3 Top Tech Stocks to Buy in July

Major stock market indexes have rallied to all-time highs so far in 2019, lifting many of the most promising tech names to dizzying heights in the process. This has made it much more difficult to differentiate overpriced technology stocks from those that still trade at a discount relative to their long-term potential.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="To that end we asked each of three top Motley Fool contributors to choose a tech stock he thinks investors would do well to buy this month. Read on to learn why they like 2U (NASDAQ: TWOU), eBay (NASDAQ: EBAY), and Yandex (NASDAQ: YNDX).” data-reactid=”12″>To that end we asked each of three top Motley Fool contributors to choose a tech stock he thinks investors would do well to buy this month. Read on to learn why they like 2U (NASDAQ: TWOU), eBay (NASDAQ: EBAY), and Yandex (NASDAQ: YNDX).

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Educate yourself while this pullback lasts

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Steve Symington&nbsp;(2U):&nbsp;Shares of 2U have plummeted nearly 40% since early May, and seemingly with good reason. That’s when the online-education platform leader modestly reduced its full-year revenue guidance, sparking a flurry of analyst downgrades. The reduction in guidance was the result of a decline in student enrollments in 2U’s five largest graduate programs — specifically a decline of about 20%, albeit from an unusually high starting point. In particular, during the subsequent conference call, 2U cofounder and CEO Chip Paucek blamed the guidance reduction on a combination of lower student applications, increased selectivity from university partners in the admissions process, and a temporary delay in the launch date of one of its largest projected programs.” data-reactid=”26″>Steve Symington (2U): Shares of 2U have plummeted nearly 40% since early May, and seemingly with good reason. That’s when the online-education platform leader modestly reduced its full-year revenue guidance, sparking a flurry of analyst downgrades. The reduction in guidance was the result of a decline in student enrollments in 2U’s five largest graduate programs — specifically a decline of about 20%, albeit from an unusually high starting point. In particular, during the subsequent conference call, 2U cofounder and CEO Chip Paucek blamed the guidance reduction on a combination of lower student applications, increased selectivity from university partners in the admissions process, and a temporary delay in the launch date of one of its largest projected programs.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="But long-term investors should note first that&nbsp;overall&nbsp;enrollments are still climbing, up 3% at its top 15 programs and 32% excluding its top five. This near-term hiccup should be little more than a bump in the road; 2U’s current domestic graduate program (DGP) launch pipeline is poised to approximately double its DGP base to 100 by 2021, and the company maintains a longer-term goal of 250 such programs.” data-reactid=”27″>But long-term investors should note first that overall enrollments are still climbing, up 3% at its top 15 programs and 32% excluding its top five. This near-term hiccup should be little more than a bump in the road; 2U’s current domestic graduate program (DGP) launch pipeline is poised to approximately double its DGP base to 100 by 2021, and the company maintains a longer-term goal of 250 such programs.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="What's more, that doesn't even account for 2U's international graduate program potential, or incremental growth from its recently formed "alternative credentials" segment, which includes nondegree short courses and tech "boot camps" via its acquisitions of GetSmarter in 2017 and Trilogy Education in April.” data-reactid=”28″>What’s more, that doesn’t even account for 2U’s international graduate program potential, or incremental growth from its recently formed “alternative credentials” segment, which includes nondegree short courses and tech “boot camps” via its acquisitions of GetSmarter in 2017 and Trilogy Education in April.

For patient investors willing to buy now and watch that growth story unfold, this pullback could be a golden opportunity to open or add to a position.

A middleman with a strengthening business

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Demitri Kalogeropoulos (eBay): It’s possible that eBay can capitalize on another technical slip by market leader Amazon&nbsp;(NASDAQ: AMZN) during its annual Prime Day sale this month. But there are more fundamental reasons to like the e-commerce marketplace’s stock right now.&nbsp;” data-reactid=”31″>Demitri Kalogeropoulos (eBay): It’s possible that eBay can capitalize on another technical slip by market leader Amazon (NASDAQ: AMZN) during its annual Prime Day sale this month. But there are more fundamental reasons to like the e-commerce marketplace’s stock right now. 

eBay’s latest earnings report showed hints of a growth rebound, with sales rising 4% to comfortably exceed the guidance that CEO Devin Wenig and his team had issued. Yes, that’s far from the 9% boost that Amazon recently reported on its product volumes. Yet eBay’s asset-light selling approach is far more efficient, with a 23% operating margin that trounces Amazon’s 6%.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="eBay now thinks it can grow its core revenue by around 3% this year rather than its prior 1% target. Profits should expand faster as it shifts spending toward more attractive areas like its emerging payments and advertising businesses. Even modest success here should translate into solid returns for investors despite the fact that the e-commerce giant’s sales growth has been slower than that of fully integrated merchants like Amazon and Walmart&nbsp;(NYSE: WMT).” data-reactid=”33″>eBay now thinks it can grow its core revenue by around 3% this year rather than its prior 1% target. Profits should expand faster as it shifts spending toward more attractive areas like its emerging payments and advertising businesses. Even modest success here should translate into solid returns for investors despite the fact that the e-commerce giant’s sales growth has been slower than that of fully integrated merchants like Amazon and Walmart (NYSE: WMT).

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