These stocks have carved out new niches in established industries.
The Nasdaq may have reached a tipping point. In the 5 trading sessions of the 3rd week of April, Nasdaq Composite decreased by approximately 6%, Nvidia It fell 14%.
The good news is that the decline is likely a healthy correction rather than a sign of a permanent decline. This will lead to more tech stocks being bought. With stock prices down and many tech stocks showing signs of recovery, it might be a great time to buy these three stocks.
digital ocean
digital ocean (DOCN 3.30%) is a cloud infrastructure provider for small and medium-sized businesses. DigitalOcean’s market capitalization is less than $3 billion, so its larger competitors Amazon and microsoft There is a tendency to cover it up.
But DigitalOcean offers two things its mega-tech peers can’t do without compromising their business models: price transparency and the DigitalOcean community.
The prices offered mean small businesses only buy the services they need, saving money for clients who are often on tight budgets. Additionally, the community provides customers with documentation and access to other DigitalOcean customers. Therefore, customers who cannot afford a full-fledged IT department can rely on this network to solve their problems.
To be sure, DigitalOcean faced unique struggles. Small businesses fail more often and have higher turnover rates than large businesses. The stock also fell after the company announced a CEO change last year. While that has created uncertainty, Paddy Srinivasan brings years of his SaaS leadership experience that could revitalize the company.
Despite challenges, its growth is steady. DigitalOcean reported that its 2023 revenue was $693 million, an increase of 20% from the previous year. Additionally, net income for 2023 was $19 million, higher than the previous year’s loss of $28 million.
Although the company maintains a high P/E ratio due to its newfound profitability, its future P/E ratio is only 20x. Given its cheap valuation, competitive niche market, and growing need for cloud services, the company could reap huge rewards as it fuels its growth. Continuous expansion.
sea limited
sea limited (S.E. 0.05%) is a Southeast Asian conglomerate specializing in gaming, e-commerce and fintech.Popular mobile games among e-commerce leadership in Southeast Asia free firea fast-growing fintech space whose stocks have soared during the 2021 bull market.
Nevertheless, problems grew for the company as its stock price began to decline in the second half of 2021.Ban free fire Market entry in India, failure to enter markets outside of Southeast Asia, and competition from TikTok are among the company’s many challenges.
but, free fire A return to India is on the horizon to address security concerns. Additionally, Shopee’s e-commerce division, besides its continued presence in Brazil, has focused primarily on its core region of Southeast Asia and has invested heavily in logistics in the region.
The stock is currently about 80% below its all-time high, meaning it may be closer to a financial recovery than some think. Revenue in 2023 was $13 billion, with only 5% growth, but struggles at gaming division Garena overshadowed Sea’s success in e-commerce and fintech.
Additionally, the $163 million profit was the company’s first annual profit. Analysts believe the improvement will continue, with earnings expected to grow 116% this year and 163% in 2025.
Sea is unlikely to maintain triple-digit profit growth over the long term. However, with strong growth in two of its three segments and a forward P/E of 37x, investors may want to consider Sea Limited while it’s still cheap.
Shopify
Shopify (shop 1.11%) It has flourished in the e-commerce space by allowing sellers to sell without relying on Amazon around the world. Many companies offer e-commerce platforms, but Shopify stands out for its easy-to-use and customizable platform.
Additionally, an estimated 10% of all e-commerce transactions are supported by an extensive ecosystem that includes payments, inventory management, email marketing, and many other features.
Admittedly, it may have overexpanded its ecosystem when trying to get into the logistics business, resulting in the company returning to a net loss. Still, Shopify later reversed course, sold the business, and returned to profitability.
Revenue in 2023 increased 26% from 2022 to just under $7.1 billion as the company continued to attract more merchants to its platform. Additionally, despite the $1.3 billion impairment charge from the sale of its logistics business, Shopify earned comprehensive income of $152 million for the year, significantly exceeding its 2022 loss of $3.5 billion.
Looking forward, Shopify expects revenue to grow at a low rate in the 20% range, likely leading to significant profit growth. Indeed, its forward P/E of 69 may seem expensive, and its high valuation may have contributed to the decline in recent weeks.
Despite this, the company’s five-year average forward earnings multiple is 85x. This alone proves optimism about Shopify’s future, and now could be the perfect time to add to its stock.
John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Will Healy has held positions at DigitalOcean, Sea Limited, and Shopify. The Motley Fool has positions in and recommends Amazon, DigitalOcean, Microsoft, Nvidia, Sea Limited, and Shopify. The Motley Fool recommends the following options: His January 2026 $395 long call on Microsoft and his January 2026 $405 short call on Microsoft. The Motley Fool has a disclosure policy.
