Should Investors Buy These 3 Top-Ranked Tech Stocks?
Technology stocks have been big-time performers year-to-date, rewarding investors with gains following a dreadful 2022. Take, for example, the Zacks Computer & Technology sector, which is up 41% in 2023 compared to the S&P 500’s impressive 21% gain.
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And for those interested in further exposure to the sector, three stocks – StoneCo STNE, Analog Devices ADI, and nVent Electric NVT – would all provide precisely that.
All three are forecasted to witness solid earnings growth, have seen their earnings outlooks improve over the last several months, and carry sound valuations. Let’s take a closer look at each.
StoneCo
StoneCo offers an end-to-end cloud-based technology platform to conduct electronic commerce across in-store, online, and mobile channels. The stock sports a Zacks Rank #1 (Strong Buy), with earnings expectations drifting higher.
As shown below, the revisions trend has been robust across multiple timeframes.
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In addition, the company’s valuation is attractive, with the current 18.9X forward earnings multiple sitting nowhere near the steep 45.5X five-year median and highs of 66.9X in 2022. The stock carries a Style Score of “B” for Value.
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And it’s impossible to ignore the company’s growth expectations, with earnings forecasted to soar 115% in its current fiscal year (FY23) and a further 20% in FY24. Top-line growth is also apparent, with sales suggested to climb 4.4% and 8% in FY23 and FY24, respectively.
Analog Devices
Analog Devices, a current Zacks Rank #2 (Buy), is an original equipment manufacturer of semiconductor devices. The revisions trend has been notably bullish for its current fiscal year, with the $10.57 per share estimate up nearly 7% since July 2022.
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Shares aren’t stretched regarding valuation, with the current 18.1X forward earnings multiple well beneath the 21.1X five-year median and steep highs of 23.5X in 2022. The stock sports a Style Score of “C” for Value.
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The company has been a consistent earnings performer, exceeding both earnings and revenue estimates in 12 consecutive quarters. ADI posted a 3% EPS beat in its latest release and reported revenue nearly 2% ahead of expectations.
nVent Electric
nVent Electric, a current Zacks Rank #1 (Strong Buy), provides electrical connection and protection solutions. Analysts have been bullish across all timeframes over the last several months.
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NVT shares provide exposure to technology paired with a passive income stream; NVT’s annual dividend currently yields 1.3%, with a payout ratio sitting sustainably at 27% of the company’s earnings. The payout hasn’t grown in the last five years, but NVT’s 125% share gain during the period certainly picks up the slack.
Keep an eye out for the company’s upcoming quarterly release expected on July 28th; the Zacks Consensus EPS Estimate of $0.68 indicates a solid 20% improvement in earnings from the year-ago quarter. In addition, nVent Electric is expected to post $787 in quarterly revenue, 8% higher year-over-year.
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Bottom Line
With the strong performance of technology stocks in 2023, investors have been scurrying to find exposure if they didn’t already have it.
And for those interested in riding the sector’s current momentum, all three stocks above – StoneCo STNE, Analog Devices ADI, and nVent Electric NVT – would be worth a close look.
All three sport solid growth, an improved earnings outlook, and sound valuations.
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Analog Devices, Inc. (ADI) : Free Stock Analysis Report
nVent Electric PLC (NVT) : Free Stock Analysis Report
StoneCo Ltd. (STNE) : Free Stock Analysis Report
