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6 Soaring Technology Stocks with Earnings Beat Potential
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If a stock is continuously on an uptrend, there is usually a sound reason behind extended positive run, or else it would have seen some pullback. These stocks that sustain their rally typically have sound fundamentals, a favorable recommendation, strong earnings beat potential, and positive estimate revisions.
You must have noticed how some stocks skyrocket after their earnings release. Studies indicate that a positive earnings surprise drives shares for several weeks following the report. The earnings season has started and the investor community is busy comparing estimates with actuals.
Technology Stocks Poised to Outperform this Earnings Season
The computer and technology sector performed well in the last earnings season, registering higher revenue and earnings growth rates than the S&P 500 average. Per the latest Earnings Preview report, the trend is expected to continue this earnings season.
Per the report, the sector’s total earnings for the first quarter are expected to grow 11% from the same period last year on 6.7% higher revenues. This is much higher than 9.2% earnings growth witnessed in the fourth quarter of 2016 on a 5.6% increase in the top line.
The strong growth projections may be mainly attributed to the growing adoption of cloud computing, cloud infrastructure build-out, Big Data, flash storage, networking, security, 3D printing, wearable devices and Internet of Things (IoT) at home, office and car. Apart from this, modestly improving PC shipments also raise expectations.
With the U.S. economy rebounding, as evident from an improvement in GDP numbers, the Consumer Confidence Index, unemployment rate and factory activity data, we believe that there are tremendous growth opportunities for technology stocks in 2017.
Per the latest research report from information technology research and advisory firm, Gartner Inc. (IT), worldwide IT spending is projected to increase 2.7% to $3.46 trillion in 2017 from $3.38 billion in 2016. This will mark a solid recovery in IT spending after two consecutive years of decline. Notably, in 2015 and 2016, worldwide spending declined 5.5% and 0.6%, respectively.
The optimism surrounding the technology sector is well reflected in its year-to-date performance. The sector has outperformed the S&P 500 in the aforesaid period, appreciating 9.1% compared with the S&P 500’s gain of 5.4%.
The technology space continues to be investors’ favorite due to its dynamic nature. It is expected to grow faster than ever before as evident from Gartner’s latest forecasts as well as improving U.S. economic data.
6 Prominent Picks
Here we have highlighted six computer and technology stocks that are up over 15% year to date and have earnings beat potential. These carry a Zacks Rank #1 (Strong Buy) or #2 (Buy) and positive Earnings ESP. Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.
An earnings beat boosts investors’ confidence in the stock, which is reflected in its rapid price appreciation. Thus, these stocks could turn out to be great additions to your portfolio ahead of their earnings releases.
Applied Materials, Inc. (AMAT - Free Report) is a solid bet with its stock price up 20.8% year to date. The stock flaunts a Zacks Rank #1 and has an Earnings ESP of +1.32%. The company delivered an average positive earnings surprise of 3.9% over the trailing four quarters and has a long-term earnings growth rate of 15.5%.
We also suggest investing in Cognex Corporation (CGNX - Free Report) , shares of which have advanced roughly 31.8% so far in the year. The stock delivered an average positive earnings surprise of 28.4% over the trailing four quarters. The company has an Earnings ESP of +14.3% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Investors can also count on Lumentum Holdings Inc. (LITE - Free Report) , with a Zacks Rank #1 and an Earnings ESP of +2.56%. The company registered an average positive earnings surprise of 17.3% over the trailing four quarters, and has a long-term earnings growth rate of 18.5%. Shares of the company have soared 30.4% year to date.
Another stock that you may consider is Seagate Technology Plc (STX - Free Report) , with a Zacks Rank #2 and an Earnings ESP of +3.77%. The company delivered an average positive earnings surprise of 3.3% over the trailing four quarters, and has a long-term earnings growth rate of 8.2%. Shares of the company have surged 20.4% year to date.
One can also invest in KLA-Tencor Corporation (KLAC - Free Report) , which carries a Zacks Rank #2 and has an Earnings ESP of +2.60%. The company registered an average positive earnings surprise of 14.0% over the trailing four quarters, and has a long-term earnings growth rate of 21.2%. Shares of the company have soared 22.6% year to date.
BWX Technologies, Inc. (BWXT) is also one such technology stock that investors can opt for. So far this year, the stock has gained 19.5%. The stock carries a Zacks Rank #2 and has an Earnings ESP of +2.33%. The company delivered an average positive earnings surprise of 17.8% over the trailing four quarters, and has a long-term earnings growth rate of 10.1%.
Looking Ahead
These stocks have managed to grab the spotlight with notable performances. These factors make us more or less sure that investing in these stocks will yield strong returns for your portfolio in the short term.
Now See Our Private Investment Ideas
While the above ideas are being shared with the public, other trades are hidden from everyone but selected members. Would you like to peek behind the curtain and view them? Starting today, for the next month, you can follow all Zacks' private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trades >>
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6 Soaring Technology Stocks with Earnings Beat Potential
If a stock is continuously on an uptrend, there is usually a sound reason behind extended positive run, or else it would have seen some pullback. These stocks that sustain their rally typically have sound fundamentals, a favorable recommendation, strong earnings beat potential, and positive estimate revisions.
You must have noticed how some stocks skyrocket after their earnings release. Studies indicate that a positive earnings surprise drives shares for several weeks following the report. The earnings season has started and the investor community is busy comparing estimates with actuals.
Technology Stocks Poised to Outperform this Earnings Season
The computer and technology sector performed well in the last earnings season, registering higher revenue and earnings growth rates than the S&P 500 average. Per the latest Earnings Preview report, the trend is expected to continue this earnings season.
Per the report, the sector’s total earnings for the first quarter are expected to grow 11% from the same period last year on 6.7% higher revenues. This is much higher than 9.2% earnings growth witnessed in the fourth quarter of 2016 on a 5.6% increase in the top line.
The strong growth projections may be mainly attributed to the growing adoption of cloud computing, cloud infrastructure build-out, Big Data, flash storage, networking, security, 3D printing, wearable devices and Internet of Things (IoT) at home, office and car. Apart from this, modestly improving PC shipments also raise expectations.
With the U.S. economy rebounding, as evident from an improvement in GDP numbers, the Consumer Confidence Index, unemployment rate and factory activity data, we believe that there are tremendous growth opportunities for technology stocks in 2017.
Per the latest research report from information technology research and advisory firm, Gartner Inc. (IT), worldwide IT spending is projected to increase 2.7% to $3.46 trillion in 2017 from $3.38 billion in 2016. This will mark a solid recovery in IT spending after two consecutive years of decline. Notably, in 2015 and 2016, worldwide spending declined 5.5% and 0.6%, respectively.
The optimism surrounding the technology sector is well reflected in its year-to-date performance. The sector has outperformed the S&P 500 in the aforesaid period, appreciating 9.1% compared with the S&P 500’s gain of 5.4%.
The technology space continues to be investors’ favorite due to its dynamic nature. It is expected to grow faster than ever before as evident from Gartner’s latest forecasts as well as improving U.S. economic data.
6 Prominent Picks
Here we have highlighted six computer and technology stocks that are up over 15% year to date and have earnings beat potential. These carry a Zacks Rank #1 (Strong Buy) or #2 (Buy) and positive Earnings ESP.
Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.
An earnings beat boosts investors’ confidence in the stock, which is reflected in its rapid price appreciation. Thus, these stocks could turn out to be great additions to your portfolio ahead of their earnings releases.
Applied Materials, Inc. (AMAT - Free Report) is a solid bet with its stock price up 20.8% year to date. The stock flaunts a Zacks Rank #1 and has an Earnings ESP of +1.32%. The company delivered an average positive earnings surprise of 3.9% over the trailing four quarters and has a long-term earnings growth rate of 15.5%.
We also suggest investing in Cognex Corporation (CGNX - Free Report) , shares of which have advanced roughly 31.8% so far in the year. The stock delivered an average positive earnings surprise of 28.4% over the trailing four quarters. The company has an Earnings ESP of +14.3% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Investors can also count on Lumentum Holdings Inc. (LITE - Free Report) , with a Zacks Rank #1 and an Earnings ESP of +2.56%. The company registered an average positive earnings surprise of 17.3% over the trailing four quarters, and has a long-term earnings growth rate of 18.5%. Shares of the company have soared 30.4% year to date.
Another stock that you may consider is Seagate Technology Plc (STX - Free Report) , with a Zacks Rank #2 and an Earnings ESP of +3.77%. The company delivered an average positive earnings surprise of 3.3% over the trailing four quarters, and has a long-term earnings growth rate of 8.2%. Shares of the company have surged 20.4% year to date.
One can also invest in KLA-Tencor Corporation (KLAC - Free Report) , which carries a Zacks Rank #2 and has an Earnings ESP of +2.60%. The company registered an average positive earnings surprise of 14.0% over the trailing four quarters, and has a long-term earnings growth rate of 21.2%. Shares of the company have soared 22.6% year to date.
BWX Technologies, Inc. (BWXT) is also one such technology stock that investors can opt for. So far this year, the stock has gained 19.5%. The stock carries a Zacks Rank #2 and has an Earnings ESP of +2.33%. The company delivered an average positive earnings surprise of 17.8% over the trailing four quarters, and has a long-term earnings growth rate of 10.1%.
Looking Ahead
These stocks have managed to grab the spotlight with notable performances. These factors make us more or less sure that investing in these stocks will yield strong returns for your portfolio in the short term.
Now See Our Private Investment Ideas
While the above ideas are being shared with the public, other trades are hidden from everyone but selected members. Would you like to peek behind the curtain and view them? Starting today, for the next month, you can follow all Zacks' private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trades >>