Did you miss the FAANG actions? Buy CASH shares instead.

Investors who actively follow the stock market may be familiar with the acronym FAANG. It conveniently brings together some of the largest modern technology companies in the world, namely:

  • Facebook, which now trades under Metaplatforms
  • Amazon
  • Apple
  • netflix
  • Google, which trades under Alphabet

The five stocks are known for their high long-term returns, with Amazon, Apple and Alphabet each worth more than $1 trillion today. Although they are still among the biggest companies investors can buy, a new generation of FAANG stocks could emerge.

A panel of three Motley Fool contributors just coined the acronym CASH, covering Cloudy (REPORT 3.58%), Advanced micro-systems (AMD 2.76%)and Shopify (STORE 0.84%). Here’s what makes them worth buying.

A disruptive cloud computing company

Trevor Jennewine (Cloudflare): The cloud computing industry is dominated by tech titans like Amazon Web Services (AWS), but Cloudflare has distinguished itself in many ways and the company is growing at a breakneck pace.

Cloudflare operates a global edge cloud. Its infrastructure spans 275 cities and interconnects with thousands of other networks, including all major internet service providers. This makes Cloudflare very fast. Its infrastructure is within 50 milliseconds of 95% of the world’s Internet-connected population, and internal studies suggest that Cloudflare is the fastest network in the vast majority of countries around the world.

With this advantage, Cloudflare offers a range of application, network, and security services that accelerate and protect critical business infrastructure, while eliminating the cost and complexity of managing on-premises network hardware. Cloudflare also provides developer tools that allow customers to build websites, build software, and write code directly on its network. Forrester Research recently recognized Cloudflare as the leader in Edge development.

Additionally, Cloudflare is designed to support hybrid cloud and multicloud strategies. Think of their network as a single pane of glass that gives each customer visibility, performance, and security across their entire IT ecosystem, from private data centers to public clouds. This differentiates Cloudflare from public cloud providers, as these providers tend to favor their own technologies.

Cloudflare grew its customer base by 20% to 151,000 over the past year, and the average customer spent 26% more, underscoring an effective strategy to scale and expand. In turn, revenue soared 53% to $813 million, and the company generated $36 million in cash from operations. This meager cash flow may worry some investors, but Cloudflare pegs its market opportunity at $135 billion by 2024 and management plans to run the business near breakeven for the foreseeable future to capitalize on it.

Given its competitive strengths and considerable market opportunities, the future looks bright for Cloudflare. That’s why this growth stock is a buy.

The leader in high performance computing

Anthony Di Pizio (advanced microdevices): It’s hard to find a product or service today that hasn’t been digitized in some way, and this is made possible by advanced computer chips offering smaller processing power, less expensive and more portable. Advanced Micro Devices is one of the world’s leading producers of these chips (commercially known as semiconductors), and it’s the driving force behind some of the most popular consumer electronics products.

The company’s chips power both Sonyof the PlayStation 5 and Microsoft‘s Xbox, in addition to infotainment systems from You’re hereof electric vehicles. That should be enough to underline AMD’s importance in everyday life, but of course the company does so much more.

AMD has a booming data center segment, which grew 83% year-over-year in Q2 2022, generating $1.5 billion in revenue. The company counts some of the largest cloud service providers as data center customers, including Microsoft (Azure) and two of the FAANG names – Amazon (Amazon Web Services) and Alphabet (Google Cloud).

But it’s AMD’s recent acquisition of Xilinx for $49 billion that could be the real driver of long-term growth. Xilinx is the industry leader in adaptive computing, a technology that involves semiconductors that adapt to user needs in real time, reducing the need to constantly swap hardware. AMD believes this is the next frontier, and the newly merged companies will likely become the undisputed leader in high-performance computing over the next 10 years and beyond.

AMD’s market valuation currently stands at just $158 billion, which is paltry by FAANG standards, but there’s no doubt the company has as much of an impact on the tech sector as anyone. which of the names of this acronym. Currently, AMD shares are trading at a lower price/earnings multiple (25.5) than the Nasdaq-100 tech index (26.8), so this could be a great time to start building a position.

This top dog is down, but not out

Jamie Louko (Shopify): Shopify has had its ups and downs lately, and the stock has certainly been punished for it. Shares on this e-commerce platform are down 78% from their all-time highs. This is partly because the company sees e-commerce as a percentage of the downward trend in U.S. retail sales, and while e-commerce adoption is still higher than it was not in 2019, it is declining in line with the pre-pandemic situation. growth projections.

However, e-commerce is expected to become increasingly popular and Shopify will likely benefit from this. The company empowers small businesses to start, run, and grow their businesses to help compete with larger e-commerce sites. This venture has been quite successful: Shopify now has millions of merchants worldwide, which helped sell nearly $47 billion in merchandise volume in the second quarter of 2022.

Shopify merchants accounted for more than 10% of US retail e-commerce sales in 2021, but the company could take more of a share. Shopify is known for its innovation and is constantly delivering new features and products to help its merchants thrive. This could turn Shopify into a go-to platform and help it gain market share.

One of Shopify’s latest innovations is the Shopify Fulfillment Network (SFN), which allows merchants to offload shipping and fulfillment tasks to Shopify. It will be expensive to build, but it could add value. One of the advantages of big e-commerce players over small businesses is fast delivery times, so the fact that Shopify can achieve two-day delivery for the majority of orders could be a huge incentive to use the Shopify platform.

Shopify is a leader in the small business arena and tackles a huge market. Its high switching costs also make its platform sticky. The company trades at 9.3 times its sales – a historically low valuation since its IPO in 2015. Although this is higher than other e-commerce stocks like Etsy and BigCommerce Holdings Shopify’s competitive advantages might be worth a premium.

Given this historically reasonable price, investors might want to invest in this top dog and hold onto it for the long term.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. Suzanne Frey, an executive at Alphabet, is a board member of The Motley Fool. Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a board member of The Motley Fool. Anthony Di Pizio has no position in the stocks mentioned. Jamie Louko holds positions at Amazon, Apple, Cloudflare, Inc., Etsy, Shopify, and Tesla. Trevor Jennewine holds roles at Amazon, Etsy, Shopify, and Tesla. The Motley Fool holds and recommends Advanced Micro Devices, Alphabet (A shares), Alphabet (C shares), Amazon, Apple, BigCommerce Holdings, Inc., Cloudflare, Inc., Etsy, Meta Platforms, Inc., Microsoft, Netflix, Shopify and Tesla. The Motley Fool recommends the following options: Shopify January 2023 $1140 long call, Apple March 2023 long call $120, Shopify January 2023 $1160 short call, and March 2023 $130 short call 2023 on Apple. The Motley Fool has a disclosure policy.

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