A recovery in the technology sector is inevitable in the long run, and these companies could lead the charge.

High inflation is causing consumers to tighten their belts this year, with staples like gas setting all-time highs on a price-per-gallon basis. It has prompted the Federal Reserve to take aggressive action, raising the benchmark interest rate by 50 basis points in May, which is double the typical 25-basis-point increase, in an attempt to cool prices. Higher rates have wreaked havoc on high-flying stocks in the technology sector, plunging the Nasdaq-100 index into a bear market as investors rein in their growth expectations.

While the short-term volatility is unsettling, it’s important to focus on the long run when investing. History is proof that bear markets don’t last forever, so now could be a great time to put money to work in heavily discounted stocks. A panel of three Motley Fool contributors have identified Fiserv ( FISV 0.59%), The Trade Desk ( TTD 8.30%), and Airbnb ( ABNB 3.92%) as potential leaders when the tech sector’s resurgence eventually happens. Here’s why. Image source: Getty Images. A silent achiever

Anthony Di Pizio (Fiserv): Fiserv doesn’t attract a great deal of attention, but the $63 billion giant is a dominant player in the payments industry. It doesn’t serve individual consumers directly, yet it has touch points with over 1 billion of them. The company provides financial technology solutions to merchants and financial institutions to help them accept and process payments and power their digital customer experiences.

Fiserv has built a client base of over 10,000 banks and financial institutions, and it helps them process 12,000 transactions every second. In addition, the company’s white label software powers the customer-facing online banking portals for many of its clients. But Fiserv’s largest segment is focused on helping 6 million merchants accept credit card payments in-store driven by its cloud-based Clover point-of-sale brand. It’s currently set to process $197 billion in transactions on an annualized basis.

While Fiserv stock is down 10% in 2022 so far, it has handily outperformed the Nasdaq-100 index, which has declined by more than 28%. Investors tend to favor profitable companies that return money to shareholders when markets are volatile, because they can offer a stability that high-flying growth stocks can’t. In Q1 2022, Fiserv repurchased $500 million worth of its own shares, taking its total buybacks to a whopping $3.8 billion over the last two years alone. Share buybacks are a popular tool among investors because they reduce the company’s share count and therefore, organically lift the value of each share outstanding.

Fiserv’s growth rate is expected to slow amid the tighter economic conditions. It generated $15.3 billion in revenue in 2021, which analysts expect to increase by 7.5% to $16.5 billion this year. But its profitability makes the stock a great value right now. The company has generated $5.81 in adjusted earnings per share on a trailing-12-month basis, placing its stock at a price-to-earnings multiple of 16. That’s a 33% discount to the Nasdaq-100 index, which trades at a multiple of 25.

For investors looking for some shelter in the tech bear market , in addition to a diverse financial services company with strong upside potential as things recover, Fiserv is an excellent candidate. Image source: Getty Images. A diamond in the rough

Jamie Louko (The Trade Desk): Oftentimes, the best buying opportunities come when there is nothing but fear in the market, and I think that is the case with many tech stocks today. Fast-growing, cash-generative companies have been crushed, but as stocks recover, I think The Trade Desk could lead the charge.

The Trade Desk helps advertisers find digital ad space to promote their business, which can be difficult to do alone. Without facilitators like The Trade Desk, advertisers would have to hunt for publishers by themselves, and there would be no guarantee that the digital ad inventory they find would be the best way to reach their target audience. However, The Trade Desk has partnerships with over 225 publishers to help advertisers find inventory that will result in effective marketing.

The Trade Desk is the leader in this industry according to Gartner ‘s Magic Quadrant, and that dominance is paying off. It generated $315 million in first-quarter revenue, with over 43% of that turning into free cash flow. The company can use this cash generation to capitalize on the major opportunity ahead.

Despite being a leader, The Trade Desk still has plenty of room to expand. In 2021, the company had roughly $6.2 billion in […]

source 3 Top Stocks That Could Lead a Market Rebound

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