosure policy.
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