By: Dividend Sensei
News of two vaccines being approved by the end of the month has sent value stocks soaring. JPMorgan predicts a rotation out of tech and into the most pandemic affected companies. This could create attractive opportunities to potentially buy the world’s highest-quality, hyper-growth tech stocks at reasonable or even attractive valuations. One of these two tech stocks is an above-average quality company, which is expected to grow 10% CAGR over time. It’s suffering from profit deterioration that makes me hesitant to recommend it even at 8X earnings.
In contrast, the other company is an 11/11 quality Super SWAN, and most analysts expect it to grow 17.4% CAGR over time. It’s 22% overvalued, but well worth watch listing for a future correction or bear market. There is a 90% probability that it will fall 30% over the next five years. I will be setting limits at a 5% margin of safety to ensure I profit from future market overreactions on one of the greatest tech companies on earth.