Top Tech Stocks to Buy Amid Strong Earnings and Bullish Outlook
The stock market continues to push higher as Wall Street gushes over the better-than-expected earnings season that’s seen all of the heavy hitters in tech, from Apple AAPL to Amazon AMZN, post blowout quarterly results. Investors are also more bullish about the likelihood of increased government spending under the Biden administration.
The strong start to February continues, with the Nasdaq and the S&P 500 both touching new highs again on Wednesday, before pulling back slightly.
The positivity comes after the market posted its best week since November to start February, as it quickly bounced back from its pullback that coincided with the GameStop saga. Despite setbacks on the vaccine front, there is hope that things will be able to return to normal later in the year.
There is also plenty of pent-up demand, which is great for the consumer spending-dependent U.S. economy. Plus, the fourth quarter earnings results have turned positive and the outlook for the first quarter and 2021 continues to improve (also read: A Very Strong Earnings Picture).
Clearly, big tech has been the star of the show during Q4 earnings season, but smaller names have also shined and tech has proven during the coronavirus that nothing can stop the train.
Technology impacts nearly every aspect of our lives and the economy, and with a bullish setup for 2021, investors might want to add a few tech names to their portfolios…
Marvell Technology Group Ltd. MRVL
Marvell is an infrastructure semiconductor solutions company that’s gone on a big over the last five years to destroy its industry. The firm’s storage, network infrastructure, and wireless connectivity offerings are set to benefit from the continued growth of cloud computing and the 5G rollout.
MRVL also announced in October 2020 its plan to buy Inphi to help boost its standing and offerings within these key growth areas of tech. The deal is projected to close “by the second half of calendar 2021.”
Marvell’s Q3 FY21 revenue jumped over 13% and Zacks estimates call for its fourth quarter revenue to climb 10% to help lift its adjusted earnings by 70% to $0.29 a share. The company is set to release its fiscal 2021 financial results on March 3, with its revenue projected to jump 10% to roughly $3 billion, while its adjusted EPS figure is projected to climb by 41%.
MRVL’s FY22 outlook appears even more impressive, with its revenue expected to surge 18% higher to $3.5 billion. And its earnings are set to come in 46% stronger.
Wall Street has loved MRVL’s ability to grow, while providing exposure to the future of tech. The stock has soared 500% in the last five years to blow by the Zacks Tech Sector’s 200% run. More recently, MRVL is up 100% during the last 12 months and 20% in the past three.
Investors might also find a more enticing entry point since the stock has cooled off recently to rest about 8% off its January records at around $51 per share. And it is not overbought in terms of the Relative Strength Index.
Marvell is part of the Semiconductor – Communications space that rests in the top 8% of our over 250 Zacks industries. And 16 of 22 brokerage recommendation that Zacks has for the stock come in at a “Strong Buy,” with none below a “Hold.”
The company’s positive earnings revisions help it land a Zacks Rank #2 (Buy) right now. It also trades at an 18% discount to its own year-long highs in terms of forward 12-month sales at 9.9X, which marks great value compared to fellow high-flyers such as Nvidia’s NVDA 17.8X and established titans such as Microsoft’s MSFT 10.7X. On top of all of that, Marvell pays a dividend that is currently yielding about 0.50%.
CrowdStrike CRWD
CrowdStrike is a cloud-focused cybersecurity firm that utilizes machine learning and AI to protect endpoints and cloud workloads. This is crucial in the cloud age that’s full of rapidly expanding endpoints, which include laptops, desktops, smartphones, IoT devices, and more. Remote work and schooling helped push this area of the ever-growing cybersecurity space to the forefront.
CRWD crushed our Q3 estimates in December, with sales up 86%. CrowdStrike also lifted its guidance and Zacks estimates currently call for it to swing from an adjusted loss of -$0.02 a share in the year-ago period to +$0.09 in Q4 on 65% stronger sales (it is set to report its Q4 FY21 results on March 16).
For the full-year, it is projected to soar from a loss of -$0.42 a share to +$0.23, with FY22 expected to surge another 70% higher. Meanwhile, its revenue is projected to jump 79% to hit $860 million in FY21 and then jump 42% to $1.22 billion in FY22.
Investors should note that this expected growth would come on top of FY20’s 93% sales expansion. CRWD’s improving EPS outlook helps it land a Zacks Rank #2 (Buy), and 14 of the 17 brokerage ratings Zacks has for CRWD sit at a “Strong Buy.”
CrowdStrike, which went public in the summer of 2019, has skyrocketed 265% in the past 12 months. CRWD has already bounced back after a slight dip after it hit new highs in mid-January. The stock is still firmly a growth play at the moment. And in a world where everything is connected and data is endless, cybersecurity firms such as CRWD stand to benefit.
Workday WDAY
Workday’s human resources and financial-focused cloud software offerings have become popular in a world where businesses rely on various technologies to do just about everything. WDAY is part of this ever-growing enterprise cloud applications and software space that includes the likes of Salesforce CRM, Zoom Video ZM, and countless others. WDAY’s portfolio features tools for financial management, human resources, planning, spend management, and analytics, which aren’t going to go out of style.
The company has grown its top line by double digits every year since it went public in 2012. And it’s coming off another strong performance in Q3 of its fiscal 2021. Zacks estimates call for Workday’s FY21 earnings to jump 43% on 18% stronger sales that would see reach $4.29 billion. The company’s revenue is then projected to climb over 16% higher to lift its adjusted EPS figure by nearly 9% in fiscal 2022.
Workday shares have matched their industry’s climb over the last year, up 40%. More recently, the stock has jumped 20% in the past month and it hit record highs on Wednesday. Plus, the company announced at the end of January its intent to buy Peakon, which runs a platform that converts employee “feedback into insights” for businesses to use.
Workday currently lands a Zacks Rank #2 (Buy) and boasts an “A” grade for Growth in our Style Scores system. The company is set to release its fourth quarter results on February 25.
WDAY has crushed our earnings estimates in three out of the last four quarters and the stock surged following its Q1 and Q2 releases. And Workday’s valuation picture is better than it has been recently even though it just hit new highs.
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Microsoft Corporation (MSFT) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
Marvell Technology Group Ltd. (MRVL) : Free Stock Analysis Report
salesforce.com, inc. (CRM) : Free Stock Analysis Report
Workday, Inc. (WDAY) : Free Stock Analysis Report
Zoom Video Communications, Inc. (ZM) : Free Stock Analysis Report
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