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5 Tech Stocks to Mend a Coronavirus-Clobbered Portfolio

Aniruddha Ganguly

The coronavirus-battered U.S. economy is expected to get a lifeline as the country’s 50 states are likely to limp back to normalcy with at least partial reopening this week.

The states’ endeavors received further support from President Donald Trump after he signed an executive order on May 20, which aims at relaxing regulations that hamper economic recovery.

Investors should consider these developments as green signals to park their money in equities although markets are expected to remain volatile in the near term.

Tech stocks are definitely the best bets at present, considering their resilient nature and impressive prospects. Notably, the S&P 500 Information Technology Index is up 4% year to date versus the loss of 9.5% for the S&P 500 Index.

Prospects Galore in Tech Space

Technology stocks remain attractive owing to consistent digital transformation in the sector. Rapid adoption of cloud computing along with the ongoing infusion of AI and machine learning as well as the accelerated deployment of 5G technology, blockchain, IoT, autonomous vehicles, AR/VR and wearables are major tailwinds.

Coronavirus-induced work-from-home as well as online-learning wave is not only driving demand for computers and peripherals but also for remote-working management tools and video conferencing software. Furthermore, a solid uptake of AI-infused virtual assistants steadily perks up demand for smart speakers like Amazon Echo and Google Home.

Moreover, a strong trend of lapping up online gaming, music and video-streaming services, which further received a boost from the coronavirus-led lockdowns and shelter-in-home guidelines, is a major lever.

Contactless payment and delivery also gained a significant traction from the coronavirus outbreak. Further, an e-commerce boom prompted by changing consumer behavior is a key catalyst.

Here we pick five tech stocks that apart from boasting strong fundamentals carry a favorable combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Per the Zacks’ proprietary methodology, stocks with such a perfect mix of elements offer solid investment opportunities.

These fundamentally robust stocks have outperformed the S&P 500 composite on a year-to-date basis.

Year-to-Date Performance



 

Best Buys

VeriSign VRSN benefits from solid growth in .com and .net domain name registrations. An expected increase in domain name base is a positive. This Zacks #1 Ranked stock with a Growth Score of A is expected to cash in on the pervasive Internet consumption globally.

The Zacks Consensus Estimate for 2020 earnings is pegged at $6.62 per share, having been revised 27.3% upward in the past 30 days. Earnings are expected to grow 24.7% from the figure reported in the previous year.

Fortinet FTNT is benefiting from its dominance in the Unified Threat Management (UTM) space, which is one of the fastest-evolving segments in Network Security. Solid adoption of Fortinet’s UTM solutions is major driver. Fortinet has a Zacks Rank #2 and a Growth Score A.

The Zacks Consensus Estimate for Fortinet’s 2020 earnings stands at $2.75 per share, having moved 5.8% north over the past 30 days. Earnings are expected to grow 11.3% from the figure reported in the preceding year.

ServiceNow NOW is advancing on the back of a rapid adoption of its wide-ranged application-based products across all industries. This Zacks #2 Ranked company’s expanding global presence, strong partnerships and strategic buyouts are expected to aid its financial performance in the near term.

ServiceNow also has a Growth Score of A. The consensus mark for fiscal 2020 earnings is pegged at $4.24 per share, having been raised 1.4% in the past 30 days. Earnings are expected to grow 27.7% from the figure reported a year earlier.

NVIDIA NVDA is making progress on the back of sturdy growth in GeForce desktop and notebook GPUs, which is bumping up its gaming revenues. Moreover, an uptick in Hyperscale demand is a tailwind for this #2 Ranked stock’s data-center business. Additionally, ray-traced gaming, rendering, high-performance computing, AI and self-driving cars are a boon for the company.

The consensus mark for NViDIA’s fiscal 2021 earnings has inched up 0.5% to $7.50 over the past 30 days, suggesting growth of 29.5% from the year-ago reported figure.

Apple AAPL benefits from a continued momentum in the Services segment, boosted by a robust performance of App Store, Apple Music, Video and cloud services. Moreover, the speedy acceptance of contactless payment bolsters the usage of Apple Card, which is a key catalyst.

Apple has a Zacks Rank of 2 and a Growth Score of B. The consensus mark for fiscal 2020 earnings is pegged at $12.31 per share, having moved 0.7% north in the past 30 days. Earnings are expected to climb 3.5% from the prior-year reported number.


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