2 Top Tech Stocks to Buy Right Now

It's hard to find a lot of high-quality stocks trading at bargain-basement prices when the broader markets are at all-time highs. That's the superpower long-term investors have. As long as you don't dramatically overpay, a growing, fundamentally strong business can still create fantastic investment returns over time.

Looking through some of the top technology stocks, MicroStrategy (NASDAQ: MSTR) and Salesforce (NYSE: CRM) stood out as proven market-beating stocks with either long-term upside or reasonable valuations I can get behind.

Here is what makes each stock likely to continue performing well over the coming years and why investors should consider buying them today.

1. A cryptocurrency investment with upside from software

MicroStrategy is a unique company. It started as a software company that sells licenses, subscriptions, and consulting services for business intelligence and analytics software. MicroStrategy generated $480 million in operating revenue over the past four quarters. However, most of the company's value now sits in Bitcoin, which management continually acquired since 2020. Today, MicroStrategy holds approximately 226,500 Bitcoin at $8.34 billion in cost, worth over $15 billion at Bitcoin's current price.

The company funds this primarily with convertible bonds. Ideally, MicroStrategy creates value for shareholders by increasing the amount of Bitcoin it holds faster than the share count rises due to the issued equity. MicroStrategy calls this ratio its Bitcoin yield:

Image source: MicroStrategy.

It's been remarkably effective thus far because the stock has outperformed Bitcoin itself over the past five years despite Bitcoin's price appreciating dramatically. During that time, MicroStrategy returned over 1,100% versus 110% for the S&P 500 index. Executive Chairman Michael Saylor is among Bitcoin's most dedicated supporters and wants to eventually leverage MicroStrategy's assets to create a Bitcoin investment bank.

This isn't a stock you value using traditional financials since most of its value is pegged to a digital asset. Instead, buying MicroStrategy is essentially an investment in Bitcoin's long-term performance and potential to become part of a digital economy. MicroStrategy's fantastic results over the past several years make it one of the most compelling ways to add Bitcoin exposure to your investment portfolio.

2. This proven winner can grow through expansion and cross-selling

Salesforce was one of the first SaaS stocks. The company started selling its customer relationship management (CRM) software at the turn of the century and is one of the world's largest software companies today. Through innovation and acquisitions, Salesforce has expanded to build a do-it-all software ecosystem that sells various tools and services to run a business. The stock returned over 6,600% over its lifetime, handily outrunning the S&P 500.

CRM software is critical to businesses that track customer interactions, including quotes, sales, history, and anything else they might need to know. It's estimated that over 150,000 businesses worldwide use Salesforce as their CRM. Not only has that made Salesforce an enormous company with over $36 billion in annual revenue, but it's also an epic sales funnel because it can cross-sell other products and services to its vast customer base. More than 80% of the company's incremental recurring revenue now comes from existing customers.

Management is guiding for 8% to 9% revenue growth this year, which I think the company can maintain due to its cross-selling opportunities, especially as it implements artificial intelligence (AI) throughout its products.

Meanwhile, analysts estimate that Salesforce will grow earnings by nearly 15% annually on average over the next three to five years. Earlier this year, Salesforce initiated its first dividend, giving investors a starting 0.5% yield that could grow as management raises the payout.

The stock has risen 40% over the past year, so ideally, one would have bought shares earlier. Yet, the buying window still looks open. The stock trades at 26 times its estimated full-year earnings, which seems reasonable for a business with such a solid track record of growth and a bottom line compounding at 15%. Again, great stocks only need to be available at fair prices to win over the long term.

Should you invest $1,000 in MicroStrategy right now?

Before you buy stock in MicroStrategy, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and MicroStrategy wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $845,679!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of October 14, 2024

Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Salesforce. The Motley Fool has a disclosure policy.