The U.S. stock market gained on Jul 8 as investors shrugged off worries about rising coronavirus cases and rejoiced on the economic reopening efforts. With an intra-day gain of 1.4%, the tech-laden Nasdaq Composite index gained the highest, followed by the S&P 500 and Dow Jones rallying 0.8% and 0.7%, respectively.
Notably, the stock market is in a recovery mode since April after bottoming out in late-March due to the pessimism surrounding the coronavirus crisis. Year-to-date losses of Dow Jones and the S&P 500 have contracted to 8.7% and 1.9%, respectively, from 23.2% and 20% as of Mar 31. The Nasdaq Composite index’s YTD return has even turned to +16.9% as of Jul 8 from -14.2% as of Mar 31.
Investors are hoping that the worst of the pandemic is almost over and the economy will swing back to a recovery mode on the government’s easing restrictions. Optimism over a potential vaccine for COVID-19, along with an uptick in economic activities and an improving job market, has also boosted investor confidence.
Tech Sector Leads Market Recovery
The technology sector has played a crucial role in the quicker recovery of the stock market. Since April to date, the Technology Select Sector SPDR XLK, which tracks an index of the S&P 500 technology stocks, has rallied 34%. Moreover, the ETF has a positive year-to-date return of 17.5%, outperforming the gains of all three major U.S. indices.
The technology sector has been strongly resilient to the impact of coronavirus-induced disruptions, aided by advanced technologies, including Artificial Intelligence (AI), Machine Learning (ML), Augmented Reality (AR), cloud computing, blockchain and robotics.
The adoption rate of Internet-based services and apps has been increasing rapidly as people are compelled to stay indoors. Moreover, the global work-from-home wave is bolstering demand for advanced technology-based virtual meetings and conference tools.
Additionally, the work-and-learn-from-home necessity has propelled demand for PCs, notebooks, peripheral accessories, and cloud storage. All these, in turn, are fueling growth for high speed Internet services.
Moreover, the rising demand for robust communication networks is another positive. Further, the growing proliferation of AI technology, and cloud computing products and services in managing this pandemic situation is a tailwind. All these trends are stoking demand for semiconductor chips.
In addition, the long-term growth prospects of tech companies look promising owing to the continuous digital transformations. The accelerated deployment of 5G technology — the next-generation wireless revolution — is likely to spur further growth. Moreover, blockchain, IoT, autonomous vehicles, AR/VR and wearables offer significant growth opportunities.
Considering the healthy growth prospects of tech companies, it makes sense to invest in this space for long-term gains.
Choosing the Stocks
It is difficult to pick the right stocks from a wide range of available investment opportunities.
This is where the Zacks Stock Screener comes in handy. With the help of this screener, we have filtered five tech stocks that are incredible for investment right now. These stocks carry a Zacks Rank #1 (Strong Buy) or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Also, the stocks have a VGM Score of A or B. Per Zacks’ proprietary methodology, stocks with such favorable combinations offer solid investment opportunities.
Micron Technology MU is benefiting from strong demand for memory chips from PC manufacturers and data-center operators. Markedly, the work-and-learn-from-home trend is stoking demand for cloud storage. Also, the pandemic-induced social-distancing measures and lockdowns have boosted the usage of online and e-commerce services globally. Therefore, data-center operators are enhancing their capacities to accommodate the demand surge for cloud services. This bodes well for the company.
Micron currently carries a Zacks Rank #2 and has a VGM Score of A. The Zacks Consensus Estimate for fiscal 2020 has moved up 15% to $2.76 per share in the past 30 days.
Micron Technology, Inc. Price and Consensus
Micron Technology, Inc. price-consensus-chart | Micron Technology, Inc. Quote
Synaptics SYNA is well poised to capitalize on its market-leading position for both touchpads and secure fingerprint sensors amid the upbeat trends in PC shipments. New design wins across all OEM leaders, including Dell, HP and Lenovo, deserve a special mention.
Further, increasing adoption of this Zacks #2 Ranked company’s edge SoCs, integrated with AI and embedded neural network capabilities for smart video and audio devices, is anticipated to be conducive to its financial performance.
The stock has a VGM Score of A and the consensus mark of $4.37 per share for its fiscal 2021 earnings has been revised 2.1% upward over the last 30 days.
Synaptics Incorporated Price and Consensus
Synaptics Incorporated price-consensus-chart | Synaptics Incorporated Quote
KLA Corporation KLAC is benefiting from healthy demand for process diagnostics and control equipment and yield management solutions required for the fabrication of semiconductor-integrated circuits or chips. This Zacks Rank #2 company has a competitive position in several chip equipment areas, including PCB (printed circuit board) and display. At the same time, KLA has prominent exposure to 5G smartphones, 5G infrastructure equipment and autonomous driving sensors trending in the technology industry.
KLA-Tencor has a VGM Score of A. The consensus mark for fiscal 2021 earnings has moved 8 cents north to $9.71 per share over the past 30 days.
KLA Corporation Price and Consensus
KLA Corporation price-consensus-chart | KLA Corporation Quote
Avaya AVYA is gaining on the increased communication infrastructure demand from organizations for seamless collaboration between teams amid the coronavirus-induced remote-working wave. The company’s recent international launch of Avaya Cloud Office is likely to fuel adoption of the product.
Avaya currently carries a Zacks Rank #2 and has a VGM Score of A. The Zacks Consensus Estimate for fiscal 2020 earnings has been revised upward by 12.9% to $3.14 per share in the past 60 days.
Avaya Holdings Corp. Price and Consensus
Avaya Holdings Corp. price-consensus-chart | Avaya Holdings Corp. Quote
Box BOX is benefiting from the growing customer base and strong cloud storage demand. This Zacks Rank #2 company provides a single place to secure, share, and manage all of the content for an organization’s internal and external collaborations and processes. Integration with other software like Microsoft Office 365, Google Apps for Work, Adobe and salesforce is likely to boost Box’s user base.
Box currently carries a VGM Score of B. The consensus mark for the company’s fiscal 2021 earnings has moved up by a penny to 50 cents per share over the past 30 days.
Box, Inc. Price and Consensus
Box, Inc. price-consensus-chart | Box, Inc. Quote
Zacks Top 10 Stocks for 2020
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Micron Technology, Inc. (MU) : Free Stock Analysis Report
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