The tech revolution continues to create new businesses and expand others while bringing innovative products to the marketplace. Although some companies have obvious tech roots in semiconductors and medical technology, others are better known for their jogging pants and pregnancy advice. Here, we list 12 tech stocks worth tracking, with a mobile device or otherwise, in the year ahead.
Under Armour (UA)
A company that makes sports apparel and athletic shoes may not seem ready for high-tech prime time. But the Baltimore-based concern is leaping into tech in a big way, even as the stock has jumped almost 80 percent since May 2014. Last year, Under Armour made a number of multimillion-dollar app acquisitions, including MapMyFitness (physical training), MyFitnessPal (diet tracking) and Endomondo (personal training). "Clearly this indicates a commitment to its future as a tech company," says Erik Zambrano, marketing manager for Applico, a New York-based app development company.
Many consumers hate PayPal, as it takes 2.9 percent, plus 30 cents, for each transaction when someone receives money for goods or services. But if you're an investor watching the cybersecurity front, there's plenty to like. "When this e-commerce payment transfer company divorces from eBay, it could see a major boom," says Charley Polachi, managing partner at Polachi Access Executive Search in Boston. "With identity theft and cybercrimes on the rise, PayPal's safe and user-friendly payment method will only become more in demand."
The mammoth chipmaker is down roughly 16 percent from early December, a consequence of sluggish revenues in the PC market, but it looks poised for a comeback this year. "We think they're beginning to show some traction," says Kim Forrest, vice president and senior analyst at Fort Pitt Capital in Pittsburgh. "This is evidenced by Apple highlighting the use of an Intel processor in one of its MacBook upgrades during its latest new product presentation." Intel will be a go-to company as mobile-device makers step up the performance of their products, she adds.
Avago Technologies (AVGO)
Based in Singapore, Avago is a mixed-signal semiconductor company, which means it can combine analog and digital functions in a single chip. But there's nothing mixed about the signals it's sending to market watchers. "CEO Hock Tan has a proven track record of operational excellence and increasing shareholder value," says J.P. Scandalios, vice president, research analyst and portfolio manager for the Franklin Equity Group in San Mateo, California. He cites revenue growth in Avago's wireless communications segment. Last month, Avago reported its biggest year-over-year earnings and revenue growth in more than four years.
Medtronic's slice of the high-tech sector comes from health care industry solutions. Its acquisition of Covidien PLC, a $49.9 billion cash-and-stock deal completed in January, creates a juggernaut health care company. "It provides state-of-the-art equipment, software and online information systems," says Skip Aylesworth, portfolio manager of the Hennessy Technology Fund and based in Boston. "Medtronic is a way to invest in technology with growth tied to the aging world population."
XO Group Inc. (XOXO)
You may call the kiss-hug moniker cute, as XO's best-known Web properties are The Knot, a wedding planning hub and The Bump, which focuses on pregnancy and infant care. Its horizons look snuggly, too. "Their business model is now ad-driven, the company having recently divested the last of its wedding supply fulfillment operations," says Barry Randall, chief investment officer for Crabtree Asset Management. In March, XO reported revenue growth of 14 percent year over year. Could matchmaking be in order? "XO Group would make a tasty acquisition for a larger media firm like Yahoo, AOL or IAC/Interactive," Randall says.
Microsoft has endured terrible press over the past few years, much of it tied to the bungling of former CEO Steve Ballmer. "Unlike other highflying companies that could be at risk of a bubble, Microsoft is unloved, and you can buy it at a bargain," says Jeff Reeves, editor of InvestorPlace.com. Its price-to-earnings ratio of 14.2 places it well behind other tech stocks, but Microsoft is showing big growth in its cloud software division and Surface tablet hardware line. "Microsoft is one of the biggest brands on the planet, and a super-stable company with more than $100 billion in the bank," Reeves says.
One company's data breach is another's desired break. Following the Sony and Target hacks, cybersecurity has emerged as a rapidly growing need across all industries. Fortinet has positioned itself to take advantage of this growing demand. "I believe Fortinet will benefit greatly from this wave of attention," says Jeff Sica, chief investment officer of CircleSquared Alternative Investments. "They have significant cash on their books and have not burdened themselves with debt, which sometimes stunts growth. They're projected to have significant earnings growth over the next 24 months as well."
Texas Instruments (TXN)
The company that made a big splash in the 1970s, with its ubiquitous pocket calculators, is poised to stack up numbers of a different sort. Today, Texas Instruments designs and produces semiconductors that it sells to electronics designers and manufacturers. It's also a top pick of Matthew Tuttle, manager of the Tuttle Tactical Management U.S. Core ETF, based in Stamford, Connecticut. "We are looking for stocks showing strong performance, high shareholder yield and are undervalued, and [Texas Instruments] fits the bill," he says.
As a leading provider of information technology, business consulting and enterprise applications, Cognizant has close to 200,000 associates worldwide. And in late March, Forrester Research Inc. named Cognizant as a leader among B2C global service providers for the first quarter of 2015. "It's a truly global company with big contracts," Polachi notes. "They operate a well-run international virtual business 24/7."
Canadian Solar (CSIQ)
Headquartered in Ontario, Canada, with a U.S. office in San Ramon, California, this company develops solar energy components and sells solar systems for residential and commercial use. "Canadian Solar also has significant investment in solar research facilities to improve the technology for the future," Aylesworth says. Talk about a sunny outlook: Financials presented in March show a 79 percent revenue jump from 2013 to 2014. Aylesworth adds, "Canadian Solar is a way to invest in a rapidly growing green industry that will enjoy growth worldwide as we deal with global climate change issues."
You don't need an invitation to connect with LinkedIn, although you may wonder how the site makes money. "It makes money by enabling individuals and businesses to hire, market and sell," Zambrano says. "It enjoys first-mover advantage, and as it brings in more users and hiring companies, its platforms grow in power." It's too soon to tell whether it will reach CEO Jeff Weiner's goal of creating economic opportunity for every member of the global workforce. But other opportunities knock for LinkedIn investors, "and that's certainly enough to make it a stock to watch in 2015," Zambrano says.
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