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. 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. Five9, Inc. FIVN
Five9 is one of the largest providers of cloud software for contact centers and has worked to shake up on-premise operations. The firm’s cloud-based virtual contact centers offer clients a suite of apps that allow them to manage customer interactions across everything from social media and email to voice. The company reported its Q4 financial results on February 19 and posted record full-year revenue of $257.7 million, which marked a 29% climb from the year-ago period.
Looking ahead, Five9 is projected to see its Q1 revenues jump 20%. More impressively, the firm’s quarterly earnings are expected to skyrocket 62.5%. Five9 has also experienced a ton of positive earnings estimate revision activity over the last seven days for the current quarter, as well as the full year and the following fiscal year. This positivity helps Five9 sport a Zacks Rank #2 (Buy) right now. The company also has an “A” grade for Growth and FIVN stock has been on an impressive run over the last three years, with its stock price up from less than $8 a share to its current $53.52 price point.
2. eGain Corp. EGAN
Shares of eGain have soared over 65% to start the year and hover at around $11 a share. The software-as-a-service provider of customer engagement solutions in the U.S., U.K., India, and beyond, saw its total revenues jump 15% in its recently-reported quarter. More specifically, its SaaS revenues surged 53% year over year.
EGain is projected to see its current-year—which ends on June 30—revenue pop over 10%, with fiscal 2020’s top-line expected to come in 14.4% above our 2019 estimate. On top of that, the company’s adjusted quarterly earnings are projected to surge 50%, while its full-year EPS figure is expected to skyrocket 216.7%. And our Zacks Consensus Estimate for the current year has improved by 137.5% over the last 30 days. EGain’s positive earnings trends help it earn a Zacks Rank #1 (Strong Buy) and the company also boasts an “A” grade for Growth.
3. Digital Turbine, Inc. APPS
Right off the bat, investors should note that Digital Turbine trades for under $5 a share, which makes it inherently volatile. But APPS is coming off a third quarter that saw it top earnings and revenue estimates. The firm operates in our Internet – Software industry, which currently ranks in the top 14% of our 256 industries. Digital Turbine’s business tries to connect OEMs, mobile operators, and publishers with advertisers and app developers, and its positive longer-term earnings revision activity helps it earn a Ranks Rank #1 (Strong Buy).
The Austin, Texas-based company also rocks an “A” grade for Growth and is expected to swing from an adjusted loss of $0.01 per share to post earnings of $0.02 a share in the current quarter, for a 300% expansion. Digital Turbine’s revenue is also expected to surge approximately 26% in the next two quarters. Furthermore, the firm’s full-year EPS figure is projected to soar 240%, with 67% growth projected in the following year.
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