Back to News
investment

Have $1,000? These 3 Stocks Could Be Bargain Buys for 2026 and Beyond

newsfeedback@fool.com (John Ballard)
Loading...
4 min read
0 likes
⚡ Quantum Brief
Three undervalued tech stocks—Adobe, ServiceNow, and Netflix—are trading at significant discounts (38%, 50%, and 26% off highs, respectively) despite strong fundamentals, presenting potential bargain opportunities for long-term investors. Adobe’s stock plummeted on AI disruption fears, yet its Q4 results showed 10% revenue growth and $22B in remaining performance obligations (up 13% YoY), signaling enterprise adoption of its AI tools like Acrobat AI Assistant. ServiceNow’s shares halved from peaks, but it maintains 20% revenue growth guidance for 2026, with 98% renewal rates and a forward P/E of 30—far below its three-year average of 54. Netflix, down 26% from recent highs, rejected a Warner Bros. acquisition, prioritizing organic growth as it captures under 50% of 800M global connected households with 17% YoY revenue growth. All three leverage subscription models with high gross margins (Adobe: 88.6%, ServiceNow: 77.5%, Netflix: 48.6%), offering steady cash flows and growth potential despite market pessimism.
AI Audio Summary
0:00 / 0:00
Click to play
634ac7ee-9589-4c49-958b-238f62ca6c02.jpeg
Quantum News · Media Library

Businesses with a long history of consistent growth through subscription-based models never appear cheap. These businesses are highly valued by investors because customers pay recurring revenue to access their services throughout the year. However, the market is offering investors the opportunity to buy top tech stocks at a discount right now. If you're looking to invest $1,000 right now, here's why you might consider scooping up shares of Adobe (ADBE 0.49%), ServiceNow (NOW 0.86%), and Netflix (NFLX 2.09%). Image source: Getty Images. 1. Adobe Adobe has been the dominant software provider for creative and advertising professionals for many years. But the stock has sold off on fears that artificial intelligence (AI) will make it easier to create software tools that replace its offering. Why spend money on a subscription for Adobe when users can create and edit images using Google's Gemini? The stock is down 38% over the past year, and is currently trading at a forward price-to-earnings (P/E) ratio of 12. ExpandNASDAQ: ADBEAdobeToday's Change(-0.49%) $-1.35Current Price$273.78Key Data PointsMarket Cap$112BDay's Range$269.36 - $280.1752wk Range$244.28 - $422.95Volume230KAvg Vol5.1MGross Margin88.60% Wall Street is pricing Adobe like it's going out of business, but the company's performance tells a different story. Adobe continued to report growing demand for its products last quarter. In fact, it is sitting on over $22 billion of remaining performance obligations (RPO), up 13% year over year. Management credited its growth last year to "strong global demand" for its AI solutions across enterprise and consumer. Most importantly, RPO grew faster than revenue, which grew 10% year over year last quarter. This shows that Adobe is seeing bigger deals. It suggests that enterprise customers are responding positively to Adobe's new AI capabilities in its products, like Acrobat AI Assistant and GenStudio. Adobe's subscription-based business generates steady revenue and robust cash flows. Still, investors should probably wait until after the company's earnings report on March 12, just to make sure there are no negative surprises. If revenue and RPO growth remain on trend with previous quarters, it would suggest the stock is undervalued and worth starting a small position in. 2. ServiceNow The rise of AI agents is also weighing on ServiceNow's shares, the workflow automation leader. The stock is down 50% from its previous peak, yet management is still guiding for around 20% year-over-year revenue growth for the current fiscal year. ExpandNYSE: NOWServiceNowToday's Change(-0.86%) $-1.00Current Price$115.61Key Data PointsMarket Cap$121BDay's Range$113.60 - $118.8152wk Range$98.00 - $211.48Volume640KAvg Vol18MGross Margin77.53% ServiceNow helps companies automate tasks such as IT help desk tickets and onboarding new employees. But where it adds value is acting as the control layer of AI. It creates a data trail to monitor and put guardrails around what the AI is doing. These capabilities add tremendous value to companies that are using AI in their workflows. Demand is not weakening but remaining strong. ServiceNow's revenue grew at a compound annual rate of 22% over the last three years, and it just posted 21% year-over-year growth in subscription revenue in the recent quarter. Renewal rates were 98% -- consistent with historical trends. Management's guidance for subscription revenue growth of approximately 20% in 2026 suggests the stock's sell-off might be overdone. Its current forward P/E of 30 is well below the 54 average over the past three years. 3. Netflix Netflix has delivered excellent returns over the past decade. There is still significant growth runway, yet the stock is trading 26% off its recent highs, offering an attractive entry point for a starter position. ExpandNASDAQ: NFLXNetflixToday's Change(-2.09%) $-2.03Current Price$94.91Key Data PointsMarket Cap$401BDay's Range$94.69 - $98.0052wk Range$75.01 - $134.12Volume1.1MAvg Vol49MGross Margin48.59% The stock rebounded recently on news that management was walking away from its Warner Bros acquisition offer. This shows a disciplined management team that won't chase growth at any price. At the recent Morgan Stanley Technology, Media, and Telecommunications Conference, CFO Spence Neumann said, "This was an opportunity that was nice to have at the right price, not a must-have at any price." Netflix is walking away because it doesn't need to acquire growth. While most streaming subscribers believe there are too many options, according to research from The Motley Fool, Netflix is one they are not giving up. The company's revenue grew 17% year over year in the fourth quarter, and its trailing 12-month free cash flow climbed to $9.4 billion. The opportunity is still significant. Netflix has captured less than 50% of the estimated 800 million connected households worldwide. The stock's forward P/E of 31 may not look cheap, but it is a great value for a subscription-based business with 325 million customers. It's expected to grow earnings at an annualized rate of 22% over the next several years, according to the Wall Street consensus.

Read Original

Source Information

Source: The Motley Fool

Discussion

0 professional contributions

Sign in to join this professional discussion.

Be the first to add a constructive contribution.