We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Ride Nasdaq's 8-Week Rally with These 4 Tech Stocks
Read MoreHide Full Article
The Nasdaq managed to log its longest weekly winning streak in six years, with tech stocks leading the way. After a brief pullback following the Brexit episode, tech stocks scaled high buoyed by mobile revenues and cloud business strength. Cash poured in for older tech companies as more investors are on the lookout for stocks that provide steady income.
The dollar remaining weak on diminishing chances of an imminent rate hike is also expected to help tech stocks gain further ground. Given the favorable scenario, it is time to invest in attractive tech stocks listed in the Nasdaq. Moreover, statistics show that the tech-laden index has delivered positive results even after record winning streaks.
Best Weekly Performance Since 2010
Even though the Nasdaq closed slightly below break-even on Friday, it clocked its eighth successive weekly gain. This marked the longest stretch of weekly gains for the Nasdaq since Apr 23, 2010, according to Dow Jones data. Amid this weekly winning streak, the index has been scaling record highs.
But, does this mean the Nasdaq will continue to give positive returns? If we consider the Nasdaq’s prior eight-week winning streaks since 1990, then the answer is in the affirmative. Following the string of weekly gains, the average return for the next 1-week, 2-week, 1-month and 3-month returns were 2.39%, 3.31%, 8.29% and 17.81%, respectively. In fact, with the passage of time, the return trajectory has moved up (read more: Why the Nasdaq's Weekly Win Streak May Not Be Over).
Cloud, Mobile Fuel Tech Profits
A slew of upbeat earnings reports by tech biggies, thanks to their focus on cloud and mobile devices, pushed the index higher. Two of the strongest contributors to the Nasdaq’s advancement were Amazon.com, Inc. (AMZN - Free Report) and Microsoft Corporation (MSFT - Free Report) . Both Amazon and Microsoft beat estimates in the second quarter, supported by their moves to host other companies’ data on their computer services, also known as cloud. Amazon’s cloud business grew 58% to $2.89 billion in the second quarter, while Microsoft’s Azure cloud-computing service grew 6.6% to $6.71 billion in the fiscal fourth quarter.
Facebook, Inc. and Alphabet Inc.’s (GOOGL - Free Report) convincing earnings performance during the second quarter was also a driving factor behind Nasdaq’s rally. Mobile ad revenues were instrumental in boosting earnings at these giants (read more: Facebook and 4 Other Tech Stocks Testing New Highs).
Dividends Provide Steady Income
Investors also favor dividend-paying stocks, a feature that tech companies have deliberately avoided for quite some time. This has helped older tech companies scale higher this year. For instance, Cisco Systems, Inc. (CSCO - Free Report) didn’t pay dividends in the 1990s but currently disburses a dividend of $1.04 annually.
Cisco’s dividend yield has risen from 1.4% to 3.4% since 2011, according to S&P Dow Jones Indices. From 2011 till the end of 2015, the company’s sales increased at an annualized rate of 4.2%, according to WSJ Market Data Group (read more: Tech Stocks’ New Attraction: Dividends).
Weaker U.S. Dollar to Lift Tech Stocks
Despite tech stocks reaching new highs, strategists believe there is more to come. Tech earnings are expected to increase further during the later part of the year, courtesy weaker dollar. A large chunk of revenues for most of the tech companies, nearly 59%, comes from overseas. Thanks to weak dollar, sales of U.S. tech products in foreign currencies translate into more dollars and improve the bottom line. Improved profit margins usually translate into better returns for shareholders.
Last week, the greenback sold off against most of the major currencies. It reached multi-year lows against the euro, British pound, Japanese yen, Swiss franc and Canadian dollars. U.S. dollar fell following the Fed’s decision to hold off rate hike at their July meeting. Most of the Fed officials refrained from adopting a hawkish stance as inflation continues to tread below the Fed’s targeted range (read more: Play 4 High-Yield Stocks as Fed Looks Less Hawkish).
As Nasdaq Advances, Buy These 4 Sturdy Tech Stocks
Since chances of a rate hike is still low and dollar more or less weak, tech stocks are poised to move north in the near term. Mobile and cloud are also delivering huge profits while dividend provides steady income. Needless to say, the tech-heavy Nasdaq is enjoying a bullish run and is positioned to boost returns. Hence, investing in fundamentally sound tech stocks listed in the Nasdaq will be a prudent move (read more: 5 Tech Stocks to Buy as Sector Soars to Record Highs).
We have zeroed in on four such tech stocks that boast a Zacks Rank #1 (Strong Buy) or 2 (Buy). Additionally, we have set a minimum market cap threshold of $5 billion and focus on the largest and most stable tech companies. The search was also narrowed down with a VGM score of ‘A’ or ‘B’. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.
NetApp, Inc. (NTAP - Free Report) provides software, systems and services to manage and store computer data worldwide. NetApp has a Zacks Rank #1 and a VGM score of ‘A’. The company’s current year estimated earnings growth rate is 16.3%.
NVIDIA Corporation (NVDA - Free Report) operates as a visual computing company worldwide. NVIDIA has a Zacks Rank #1 and a VGM score of ‘B’. The company’s current year estimated earnings growth rate is pegged at 69.2%.
Synopsys Inc. (SNPS - Free Report) provides electronic design automation (EDA) software products worldwide. Synopsyshas a Zacks Rank #2 and a VGM score of ‘B’. The company’s current year estimated earnings growth rate stands at 21.7%.
Seagate Technology plc (STX - Free Report) produces and distributes electronic data storage technology and solutions in the United States and internationally. Seagate Technologyhas a Zacks Rank #2 and a VGM score of ‘B’. The company’s current year estimated earnings growth rate is 30.7%.
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 >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Ride Nasdaq's 8-Week Rally with These 4 Tech Stocks
The Nasdaq managed to log its longest weekly winning streak in six years, with tech stocks leading the way. After a brief pullback following the Brexit episode, tech stocks scaled high buoyed by mobile revenues and cloud business strength. Cash poured in for older tech companies as more investors are on the lookout for stocks that provide steady income.
The dollar remaining weak on diminishing chances of an imminent rate hike is also expected to help tech stocks gain further ground. Given the favorable scenario, it is time to invest in attractive tech stocks listed in the Nasdaq. Moreover, statistics show that the tech-laden index has delivered positive results even after record winning streaks.
Best Weekly Performance Since 2010
Even though the Nasdaq closed slightly below break-even on Friday, it clocked its eighth successive weekly gain. This marked the longest stretch of weekly gains for the Nasdaq since Apr 23, 2010, according to Dow Jones data. Amid this weekly winning streak, the index has been scaling record highs.
But, does this mean the Nasdaq will continue to give positive returns? If we consider the Nasdaq’s prior eight-week winning streaks since 1990, then the answer is in the affirmative. Following the string of weekly gains, the average return for the next 1-week, 2-week, 1-month and 3-month returns were 2.39%, 3.31%, 8.29% and 17.81%, respectively. In fact, with the passage of time, the return trajectory has moved up (read more: Why the Nasdaq's Weekly Win Streak May Not Be Over).
Cloud, Mobile Fuel Tech Profits
A slew of upbeat earnings reports by tech biggies, thanks to their focus on cloud and mobile devices, pushed the index higher. Two of the strongest contributors to the Nasdaq’s advancement were Amazon.com, Inc. (AMZN - Free Report) and Microsoft Corporation (MSFT - Free Report) . Both Amazon and Microsoft beat estimates in the second quarter, supported by their moves to host other companies’ data on their computer services, also known as cloud. Amazon’s cloud business grew 58% to $2.89 billion in the second quarter, while Microsoft’s Azure cloud-computing service grew 6.6% to $6.71 billion in the fiscal fourth quarter.
Facebook, Inc. and Alphabet Inc.’s (GOOGL - Free Report) convincing earnings performance during the second quarter was also a driving factor behind Nasdaq’s rally. Mobile ad revenues were instrumental in boosting earnings at these giants (read more: Facebook and 4 Other Tech Stocks Testing New Highs).
Dividends Provide Steady Income
Investors also favor dividend-paying stocks, a feature that tech companies have deliberately avoided for quite some time. This has helped older tech companies scale higher this year. For instance, Cisco Systems, Inc. (CSCO - Free Report) didn’t pay dividends in the 1990s but currently disburses a dividend of $1.04 annually.
Cisco’s dividend yield has risen from 1.4% to 3.4% since 2011, according to S&P Dow Jones Indices. From 2011 till the end of 2015, the company’s sales increased at an annualized rate of 4.2%, according to WSJ Market Data Group (read more: Tech Stocks’ New Attraction: Dividends).
Weaker U.S. Dollar to Lift Tech Stocks
Despite tech stocks reaching new highs, strategists believe there is more to come. Tech earnings are expected to increase further during the later part of the year, courtesy weaker dollar. A large chunk of revenues for most of the tech companies, nearly 59%, comes from overseas. Thanks to weak dollar, sales of U.S. tech products in foreign currencies translate into more dollars and improve the bottom line. Improved profit margins usually translate into better returns for shareholders.
Last week, the greenback sold off against most of the major currencies. It reached multi-year lows against the euro, British pound, Japanese yen, Swiss franc and Canadian dollars. U.S. dollar fell following the Fed’s decision to hold off rate hike at their July meeting. Most of the Fed officials refrained from adopting a hawkish stance as inflation continues to tread below the Fed’s targeted range (read more: Play 4 High-Yield Stocks as Fed Looks Less Hawkish).
As Nasdaq Advances, Buy These 4 Sturdy Tech Stocks
Since chances of a rate hike is still low and dollar more or less weak, tech stocks are poised to move north in the near term. Mobile and cloud are also delivering huge profits while dividend provides steady income. Needless to say, the tech-heavy Nasdaq is enjoying a bullish run and is positioned to boost returns. Hence, investing in fundamentally sound tech stocks listed in the Nasdaq will be a prudent move (read more: 5 Tech Stocks to Buy as Sector Soars to Record Highs).
We have zeroed in on four such tech stocks that boast a Zacks Rank #1 (Strong Buy) or 2 (Buy). Additionally, we have set a minimum market cap threshold of $5 billion and focus on the largest and most stable tech companies. The search was also narrowed down with a VGM score of ‘A’ or ‘B’. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.
NetApp, Inc. (NTAP - Free Report) provides software, systems and services to manage and store computer data worldwide. NetApp has a Zacks Rank #1 and a VGM score of ‘A’. The company’s current year estimated earnings growth rate is 16.3%.
NVIDIA Corporation (NVDA - Free Report) operates as a visual computing company worldwide. NVIDIA has a Zacks Rank #1 and a VGM score of ‘B’. The company’s current year estimated earnings growth rate is pegged at 69.2%.
Synopsys Inc. (SNPS - Free Report) provides electronic design automation (EDA) software products worldwide. Synopsyshas a Zacks Rank #2 and a VGM score of ‘B’. The company’s current year estimated earnings growth rate stands at 21.7%.
Seagate Technology plc (STX - Free Report) produces and distributes electronic data storage technology and solutions in the United States and internationally. Seagate Technologyhas a Zacks Rank #2 and a VGM score of ‘B’. The company’s current year estimated earnings growth rate is 30.7%.
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 >>