5 Tech Stocks to Buy
The coronavirus pandemic, which has been wreaking havoc economically, has emerged as an unlikely silver lining to the millenials or Gen Y — a generation that roughly comprises adults whose birth years range between 1981 and 1996 — by compelling them to bring about positive changes to their finances.
COVID-19 induced falling GDP and rising unemployment level are persuading this demographic cohort to become more calculative and conservative in spending. This demographic that has been often stereotyped as the “Avocado Toast Generation” is cutting back on their spending as apprehensions regarding the current recession continue to increase.
According to a survey data from Money Under 30, 69% of the millennials have spent less so far amid this crisis by saving on brewed coffees, transportation, vacations and dining out. Further, the survey shows that 65% of the millennials have received a boost to their finances, which is a major positive.
Hence, several among this generation have opened up to the idea for investment. The above-mentioned survey also shows that 61% of millennials are optimistic about investment with younger ones taking more interest amid the pandemic.
Although COVID-19 had brought the stock market to a standstill, the gradual reopening of the economies and rebounding consumer confidence are leading the market to new peaks, which presents an alluring investment opportunity to tech-savvy millenials.
Notably, the tech-ladden Nasdaq index is continuosly scaling new highs. On Jul 9, the index reached a new record high —closing the trading session at 10,547.75, up 0.5%. Further, Nasdaq has gained 17.6% on a year-to-date basis.
We note that the tech sector, which has been extremely resilient to the impacts of COVID-19-induced disruptions, has contributed significantly to the Nasdaq’s rally.
The Technology Select Sector SPDR (XLK) has gained 17.9% on a year-to-date basis, which is testament to the sector’s resilience.
Millennials may take refuge in coronavirus-battered tech stocks that have strong fundamentals.
Tech Sector Holds Prospects
Tech sector has been weathering the impact of COVID-19 on the back of advanced technologies including AI, ML, AR/VR, cloud computing, blockchain and robotics.
Further, an uptick in the demand for Internet-based services and products as a result of current work-from-home and learn-from-home trend remains noteworthy. These trends have led to solid adoption of video conferencing tools and software.
Furthermore, growth in IoT, 5G deployment, autonomous vehicles, wearables and other connected devices, which are bolstering the adoption of blockchain technology and driving growth in the semiconductor industry remain encouraging.
Additionally, growing proliferation of cloud services and products that are rapidly facilitating remote working is a major positive.
Considering growth prospects of the tech companies, it makes sense to invest for long-term gains.
Per the Zacks’ proprietary methodology, stocks with the combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer solid investment opportunities.
Based on this, here we pick five tech stocks that boast a perfect mix of elements and strong fundamentals. You can see the complete list of today’s Zacks #1 Rank stocks here.
Moreover, these stocks have a market capital of more than $5 billion.
Year-to-Date Price Performance
Zoom Communications ZM continues to add record number of subscribers and expand enterprise customer base amid the COVID-19-induced remote-working and online-learning wave. Easy to deploy, use, manage and scalability make Zoom Video’s software popular among customers. Moreover, this $76.03 billion-worth company’s efforts to eliminate the security and privacy loopholes are expected to aid it in maintain its existing enterprise user base and attract more customers.
Zoom Communications currently has a Zacks Rank of 1 and a Growth Score of A. The consensus mark for fiscal 2021 earnings has been revised upward by 195.3% in the past 60 days to $1.27 per share.
Further, the company’s debt-to-total capital is 6.5% which is much lesser than the Zacks Internet – Software industry’s average of 34.3%.
Fortinet FTNT is poised well to capitalize on rising demand for security and networking products amid coronavirus crisis, which has compelled a huge workforce globally to work remotely. It is also benefiting from robust growth in Fortinet Security Fabric, cloud and SD-WAN offerings.Moreover, continued deal wins, especially those of high value, are key growth drivers for this company, which is worth $24.18 billion.
Fortinet currently has a Zacks Rank #1 and Growth Score B. The Zacks Consensus Estimate for 2020 earnings has been revised upward by 2.2% to $2.81 per share in the past 60 days.
Further, the company’s debt-to-total capital is 0.0% compared to the Zacks Security industry’s average of 34%.
Anaplan PLAN is well poised to gain from the robust uptick in demand for its cloud-based Connected Planning platform, which enables clients to improve decision-making across finance to supply chains on a real-time basis. Further, this $7.01 billion-worth company is benefiting from rapid digital transformations across all industries which are further propelling the need for efficient planning and data-driven decision-making solutions.
Anaplan currently has a Zacks Rank #1 and Growth Score B. The Zacks Consensus Estimate for the fiscal 2021 bottom line is pegged at a loss of 43 cents per share, having narrowed from a loss of 45 cents per share in the past 60 days.
Further, the company’s debt-to-total capital is 12.2% which is lower than the Zacks Internet – Software industry’s average of 34.3%.
Twilio TWLO is benefiting from strong demand from health care, education and crisis management organizations along with accelerated digital transformation by companies amid COVID-19 pandemic. Further, this $34.35 billion-worth company is gaining on SendGrid acquisition and growing adoption of Twilio Flex.
Twilio currently has a Zacks Rank #1 and Growth Score B. The Zacks Consensus Estimate for 2020 loss has narrowed down from 12 cents to 11 cents per share in the past 60 days.
Further, the company’s debt-to-total capital is 13.1% which is lower than the Zacks Internet – Software industry’s average of 34.3%.
SAP SAP is gaining on strong growth in cloud revenues and expanding customer base. Moreover, strong demand for cloud solutions in the Europe, Middle East and Africa (EMEA) region holds promise. Further, robust adoption of S/4HANA, Fieldglass, Concur and SuccessFactors Employee Central solutions is benefiting this $182.23 billion-worth company.
SAP currently has a Zacks Rank #2 and Growth Score B. The Zacks Consensus Estimate for 2020 earnings has been revised upward by 0.5% to $5.54 per share in the past 60 days.
Further, the company’s debt-to-total capital is 36.5% which is lower than the Zacks Computer – Software industry’s average of 43.1%.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech 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
SAP SE (SAP) : Free Stock Analysis Report
Fortinet, Inc. (FTNT) : Free Stock Analysis Report
Twilio Inc. (TWLO) : Free Stock Analysis Report
Anaplan, Inc. (PLAN) : Free Stock Analysis Report
Zoom Video Communications, Inc. (ZM) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research