The past few weeks have seen a fall in the price of many tech shares. I see that as a buying opportunity for my portfolio. I have shortlisted two tech shares to buy now for my portfolio after their recent price falls.
Digital commerce giant
Online commerce giant Amazon (NASDAQ: AMZN) is a popular tech stock, but its performance lately has been underwhelming. Indeed, over the past year, the Amazon share price has fallen 8%, at the time of writing this article earlier today. It has fallen around 18% just in the past couple of months.
There has been a growing bearishness about many tech stock valuations recently. I am not surprised that Amazon has seen its shares go down in that environment, as it is one of the world’s leading tech stocks. The current market capitalisation is a staggering $1.6trn. That sort of size can attract regulatory concern. One risk with Amazon is that it may be forced to break up its business in future to avoid it being too dominant in the market.
But I reckon Amazon’s best days may be ahead of it. It continues to add customers to its Amazon Prime service in the US, which should help increase the average spend of more and more customers. Overseas markets offer substantial potential for the growth of that service. The company’s cloud computing services continue to grow at speed. With revenue growth of 38% last year, Amazon remains firmly in growth mode.
That does not mean the shares are cheap, with a price-to-earnings valuation of 73. But I reckon the company’s installed customer base offers it a base for strong future earnings growth. It is on my list of shares to buy now for my portfolio.
UK shares to buy now for growth
On this side of the pond, 2022 has started badly for S4 Capital (LSE: SFOR). The digital ad agency holding group has already lost 8% of its value in 2022. That means that over the past year, the S4 share price has grown just 2%.
But S4 is a different beast to a year ago. In its third-quarter trading update, the company reported like-for-like revenue growth of 56% compared to the same period the prior year. The company made acquisitions throughout 2021, so the overall revenue growth in the quarter was 106%. S4 has continued its acquisition strategy in 2022, announcing this month that it was buying a US data consultancy.
Director buying
Another purchase that attracted my attention was S4 boss Sir Martin Sorrell buying 10,000 S4 shares this week as the price fell. That is the second time this month he has bought S4 shares. Admittedly the size is small beer as Sir Martin already owned over 54m S4 shares before the latest transaction. But putting more of his own money in the company suggests he sees the shares as attractively priced.
With strong growth forecasts for both revenue and gross profit, I see S4 as one of the UK market’s most interesting tech shares to buy now for my portfolio. I do see risks, however. For example, the rapid acquisition rate has seen headcount balloon. The costs of integrating and managing thousands of people could eat into profits. But I see current price weakness as a buying opportunity for my portfolio and am considering increasing my existing S4 holding.
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Christopher Ruane owns shares in S4 Capital. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
