The Dow, S&P 500, and Nasdaq all surged to new highs Thursday as we inch closer to 2020. The recent strength comes on the heels of a tentative phase one trade deal between the U.S. and China, along with better-than-projected economic indicators from both of the world’s largest economies.
On top of that, the stock market could keep rolling in 2020 on the back of a return to corporate earnings growth, low interest rates, historically low U.S. unemployment, and more. The tech industry will also likely continue to stand out going forward, and the historically cyclical semiconductor space is expected to see its sales and earnings rebound in 2020 (also read: Why Stocks Are Poised To Soar In 2020).
Therefore, investors might want to add a few growth-focused tech stocks to their portfolios. And we found three tech stocks with our Zacks Stock Screener that growth investors might want to consider buying for 2020…
Snap Inc. SNAP
Snapchat’s parent company appeared to find its stride in 2019 as the social media platform expanded its user base and rolled out more effective tools for advertisers. SNAP shares have soared 200% in the last year from under $5 a share to its current price of roughly $15. With that said, the stock is down 10% in the last three months, which might help set up a better buying opportunity. SNAP stock sits $3 below its 52-week highs and just jumped above its 50-day moving average, and has even more room to climb before it hits its all-time highs.
Snapchat’s disappearing photo and video sharing features have been able to stand out against Twitter TWTR and Facebook FB, even with Instagram. Last quarter, Snapchat’s daily active users popped 13% to 210 million. Plus, total daily time spent by users watching its Discover feature jump by 40% and it has introduced new features such as video games. All of this has helped Snapchat become more valuable to advertisers, which is vital.
Looking ahead, our estimates call for Snap’s fiscal 2019 revenue to jump over 45% to $1.72 billion, with 2020 projected to come in 37.3% higher at $2.35 billion. These would both mark strong growth above 2018’s 43% sales expansion. Perhaps more importantly, Snap appears to be headed for profitability. The company is projected to report a much smaller adjusted loss in 2019 (-$0.18 vs. -$0.47), with Snap expected to then soar to full-year profitability of +$0.02 in 2020.
ServiceNow provides cloud platform solutions to help its over 5,400 enterprise customers with everything from IT to employee and customer workflows. The Santa Clara, California-based firm grabbed the No. 3 spot on Fortune’s Future 50 list of global companies “with the best prospects for long-term growth” in 2019 and 2018, ahead of the likes of Salesforce CRM, Netflix NFLX, Vertex Pharmaceuticals VRTX, and more. NOW stock has climbed 56% in 2019 to crush its industry’s 25% average.
Over the summer, the company expanded its partnership with Microsoft MSFT that will help ServiceNow sell to highly regulated industries and house its full SaaS offerings on MSFT’s Azure cloud, which competes directly against Amazon AMZN. Meanwhile, the cloud-software company’s stock was added to the S&P 500 index in November. Plus, new CEO Bill McDermott, who took over in mid-November from John Donahoe—who will soon run Nike NKE—bought $1 million worth of NOW shares.
ServiceNow stock has soared 255% in the last three years and the new chief executive’s sign of faith seems more than warranted based on its growth prospects. The firm’s full-year fiscal 2019 sales are projected to surge over 32% to $3.45 billion, with 2020 projected to pop another 28% to $4.42 billion. Plus, NOW’s adjusted EPS figures are expected to jump over 30% this year, with 2020 set to climb 32% higher. NOW holds an “A” grade for Growth and a “B” for Momentum in our Style Scores system and rests 8% off its 52-week highs.
Nvidia is a GPU giant that fell victim over the last four quarters to the cyclical nature of the semiconductor industry and its own outsized success. Still, NVDA’s video game business remains strong as its graphics chips provide more realistic gameplay to the $152 billion global gaming market. More importantly, it has expanded its data centers business and CEO Jensen Huang said last quarter that it expanded its “reach beyond the cloud, to the edge, where GPU-accelerated 5G, AI and IoT will revolutionize the world’s largest industries.”
Nvidia is the only stock on the list that sports a Zacks Rank #2 (Buy) based on its solid longer-term earnings estimate revisions positivity, with NOW and SNAP at #3 (Holds). Nvidia also rocks a “B” grade for Growth and it is part of an industry that rests in the top 15% of our more than 250 Zacks industries. The firm’s Q4 fiscal 2020 revenue is projected to surge 34.2% to help lift adjusted earnings by 107.5%.
The Santa Clara, California-headquarter company’s full-year earnings and sales are still projected to slip, which Wall Street has already priced-in. Meanwhile, its adjusted full-year fiscal 2021 earnings are projected to jump 30% on the back of 19.4% higher sales that would see it reach $12.86 billion to easily top 2019’s growth. Despite its downturn, NVDA shares are up 76% in 2019, to outpace Micron MU.
NVDA stock also still rests over 15% below its October 2018 highs. This could give the stock room to run in 2020. Plus, it is trading far below its three-year highs of 57X forward 12-month Zacks earnings estimates at 40.1X.
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Netflix, Inc. (NFLX) : Free Stock Analysis Report
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