The S&P 500 has climbed roughly 13% this year, driven by growth from tech giants such as Netflix NFLX. With that said, no matter how long the current rally lasts, it is always a good idea to search for strong companies that look poised to run impressive businesses for years to come.
Therefore, we have highlighted three large-cap tech stocks that investors might want to consider buying right now on the back of solid longer-term growth outlooks.
Amazon has seen its stock price climb over 20% this year, alongside comebacks from fellow FAANG stocks. Despite the climb, shares of AMZN still sit over 11% below their 52-week high, which gives them room to run heading into Q1 earnings season. Jeff Bezos’ company is expected to see its adjusted quarterly earnings soar roughly 43% on the back of 16.8% revenue growth, based on our current Zacks Consensus Estimates. This would mark a slowdown from Q4’s 20% sales growth, which was already Amazon’s smallest top-line expansion since 2015.
Despite slowing revenues, Amazon is still projected to see its full-year sales jump over 18% to $275.58 billion. Peeking further ahead, AMZN’s fiscal 2020 revenue is expected to surge 17% above our current year estimate to hit $323.72 billion. Along with solid double-digit revenue growth, the e-commerce powerhouse is projected to see its adjusted earnings jump 34% this year and 50% higher than 2019 in the coming year.
Looking ahead, AMZN plans to roll out physical grocery stores, beyond Whole Foods Market and Amazon Go, throughout the country as it expands its brick-and-mortar footprint. Plus, Amazon’s share of the total U.S. e-commerce market is projected to reach 52.4% in 2019, up from 48% last year, according to eMarketer. On top of that, Amazon remains the undisputed cloud computing champion, blowing away Microsoft, IBM IBM, and Google. The company is also set to grow its digital advertising business and its streaming TV service, as it expands its pharmaceutical offerings and logistics services.
Amazon is currently a Zacks Rank #3 (Hold) based on its mixed earnings estimate revision activity. The firm also sports an “A” grade for Growth in our Style Scores system and is starting to trade at a more reasonable earnings multiple.
Salesforce helped pioneer the modern, cloud-based customer relationship management industry. The company has been an impressive growth stock for years, with shares of CRM destroying the Computer Software-Services Market’s average climb over the past decade. Salesforce stock currently rests not too far below its 52-week high of $161.18 per share, with its shares up 18% in 2019. And the software-as-a-service powerhouse said on its Q4 earnings call that it plans to double its revenues over the next four years.
Simply put, Salesforce is an invaluable platform for many businesses, offering clients a wide range of cloud-based platforms to help them run sales, marketing, e-commerce, analytics, and much more. The San Francisco-based firm’s CRM offerings would require a large amount of in-house talent, infrastructure, and maintenance. Salesforce’s clients include American Express AXP, Intuit INTU, the U.S. Department of Agriculture, and more than 150,000 other firms and agencies. Marc Benioff’s company also sells Microsoft MSFT Office-style products and has introduced new wrinkles to its Einstein artificial intelligence platform that includes voice controls.
Salesforce’s current full-year revenues are projected to climb 20.6% to reach $16.02 billion. Looking ahead to the following year, the company’s top-line is expected to expand by nearly 20% to $19.18 billion. At the bottom end of the income statement, CRM is projected to see adjusted earnings expand by approximately 23% over the three to five years, on an annualized basis.
The SaaS powerhouse’s business is hardly trendy or cyclical as the Fourth Industrial Revolution heats up. Salesforce currently sports “A” grades for both Growth and Momentum in our Style Scores system and is a Zacks Rank #3 (Hold).
Alphabet Inc. GOOGL
Shares of Google parent Alphabet have underachieved their FAANG peers so far this year. Yet, the company looks set to remain one of the steadiest growth companies in tech. Alphabet is expected to see its adjusted current-quarter earnings pop over 6.2% on the back of 20.6% revenue growth. This top and bottom-line expansion is projected to continue in fiscal 2019. GOOGL’s full-year revenue is projected to surge 19.7% to touch nearly $132 billion, with its EPS figure expected to pop 8.5%. Maybe more impressively, the firm’s 2020 earnings are expected to jump 17.4% higher than our current-year estimate on 17.6% revenue growth.
Google captured roughly 40% of the digital advertising market in the U.K. last year, according to eMarketer. Meanwhile, the company is set to grab over 37% of the U.S. digital ad space in 2019. The company is by far the largest digital ad player, nearly doubling second-place Facebook FB in both markets. Along with its core digital ad business, the firm’s Pixel smartphones currently compete against Apple AAPL and YouTube TV could stand out in the larger cord-cutting age. Meanwhile, Google’s new Home Hub has gained steam in the larger home assistant market, driven by the rise of Amazon Alexa-supported devices.
Overall, the company’s “other revenues,” which includes the Google Play Store, Google’s Cloud offerings, and its hardware business, saw its revenues soar 30% to touch $6.49 billion last quarter. Google’s “other bets” segment—which houses its Waymo self-driving car segment—climbed roughly 25%. Alphabet like AMZN and CRM is a Zacks Rank #3 (Hold) at the moment and also rocks “A” grades for Growth and Momentum. And shares of GOOGL still sit roughly 8% below their 52-week highs.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
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International Business Machines Corporation (IBM) : Free Stock Analysis Report
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