STX vs. NTAP: Which Stock Should Value Investors Buy Now?
Technology has been one of the most lucrative sectors for investors, year to date. The Technology Select Sector SPDR ETF (“XLK”) has registered a gain of 12.8% year to date.
Notably, the tech-laden NASDAQ Composite (IXIC) has also rallied 10.6%, so far this year.
Nice Recovery from Early Jitters
The incidents like Uber self-driving car accident, Facebook FB Cambridge Analytica fiasco, escalating tensions around US-China trade war and Russia-Ukraine cyber security issues had kept the investors on tenterhooks, at the beginning of the year.
However, the sector has recovered smoothly, highlighting its resilient nature. It is noteworthy that the sector is benefiting from increasing demand for cloud-based platforms, growing adoption of Artificial Intelligence (AI) solutions, Augmented/Virtual reality devices (AR/VR), autonomous cars, advanced driver assisted systems (ADAS) and Internet of Things (IoT) related software.
Moreover, an improvement in global IT spending, as projected by Gartner, bodes well for the stocks. Further, President Donald Trump’s corporate tax cuts and repatriation policy have aided these companies to aggressively buyback shares and pursue strategic acquisitions.
Making The Right Choice
The aforementioned factors strengthen our view that this is the right time to invest in technology stocks. However, picking the right stocks is a difficult task.
It is here that the Zacks Style Score System can come in handy. Moreover, we select stocks that have market cap greater than $6 billion.
This is because investing in large-cap companies is always a safer bet, especially during economic downturns and stringent credit conditions.
Back-tested results show that stocks with VGM Style Scores of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) handily outperform other stocks. You can see the complete list of today’s Zacks #1 Rank stocks here.
Here, we pick five tech stocks that have the favourable combination:
Micron Technology MU is well poised to gain from the DRAM boom which is here to stay, at least in the near term, as demand remains ahead of supply. Courtesy to rising demand for digital memory — due to new applications like IoT and AI — Micron has emerged as a popular tech pick.
Micron has beaten the Zacks Consensus Estimate in the preceding four quarters with an average positive surprise of 8%. The company is witnessing impressive northbound estimate revisions — up 54 cents to $11.53 per share for the current year in the last 30 days.
The company’s earnings and revenues are expected to surge by 132.5% and 45.7%, respectively, this fiscal year.
Micron sports a Zacks Rank #1. Shares have returned 44.5% year to date.
Western Digital Corporation WDC is benefiting from the robust demand of high capacity enterprise hard drives and flash-based products.
Moreover, increase in the capacity of smartphones is likely to support the higher rate of exabyte consumption in rest of 2018, which is a positive.
Western Digital has outpaced the Zacks Consensus Estimate in the trailing four quarters with an average positive surprise of 6.2%. The company is witnessing northbound estimate revisions — up 1 cent to $14.65 per share for the current year in the last 30 days.
The company’s earnings and revenues are expected to surge by 59.4% and 7.8%, respectively, this fiscal year.
Western Digital flaunts a Zacks Rank #1. Shares have returned 8.6% year to date.
Seagate Technology STX is driven by robust adoption and strong demand of company’s storage drives. Growing traction for mass storage solutions across the company’s edge and enterprise markets is a tailwind.
Further, hints of PC market stabilization as reflected in the latest reports from Gartner and IDC bodes well for Seagate. The company’s Nearline rapid adoption is likely to bolster Seagate’s competitive position.
Seagate has surpassed the Zacks Consensus Estimate in the preceding three quarters with an average positive surprise of 8.2%. The company is witnessing northbound estimate revisions — up 5 cents to $5.34 per share for the current year in the last 30 days.
The company’s earnings and revenue are expected to surge by 29.6% and 2.4%, respectively, this fiscal year.
Seagate sports a Zacks Rank #1. Shares have returned 42.9% year to date.
MKS Instruments Inc. MKSI benefits from elevated semiconductor and other advanced markets' demand. Additionally, the acquisition of Newport Corporation and superior customer relationships remain key drivers.
MKS has beaten the Zacks Consensus Estimate in three of the trailing four quarters registering an average positive surprise of 4.1%. The company is witnessing northbound estimate revisions — up 4 cents to $8.42 per share for the current year in the last 30 days.
The company’s earnings and revenue are expected to surge by 41.3% and 15.6%, respectively, this fiscal year.
MKS has a Zacks Rank #2. Shares have returned 24.8% year to date.
HP Inc. HPQ continues to focus on product innovation & differentiation, pricing, and marketing and sales activities. It has aided the company to trigger demand for its PC and Printing products in the market. Recently-acquired Samsung’s printing (S-Print) business has added support to the company gain market share in the $55-billion high-end copy-machine market.
HP has beaten the Zacks Consensus Estimate in two of the preceding four quarters with an average positive surprise of 4.2%. The company is witnessing northbound estimate revisions — up 2 cents to $2 per share for the current year in the last seven days.
The company’s earnings and revenue are expected to surge by 21.2% and 10.5%, respectively, this fiscal year.
HP carries a Zacks Rank #2. Shares have returned 12.1% year to date.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
HP Inc. (HPQ) : Free Stock Analysis Report
Western Digital Corporation (WDC) : Free Stock Analysis Report
Seagate Technology PLC (STX) : Free Stock Analysis Report
MKS Instruments, Inc. (MKSI) : Free Stock Analysis Report
Facebook, Inc. (FB) : Free Stock Analysis Report
Micron Technology, Inc. (MU) : Free Stock Analysis Report
To read this article on Zacks.com click here.