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Investors who have grown used to the technology sector’s strong rally this year have been rocked over the past few trading periods, as stocks throughout the tech world have struggled—despite progress being made on the GOP’s long-awaited tax bill.
Before the current tech selloff began last week, our “Computers and Technology” sector was up over 30% on the year, and the tech-heavy Nasdaq Composite was resting near its all-time high. Several innovative tech firms are among Wall Street’s hottest stocks of 2017, while established industry behemoths—including Apple (AAPL - Free Report) , Facebook , Alphabet (GOOGL - Free Report) , and Microsoft (MSFT - Free Report) —have outpaced the market.
But it appears that this rally has finally started to see some volatility. Over the last week, tech stocks across the board have slumped, leading many investors to wonder whether the sector is in store for another bubble burst—similar to that of the dot-com era in the early 2000s.
Nevertheless, there are plenty of reasons to remains optimistic about tech stocks right now. Unlike during the dot-com rally, today’s sector is supported by real earnings and revenue growth. In fact, stocks in our Computers and Technology group are currently sporting an average P/E ratio of 24.13, while it was not uncommon for the Nasdaq’s average P/E to sit in the hundreds at the turn of the century.
And after another strong earnings report season—which not only continued the high-growth trend, but also included positive guidance for 2018—we have no real reason to believe that the fundamental picture surrounding the tech sector has changed.
For investors with this continued bullish mindset, the recent tech selloff would be considered an opportunity to buy stocks at a discount. With that said, if you hold that belief, check out these three tech stocks to buy now:
Alongside the expansion of the semiconductor industry, we have seen the suppliers of equipment to the chipmakers—such as Lam Research—really explode this year. But LRCX has also been hammered by the current selloff, and shares of the company have lost nearly 15% in five days.
Still, Lam Research remains a Zacks Rank #1 (Strong Buy). The stock also sports an “A” grade in the overall VGM category of our Style Scores system. The company is expected to witness EPS growth of 64% and sales growth of 36% this quarter, and its Forward P/E sits at just 12.74.
2. Activision Blizzard, Inc.
Video game makers have been among the hardest hit by the tech selloff, and shares of industry giant Activision Blizzard have lost nearly 11.5% over the past five trading days. But ATVI has emerged as an impressive growth stock this year and should stay that way in 2018, meaning that this Zacks Rank #2 (Buy) stock could be on sale right now.
Based on our latest consensus estimates, Activision is expected to post earnings growth of 15% and revenue growth of 6% next year. What’s more, the company has met or surpassed estimates in seven straight quarters. ATVI is also growing its cash flow at a rate of 90% right now, so it is clear that management is using its success to sure up its financial position.
It has been a massive year for GPU behemoth Nvidia, but the company’s remarkable rally has meant that its stock has been hit hard by the tech selloff. In fact, NVDA has slumped more than 13% over the past five days.
However, Nvidia remains a Zacks Rank #1 (Strong Buy). Next year, the company’s growth is expected to continue, with current projections calling for earnings to expand by an additional 11% and sales growing a further 16%.
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, and for the next month, you can follow all Zacks’ private buys and sells in real time. Our experts cover all kinds of trades: value, momentum, ETFs, stocks under $10, stocks that corporate insiders are buying up, and companies that are about to report positive earnings surprises. You can even look inside portfolios so exclusive that they are normally closed to new investors.
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3 Tech Stocks to Buy Amid Industry Selloff
Investors who have grown used to the technology sector’s strong rally this year have been rocked over the past few trading periods, as stocks throughout the tech world have struggled—despite progress being made on the GOP’s long-awaited tax bill.
Before the current tech selloff began last week, our “Computers and Technology” sector was up over 30% on the year, and the tech-heavy Nasdaq Composite was resting near its all-time high. Several innovative tech firms are among Wall Street’s hottest stocks of 2017, while established industry behemoths—including Apple (AAPL - Free Report) , Facebook , Alphabet (GOOGL - Free Report) , and Microsoft (MSFT - Free Report) —have outpaced the market.
But it appears that this rally has finally started to see some volatility. Over the last week, tech stocks across the board have slumped, leading many investors to wonder whether the sector is in store for another bubble burst—similar to that of the dot-com era in the early 2000s.
Nevertheless, there are plenty of reasons to remains optimistic about tech stocks right now. Unlike during the dot-com rally, today’s sector is supported by real earnings and revenue growth. In fact, stocks in our Computers and Technology group are currently sporting an average P/E ratio of 24.13, while it was not uncommon for the Nasdaq’s average P/E to sit in the hundreds at the turn of the century.
And after another strong earnings report season—which not only continued the high-growth trend, but also included positive guidance for 2018—we have no real reason to believe that the fundamental picture surrounding the tech sector has changed.
For investors with this continued bullish mindset, the recent tech selloff would be considered an opportunity to buy stocks at a discount. With that said, if you hold that belief, check out these three tech stocks to buy now:
1. Lam Research Corporation (LRCX - Free Report)
Alongside the expansion of the semiconductor industry, we have seen the suppliers of equipment to the chipmakers—such as Lam Research—really explode this year. But LRCX has also been hammered by the current selloff, and shares of the company have lost nearly 15% in five days.
Still, Lam Research remains a Zacks Rank #1 (Strong Buy). The stock also sports an “A” grade in the overall VGM category of our Style Scores system. The company is expected to witness EPS growth of 64% and sales growth of 36% this quarter, and its Forward P/E sits at just 12.74.
2. Activision Blizzard, Inc.
Video game makers have been among the hardest hit by the tech selloff, and shares of industry giant Activision Blizzard have lost nearly 11.5% over the past five trading days. But ATVI has emerged as an impressive growth stock this year and should stay that way in 2018, meaning that this Zacks Rank #2 (Buy) stock could be on sale right now.
Based on our latest consensus estimates, Activision is expected to post earnings growth of 15% and revenue growth of 6% next year. What’s more, the company has met or surpassed estimates in seven straight quarters. ATVI is also growing its cash flow at a rate of 90% right now, so it is clear that management is using its success to sure up its financial position.
3. Nvidia Corporation (NVDA - Free Report)
It has been a massive year for GPU behemoth Nvidia, but the company’s remarkable rally has meant that its stock has been hit hard by the tech selloff. In fact, NVDA has slumped more than 13% over the past five days.
However, Nvidia remains a Zacks Rank #1 (Strong Buy). Next year, the company’s growth is expected to continue, with current projections calling for earnings to expand by an additional 11% and sales growing a further 16%.
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, and for the next month, you can follow all Zacks’ private buys and sells in real time. Our experts cover all kinds of trades: value, momentum, ETFs, stocks under $10, stocks that corporate insiders are buying up, and companies that are about to report positive earnings surprises. You can even look inside portfolios so exclusive that they are normally closed to new investors.
Click here for Zacks' private trades >>