10 Top Tech Picks for 2022

After years of outperformance, tech stocks have been among the hardest hit as we enter the new year. Nevertheless, several advisors in the MoneyShow Top Picks report chose select technology stocks as their favorite investments -- suggesting the recent pullback may simply be offering risk-oriented investors more attractive entry points. Steve Reitmeister, Reitmeister Total Return What is the natural solution to a semiconductor chip shortage? Build more chips. In particular, build out the capacity for manufacturing more semiconductors given about two decades of underinvestment in the industry. The biggest winners will be semiconductor equipment companies which is why I see nothing but upside for Kulicke and Soffa in the year ahead. Earnings estimates are flying higher for this year and next. Analysts were already high on KLIC before its latest report. Now they are downright effervescent. Right now, the average stock is trading for 24X next year's earnings, whereas KLIC is not even at 11 times next year's earnings. This is also why Wall Street analysts are pounding the table with an array of fair value target prices between $78 and $100. Our POWR Ratings concurs as KLIC is in the top 8% of, and all stocks for Value. The exceptional grades for KLIC don't end there as it is also top 6% for Momentum and top 3% for Growth. And let's not forget that their industry as a whole is A rated. This means we are looking at one of the best stocks in one of the best industries. This stock would wow most investors on the tech growth story alone. However, when you layer on top that it is also one of the best value plays around then you understand why it is such an easy choice to outperform in the year ahead. Carl Delfeld, Cabot Explorer As we head into a new year Nvidia Corp. -- a leading technology play -- stands out as the best growth and momentum idea. Nvidia is a well-known semiconductor designer stock that had a great year in 2021 but, importantly, broadened its product line and revenue source beyond gaming. Nvidia is the premier designer of discrete graphics processing units that elevate the experience on computing platforms. Its chips serve a number of end markets, including premium PCs for gaming, data centers, and increasingly automotive infotainment systems. Nvidia has broadened its focus from traditional PC graphics applications such as gaming to more complex growth opportunities, including artificial intelligence and autonomous driving, which leverage the high-performance capabilities of the firm's graphics processing units. Nvidia's lead in these areas has given it a bit of a moat to beat back competitors. The company just recently announced the availability of Nvidia Omniverse software and revealed new Omniverse features for digital artists and designers. This is the future of 3D content creation and how virtual worlds will be built, commented Jeff Fisher, Nvidia senior vice president of consumer products. In addition, for the emerging autonomous car market, Nvidia announced new users of its Nvidia Drive platform. It said electric-vehicle makers such as Volvo-backed Polestar and Chinese firms such as Nio, Xpeng and Li Auto are incorporating its Drive Hyperion platform. John Gardner, Blackhawk Wealth Advisors' Market Insight Think metaverse; the opportunity is monetizing interactive, real-time 3D content (RT3D). Unity Software enables RT3D and is the metaverse stock to owns. Unity is the world's leading platform for creating and operating interactive, real-time 3D content. Creators, ranging from video game developers to artists, filmmakers, and others, use Unity to make their imaginations come to life. Unity's platform provides a comprehensive set of software solutions to create, run and monetize interactive, real-time 2D and 3D content for mobile phones, tablets, PCs, consoles, and augmented and virtual reality devices. In November 2021, Unity acquired Weta Digital, the premier creator and innovator of visual effects and animation. Weta Digital's technology made it possible to produce high-quality, award-winning movies like Avatar, Game of Thrones, Lord of the Rings, Planet of the Apes, and more. The merger will allow Unity to empower the growing number of game developers, artists, and potentially millions of consumer creators with highly sophisticated content creation tools and a cloud-based Software as a Service subscription model. Unity believes its technology could provide a foundation for the metaverse. I believe Unity is a timely stock to own in the current investment universe. Gordon Pape, Internet Wealth Builder The best formula for finding potential outperformers is to look for quality companies that have been badly beaten down by events beyond their control. Sabre qualifies, big time. Sabre is a software for services firm that powers the back end of many travel-related companies. These include airlines, airports, car rental companies, cruise lines, hotels, search engines, and online travel agencies. Sabre's software is indispensable to its clients. It's a huge market, with the industry generating over $8 trillion annually when things are normal - which, of course, they have not been for two years. Located in Texas, the company has two main business groups. The hospitality group provides technology for over 40,000 hotels and resorts in 160 countries. The platform allows these clients to optimize revenue and improve the guest experience. All this is invisible to the public but essential to making sure the travel experience runs smoothly. So, when you phone or go online to book a hotel room you are likely using the Sabre central reservation system. The second area is centered around the airlines and travel agencies. If you use companies like Bookings and Expedia, they're both built on the Sabre platform. Prior to the pandemic, the company's stock was trading north of $27 but it got crushed when travel suddenly ground to a stop. At some point, hopefully in 2022, the coronavirus will fade away. Tourism will return, airports will be jammed, cruise ships will be full, and Sabre's stock will soar once again. I think you're looking at upside of 100%+ here, but it will take time and patience. Mike Cintolo, Cabot Growth Investor Snowflake is a relatively new issue (public for 14 months) with a massive valuation that's had a big run since May. It appears to be a one-of-a-kind story: The firm has what looks to be a breakthrough when it comes to data storage, sharing and usage across big organizations. Right now, so much of a firm's ever-growing amount of data is split up and hard for some to access, and that's doubly true when using data from vendors or partners, with data having to be extracted, cleaned and then loaded -- creating these data pipelines is hard, costly and even if they work, are inefficient. But Snowflake makes it all seamless, with an architecture and access controls that allows the right people, departments and clients to see the data they need when they want; data is live and can be queried at any time, with no need for scrubbing, security or uploading. Indeed, the numbers here are hard to beat: Snowflake has had many quarters in a row of triple-digit revenue growth (one of the best stock picking criteria in our system), while remaining performance obligations (all the money under contract due to eventually be received) were up 94% in Q3, while total customer (5,416, up 52%) and seven-figure customer (148, up 128%) growth has been great. SNOW has all the makings of a stock that institutional investors will pine after. Faris Sleem, The Bowser Report MIND C.T.I. Ltd. designs, develops, and operates real-time and off-line convergent billing and customer care software solutions worldwide. Its products support services such as voice, data, and content services in a single platform. MNDO is not your average small cap stock. It has strong fundamentals and pays an amazing dividend. The stock offers a dividend yield of 8% and only trades 11% above our initial recommendation to our subscribers. Typically, high dividend yields are accompanied by lackluster financial results and diminishing growth. However, MNDO recently announced that quarterly revenues grew to $7 million in 3QFY21, which was up 18% from the same period last year. Additionally, operating income and net income were both up year-over-year. The stock has substantial institutional ownership of 17%, with its largest shareholder being Morgan Stanley. There are 24 institutional investors and the top 2 holders account for 12% of the shares outstanding. Additionally, it is worth noting that insiders hold 17% of the outstanding shares but do not trade the stock frequently. Large insider and institutional ownership is rare for a small stock, but is reassuring for long-term investors. The fundamentals are evidence of the company's success. Assets outweigh liabilities 5:1 and there is minimal debt. Its cash position grew to $16.1 million in the recent quarter and cash flows slightly improved year-over-year. Its current ratio of 3.4 is double that of its competitors and represents minimal liquidity risk. MNDO is a great dividend stock for long-term investors that has a proven history of consistently rewarding shareholders. Brian Hicks, Angel Publishing A team of scientists recently 3D-printed something revolutionary. It wasn't a toy, or a vase, or a bike frame. It was a steak. It was 3.67 ounces of real, animal tissue, fat and muscle sewn together like a work of art. The largest 3D printed steak ever. And nothing had to die. Meat and dairy production accounts for about an eighth of greenhouse gas emissions. This is only going to get worse as the newly minted (and growing) global middle class demands a more Western diet. Meat consumption is expected to increase 14% by 2030 and between 35% and 67% by 2050. Growing meat in a lab -- where chemical processes can spur cell division and produce protein with infinitely less water, space, and energy, and without any antibiotics or misery -- could soon offer a bone-in-ribeye cheaper and with less ethical hassle than any that came from the butcher. That's why we recommend purchasing stock in the Israeli company that printed that record breaking steak -- MeaTech 3D . The firm places animal stem cells in bioreactors where they can grow exponentially, differentiate, and then be turned into bio-inks for printing. With an initial public offering earlier this year, MeaTech is the leader in this newborn industry and the only lab-grown meat company publicly traded in the U.S. Such an investment is risky. MeaTech 3D is still working on patenting and scaling up its technology. However, we believe in the immense potential for growth in this space. The meat industry, as it is, has to change. We believe MeaTech 3D is the company to change it. And with an $840 billion dollar global meat sector, that change could be very profitable indeed. John Buckingham, The Prudent Speculator Spun off from McKesson in 2020, Change Healthcare is the leading independent provider of health care IT services. The company offers software and analytics solutions in support of provider network management, payments and other administrative healthcare functions that aim to enhance clinical decision-making and improve quality of care. A year ago, Change announced that it would combine with Optum, a tech-focused division of UnitedHealth , in a transaction whereby CHNG holders would receive $25.75 per share in cash. Facing an intense lobby from the American Hospital Association (AHA), parties to the deal have delayed the transaction more than once, most recently pushing the deadline to April 5, 2022, and promising the Department of Justice no deal would happen before February 22nd. We continue to think the antitrust risks are appropriately discounted, given a greater than 20% spread between the market and merger prices, while fiscal 2022 and 2023 consensus EPS estimates yield inexpensive respective forward P/E ratios of 14 and 13. Deal or no deal, we like CHNG. A sizable short-term return is available if the union is consummated and a strong competitive position exists if not, with the AHA saying, The types of services offered by OptumInsight and Change are a must have for health care providers to navigate byzantine insurance reimbursement and ensure accurate and timely payment. Rich Moroney, Dow Theory Forecasts and Upside Alphabet stock has surged more than 250% since we added it to our Focus List at Dow Theory in August 2016, nearly doubling the S&P 1500 Index's total return. We see a long runway for more gains ahead, given Alphabet's strong position in digital advertising; we recommend the stock as a favorite investment for the coming year. During the pandemic, Alphabet, Meta Platforms and Amazon expanded their dominance in the advertising industry and now combine for more than half of all ad spending outside of China, versus 40% in 2019, estimates industry researcher GroupM. Online ads account for about 64% of total advertising, says GroupM, up from 52% in 2019. Digital ads are projected to grow 31% in 2021. Total ad spending is forecasted to rise 10% next year, with spending on social-media ads expected to outpace TV commercials for the first time. Google is gaining share in the cloud and investing billions in such initiatives as machine learning, quantum computing, self-driving vehicles, and drones - businesses with the potential to open up huge new markets. Analysts are increasingly bullish on Alphabet's 2022 prospects, with the consensus projecting 5% profit growth on 17% higher sales. The stock will never be confused for being cheap. But its P/E ratio for estimated 2022 profits drops to 24 from 26 after backing out net cash of $167 per share. Alphabet is a Long-Term Buy. Onto Innovation , a recommendation from our small-cap focused newsletter, Upside, has more than doubled over the past 12 months, yet its Quadrix Value score has stayed in a tight range. Its Overall rating of 90 means that the stock scores better than about 90% of the nearly 5,000 companies in our Quadrix ratings system. It's Quality ranking is 87 based on its long-term growth record and returns on assets, equity and investment. Onto Innovation grew earnings per share 107% for the 12 months ended September, with sales up 38% and operating cash flow more than doubling. Onto generated $148 million in free cash flow over the past 12 months, up from $60 million for the year-earlier period. The expansion of 5G networks and cloud computing is boosting demand for Onto's products and services, which help semiconductor companies improve quality, performance, and reliability. Analysts are increasingly bullish on Onto's growth prospects, with earnings per share projected to rise 21% in 2022 on 14% higher revenue. The stock recently traded at 22 times estimated 2022 earnings, above the median of 19 for semiconductor stocks in the S&P 1500 Index. Backing out net cash of $9 per share lowers Onto Innovation's year-ahead p/e ratio to 20. The stock is a Best Buy. Get free access to the full 100+ page Top Picks Report featuring the nation's most respected and well-known newsletter advisors' favorite investment ideas for 2022.

10 Top Tech Picks for 2022

Despite the recent sector pullback several advisors here select technology stocks as their favorite investments for the year.

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