5 Tech Stocks We Love

By Keith Noonan, Dan Caplinger, Anders Bylund, Tim Brugger, and Andrs CardenalFool.com

Tech sector stocks have had an up-and-down year, but with a range of intriguing devices, services, and platforms on the horizon, as well as a growing global middle class to make use of them, there are plenty of technology-related companies to be excited about.

To get an idea of which ones could be in position for big wins going forward, we asked five Motley Fool contributors to spotlight a tech stock that has earned their love. Read on to learn why American Tower,Google , Microsoft, Baidu , andTake-Two Interactive made the list.

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Source: American Tower.

Anders Bylund(American Tower):So, I'm asked to pick my favorite stock among all the weird and wonderful tech businesses on the market today. And instead of some hot-shot smartphone maker, 3D printing innovator, or next-generation software developer, I'm going with a boring-as-nails radio tower manager.American Towerdoesn't even qualify as a tech stock,strictly speaking, being organized as a real estate investment trust that just happens to focus on wireless towers.

Yeah, you heard me. That's my pick.

You see, American Tower maysounddull and uninteresting. But the real story is actually anything but mundane.

As long as mobile networks matter, their operators will need base stations and radio towers to keep the signals flowing.All of the major wireless networks are big American Tower customers,and they'll remain so for decades to come.

Yes,decades. Clients sign long-term leases for their tower space; the average length of the contracts American Tower signed in the second quarter was 29 years.That's long-term stability on a silver platter.

Moreover, the company is chasing growth vianew construction and strategic buyouts, both inAmericaand abroad.And the international story is a huge piece of American Tower's appeal.

Fifty-seven percent of the company's tower sites are found abroad today,up from 41% in the year-ago quarter as CEO Jim Taiclet focuses on two waves of developing markets. First, nations like Brazil and Mexico are running about five years behind the development of the American market and are rolling out 4G networks on a large scale right now.About one quarterof American Tower's sites can be found in these markets today, poised to deliver strong lease revenue growth over the next few years.

Then, places like India and Nigeria are trailing the U.S. wireless market by about a decade and are just getting into 3G networks as we speak.That's another 25% of American Tower's global antenna system today, creating a multilayered strategy for many years of fantastic international growth.

So yeah, I'm actually excited about a seemingly humble radio tower operator. Growth, stability, and a stock trading at just 16 times forward earnings!

Source: Microsoft.

Tim Brugger(Microsoft):In part because of its lackluster stock price year to date, Microsoft should make your short list of stocks to love. Naysayers point to the impact the slowing PC market has had on Microsoft, and they're right. However, eventually, investors will come to recognize that Microsoft's reliance on desktop computing is a thing of the past, and it remains woefully undervalued.

For the first time in seven quarters, Microsoft announced that its cloud revenue -- one of CEO Satya Nadella's "mobile-first, cloud-first" strategic initiatives -- didn't growtripledigits in its recently completed fiscal 2015 Q4. Thanks to its Azure cloud platform, Office 365, and Dynamics CRM, Microsoft's cloud revenue jumped a "mere" 88% last quarter: 96% after factoring in currency headwinds. At an annual run rate of over $8 billion, Microsoft has quickly become the leader in the exploding cloud marketplace.

As for Nadella's "mobile-first" pillar, even that's showing signs of life. Microsoft's pseudo-tablets, the Surface 3 and Surface Pro 3, generated just shy of $900 million in revenue last quarter. And Surface sales are likely to skyrocket as soon as Microsoft expands its re-seller partnerships from a measly 150 to over 4,500 in the coming months.

For growth and income investors,Microsoft'srecent announcement that it's bumping its quarterly dividend up to $0.36 a share, from $0.31, is just icing on the cake. At 3.3%, Microsoft's new dividend yield is one of the best in its sector. As Microsoft continues to distance itself from its competitors in the fast-growing cloud market and solidifies its mobile results, investors will finally come to realize this it isn't your father's Microsoft any longer -- and that's when the fun will begin.

Source: Google.

Andres Cardenal (Google):Google is a unique name in the tech industry. The company is the undisputed leader in search, according to estimates from eMarketer, retaining a gargantuan 55% of all advertising dollars produced by the online search industry.

In addition, Google is building an extraordinarily valuable portfolio of services and applications, and YouTube looks like a particularly exciting growth driver for the company over the years ahead. Watch time on YouTube was up by a staggering 60% year over year during the second quarter in 2015, while mobile watch time on the platform more than doubled from the same period in 2014.

As global consumers are increasingly going online for their video content, advertisers are jumping in to capitalize on the opportunity. The number of advertisers running video ads on YouTube is up more than 40% year over year, and the average spend among the 100 top advertisers is up by 60% versus the same quarter last year.

Total company-level sales grew by an impressive 18% on a constant-currency basis last quarter, and the business model is remarkably profitable, as Google generates an adjusted operating margin around of 34% of revenue. Sustained sales growth, in combination with rock-solid profitability, bodes well for investors in Google stock over the years ahead.

Source: Baidu.

Dan Caplinger(Baidu): The Chinese stock market has gotten hit hard lately, with many investors worried about bubble-like conditions amid a huge uptick in investing participation among ordinary Chinese citizens. Yet as so often happens, the recent sell-off hasn't discriminated between good companies and bad, andBaiduhas found its stock crushed despite having impressive growth opportunities.

Baidu investors have had some legitimate concerns recently, as margin levels have been decreasing steadily, and most of those following the stock expect a drop in profits in the near future. Nevertheless, Baidu's revenue growth continues to climb unchecked, and in the long run, the Chinese search giant appears to be on the right path toward transitioning away from its desktop dominance to play a bigger role in the rapidly growing mobile search market.

Even though Baidu's efforts to create partnerships with locally based businesses are costing the company in the short run, the impact the strategy could have over time could offset those short-run costs, especially if it allows Baidu to remain involved in transactions through mobile apps and other vehicles beyond traditional, Internet-based ordering. China might be slowing, but it's not down for the count, and Baidu can expect to participate in the nation's success for years into the future.

Source: Take-Two Interactive.

Keith Noonan (Take-Two Interactive):While shares of gaming industry competitorsActivision Blizzardand Electronic Artsare both up roughly 50% in 2015, Take-Two Interactive has seen more modest growth, gaining roughly 6% year to date. Don't let the comparatively small gains trick you, however. Take-Two has been delivering great results, with its last quarterly report touting 142% sales growth and a 47% increase in high-margin digital content sales compared to the prior-year quarter. These positive trends look set to continue.

Take-Two's core property,Grand Theft Auto,is stronger than ever, and the company's overall lineup seems to be improving as well.

Grand Theft Auto 5, released in 2013, has shipped astaggering 52 million copies, and is still moving units -- coming in as the second-best-selling game in U.S. retail in the first half of 2015. Take-Two also publishes hit titles in theWWE,Borderlands, and NBA 2Kseries, although its best earnings periods remain tied to the releases of new, mainline Grand Theft Auto games -- making valuation metrics such as price-to-earnings and price-to-earnings-growth ratios relatively difficult to use as indicators of stock-price fairness. Alternatively, the $2.5 billion market cap company has about $1.2 billion in cash and short-term assets,under $500 million in long-term debt, and an enterprise value of roughly $1.8 billion-- or just about 5.2 times the company's trailing-12-month free cash flow in a period that did not see the release of a new, mainlineGrand Theft Auto game.

Take a potential value play and combine it with one of the biggest franchises in entertainment, a strengthening software lineup, and an increasingly favorable sales makeup, and there's a lot to love about Take-Two.

The article 5 Tech Stocks We Love originally appeared on Fool.com.

Anders Bylund owns shares of American Tower and Google (A shares). Andrs Cardenal owns shares of Google (A shares) and Google (C shares). Dan Caplinger owns shares of Google (C shares). Keith Noonan owns shares of Activision Blizzard and Take-Two Interactive. Tim Brugger has no position in any stocks mentioned. The Motley Fool owns and recommends Activision Blizzard, American Tower, Baidu, Google (A shares), and Google (C shares). The Motley Fool owns shares of Microsoft and has the following options: long January 2017 $80 calls on American Tower. The Motley Fool recommends Take-Two Interactive. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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