The current boom in the technology sector comes from its growing relevance in not just the technology sector, but also most other industries and markets. The primary reason for this is technology’s promise of bringing greater efficiency by simply facilitating better calculations in every aspect of production that thereby leads to lower cost.
Even this growth may have had a finite existence if machines hadn’t gotten smarter and smarter and their intelligence contained in smaller and smaller areas. This miniaturization, along with consistent price rationalization, has enabled its application in an ever-growing number of areas.
So the tech boom that we see today currently doesn’t have a finite growth period or application area. This makes the technology sector an ideal place to put your money in.
But of course, we have to play the sector just as expediently as any other, which is what makes stock picking so interesting.
Technology stocks have done reasonably well this year, returning 14.1% on average, year to date. So some are best avoided on valuation considerations, even though they’re likely to remain operationally attractive.
I’ve picked a few here that carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Depending on your risk appetite, the stocks in the Zacks universe carry a growth, value and momentum score. So if your risk appetite is reasonable high, you may find growth stocks (offering greater returns at greater risk) more attractive. So you should choose the ones with a Growth Score of A or B.
If you’re not much of a risk taker and prefer to hold on to stocks and see them reach their full potential, value is your thing. In that case, choose the stocks with a Value Score of A or B. A Momentum Score of A or B is for short-term investors looking to ride the wave. There’s something in here for everyone:
SMTC Corp. SMTX
SMTC is a leading provider of advanced electronics manufacturing services to electronics industry original equipment manufacturers worldwide.
Zacks Rank #1
Growth Score A, Momentum Score B
Industry: Electronics – Miscellaneous Components Bottom 15% (216 out of 253)
2020 loss per share estimate unchanged in last 30 days
2021 earnings estimate up 3 cents (15.8%) in last 30 days
Last 4-quarter average earnings surprise 168.2%, last quarter 172.7%
Valuation based on forward 12 months earnings shows that SMTX is trading at a 14.1X multiple, which is below its median value over the past year of 19.4X and also trails the S&P 500’s 18.0X.
Amkor Technology, Inc. AMKR
Amkor Technology, is one of the largest providers of semiconductor packaging and test services.
Zacks Rank #1
Value Score A, Momentum Score A
Industry: Electronics – Semiconductors Top 15% (37 out of 253)
2019 earnings estimate unchanged in last 30 days, up 25 cents (166.7%) in the last 60 days
2020 earnings estimate unchanged in last 30 days, up 20 cents (33.3%) in the last 60 days
Last 4-quarter average earnings surprise 98.7%, last quarter 228.6%
Valuation based on forward 12 months earnings shows that AMKR is trading at a 15.3X multiple, which is below its median value over the past year of 19.3X and also trails the S&P 500’s 18.0X.
Qualys, Inc. QLYS
Qualys, Inc. is a provider of cloud security and compliance solutions that enable organizations to identify security risks to their information technology infrastructure.
Zacks Rank #1
Growth Score A, Momentum Score A
Industry: Security Top 6% (16 out of 253)
2019 earnings estimate up 2 cents in last 30 days
2020 earnings estimate up 3 cents in last 30 days
Last 4-quarter average earnings surprise 21.4%, last quarter 24.5%
Valuation based on forward 12 months earnings shows that QLYS is trading at a 49.4X multiple, which is at the low end of its trading range over the past year and therefore, also below its median value of 60.9X. The company typically trades at a premium to the S&P 500.
Synaptics Inc. SYNA
Synaptics is a leader in designing and marketing human interface solutions such as touchpads for notebook computers, capactive touch screen controllers for handsets and biometric fingerprint sensors for mobile devices.
Zacks Rank #1
Growth Score A, Momentum Score B
Industry: Electronics – Semiconductors Top 15% (37 out of 253)
2020 earnings estimate up 94 cents (30.3%) in last 30 days
2021 earnings estimate up 82 cents (22.4%) in last 30 days
Last 4-quarter average earnings surprise 29.2%, last quarter 67.1%
Valuation based on forward 12 months earnings shows that SYNA is trading at a 22.8X multiple, which is above its median value over the past year of 18.0X and level with the S&P 500. However, it is well below the high point of 57.7X over the historical period.
MicroStrategy Inc. MSTR
MicroStrategy is a leading provider of business intelligence software across the world.
Zacks Rank #1
Growth Score A, Momentum Score B
Industry: Computer – Software Top 32% (81 out of 253)
2019 earnings estimate up 59 cents (24.3%) in last 30 days
2020 earnings estimate up 17 cents (4.4%) in last 30 days
Last 4-quarter average earnings surprise -195.6%, last quarter 28.8%
Valuation based on forward 12 months earnings shows that MSTR is trading at a 39.4X multiple, which is toward the low end of its trading range over the past year and therefore, also below its median value of 57.9X. The company typically trades at a premium to the S&P 500.
American Superconductor Corp. AMSC
American Superconductor is a leading energy technology company.
Zacks Rank #1
Value Score B, Momentum Score B
Industry: Electronics – Miscellaneous Components Bottom 15% (216 out of 253)
2020 loss per share estimate down 28 cents (23.1%) in last 30 days
2021 loss per share estimate down a penny in the last 30 days
Last 4-quarter average earnings surprise 36.2%, last quarter 79.4%
Valuation based on TTM sales shows AMSC trading at 2.9X, which is below its median value of 3.5X and also the 3.4X of the S&P 500.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment