Growth investors are often focused on finding companies whose earnings and revenue are expected to outpace the market. This investment strategy comes with its share of risks. Yet, it also brings the exciting possibility of outsized returns.
For years, many of Wall Street’s most exciting growth stocks have emerged from the technology sector. Recent examples include everyone from Netflix NFLX, and Facebook FB to Nvidia NVDA and other chip stocks. Despite some volatility, strong earnings and impressive sales remain the story for many companies in the technology sector.
With that said, let’s pair the proven Zacks Rank with our Style Scores system. This system includes a “Growth” category that helps us find tech stocks poised for solid growth. Investors should note that our Growth category values earnings and sales growth, as well as improvements to a company’s financial statements, including strong cash flows and solid return on equity.
Now it’s time to check out three tech stocks that came through our screen today that growth investors might want to consider at the moment…
1. Palo Alto Networks (PANW)
Shares of Palo Alto Networks have surged 32% in 2019 to outpace the S&P 500’s 17% climb and its industry’s 27% expansion. As a pure-play cybersecurity stock, PANW provides exposure to a booming industry that looks poised to become even more vital in our ever more connected world as cloud computing and IoT proliferate. The Santa Clara, California-based company boasts over 60,000 customers around the world and has worked with 85 Fortune 100 firms. More specifically, Palo Alto Networks has partnered with Amazon AMZN, Google GOOGL, and Microsoft MSFT to help secure their massive public clouds.
Palo Alto Networks’ firewall technology has been an industry leader for years and helped its fiscal 2018 revenue surge 29% to $2.3 billion. Looking ahead, our current Zacks Consensus estimates call for PANW’s adjusted Q3 fiscal 2019 earnings to jump 23.2% on the back of 24% revenue growth. Better yet, the firm’s full-year EPS figure is projected to soar over 37% on 26% revenue expansion. Palo Alto Networks is currently a Zacks Rank #2 (Buy) and sports an “A” grade for Growth and a “B” for Momentum in our Style Scores system.
2. Cloudera Inc. (CLDR)
Cloudera provides cloud-based big data solutions and works with the likes of Intel INTC and other big names in technology. CLDR’s open-source distribution platform enables efficient and secure data management and analytics. Investors should also note that the company officially completed its merger with enterprise data peer Hortonworks, Inc. in January to help create a more robust firm. With that said, shares of CLDR have been on a downward trend since the company went public in the spring of 2017, and have slipped this year after the firm reported a wider-than-excepted quarterly loss.
Looking ahead, however, CLDR stock—which is trading for roughly $11 per share at the moment—could bounce back on impressive top and bottom-line growth. The company’s Q1 fiscal 2020 revenue is expected to soar 83%, with full-year sales projected to climb 77%. On top of that, the company’s adjusted fiscal 2021 earnings are projected to skyrocket 133% above our current year estimate (-$0.36 a share) to reach $0.12 per share. Cloudera rocks a “B” grade for Growth and is a Zacks Rank #2 (Buy) at the moment.
3. Veeva Systems Inc. (VEEV)
VEEV stock has soared 56% in 2019 and 96% over the last 12 months. Jumping back even further, Veeva Systems shares have crushed the Computer Software-Services Market over the last five years, up 610%, compared the industry’s 130% climb. Veeva offers cloud-based solutions for the pharmaceutical and life sciences industries and boasts more than 700 customers, which include pharmaceutical giants and biotechs such as Eli Lilly LLY and Biogen BIIB. The firm’s main offerings are presented in a software-as-a-service model and deliver industry-specific tools for CRM, content management, and many other enterprise applications.
The company is coming off a fourth quarter that saw its revenue jump 25%. Veeva is projected to see its adjusted first-quarter fiscal 2020 earnings surge over 21% on 22% revenue growth. This solid double-digit top and bottom-line growth is projected to continue for the full year to the tune of 19% earnings growth and roughly 20% sales expansion. Peeking even further ahead, the cloud- solutions firm is expected to see its 2021 revenue climb 18% above our current-year estimate. And Veeva’s positive longer-term earnings estimate revision activity helps it earn a Zacks Rank #2 (Buy).
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Netflix, Inc. (NFLX) : Free Stock Analysis Report
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Facebook, Inc. (FB) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
Veeva Systems Inc. (VEEV) : Free Stock Analysis Report
Palo Alto Networks, Inc. (PANW) : Free Stock Analysis Report
Eli Lilly and Company (LLY) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
Biogen Inc. (BIIB) : Free Stock Analysis Report
Intel Corporation (INTC) : Free Stock Analysis Report
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Cloudera, Inc. (CLDR) : Free Stock Analysis Report
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