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6 Large-Cap Technology Stocks for Momentum Investors
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Momentum investing calls for a continuous appraisal of stocks, which ensures that an investor does not pick a beaten-down name and overlook a thriving one. Momentum investors buy high on the anticipation that the stock will only ascend further in the short-to-intermediate term.
We believe the recent stock market upsurge presents an ideal buying opportunity for momentum investors. The market is highly anticipated to continue its bullish run driven by an improving macro-economic scenario. Notably, the Conference Board Leading Economic Index for the United States increased in January, which supports continuing economic growth.
Moreover, positive impact of recent tax-reform on company earnings, which will be more prominent in the current quarter, is expected to provide a significant boost to the bull market.
Technology Momentum Continues
Technology has been one of the most lucrative sectors for investors, year to date. The technology-heavy NASDAQ Composite (IXIC) is up almost 7.6% as compared with S&P 500’s growth of roughly 2%.
The Technology Select Sector SPDR ETF (XLK) has also gained 8.2% on a year-to-date basis. Powershares QQQ ETF (QQQ) has also increased 9%.
The sector is benefiting from increasing demand for cutting-edge technology such as cloud computing, Big Data, Internet of Things (IoT), wearables, AR/VR headsets, drones, self-driving cars and artificial intelligence (AI).
Although technology stocks will benefit less from the corporate tax cuts, they hoard huge cash overseas and are poised to benefit the most from Trump's repatriation policy. Moreover, higher domestic cash level will make the technology stocks less susceptible to an anticipated interest rate hike in 2018.
Further, improving liquidity level will allow these companies to spend more on the emerging technologies like ADAS, IoT and AR/VR.
Spending to Grow Exponentially
BlackRock expects ADAS market to grow at least 20% each year through 2025, creating significant growth opportunity for manufacturers of camera lenses, sensors and other items.
Per market research firm IDC, global spending on robotics and drones solutions will increase 22.1% year over year to $103.1 billion in 2018. This spending is projected to grow at a CAGR of 25.4% over 2018-20121 time frame to $218.4 billion.
Moreover, global spending on IoT will grow 14.6% year over year to reach $772.5 billion in 2018. IDC predicts global spending on IoT to surpass $1 trillion mark in 2020 and reach $1.1 trillion by 2021.
In addition to these positive data, IT spending is expected to grow. Gartner now projects global IT spending for 2018 to rise 4.5%, up from 3.8% in 2017.
Our Picks
The trick to achieve success in momentum investing is based on the risk-appetite of the investor. Momentum investing is not for the faint-hearted and success comes only to those who can effectively ride the upswing and brave the downswing of the market with the same élan. It is here that the Zacks Style Score System can come in handy.
We use the Zacks Momentum Style Score to pick stocks. The style score indicates the best time to buy a stock and take advantage of its momentum with a highest probability of success. Moreover, we prefer large caps due to their fundamental strength and stability amid increasing volatility in markets.
Back-tested results show that stocks with Momentum Style Scores of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) handily outperform other stocks.
Here, we have identified six great momentum stocks, each having market cap of more than $15 billion.
NVIDIA Corporation (NVDA - Free Report) offers graphics chip processors and related software for a wide range of visual computing platforms. The Santa Clara, CA-based company has returned 24.6% year to date, substantially outperforming the S&P 500 index.
NVIDIA’s robust product portfolio that caters to the AI, deep learning, datacenter and driverless cars industries presents significant growth prospect. Notably, the company has beaten the Zacks Consensus Estimate in the trailing four-quarters with an average positive surprise of 40.76%.
Micron Technology Inc. (MU - Free Report) is a well known provider of Dynamic Random Access Memory (“DRAM”) and NAND flash memory. Since a major portion of the revenues are derived from DRAM sales, rising prices due to paucity in supply bodes well for the company.
Micron has beaten the Zacks Consensus Estimate in the preceding four quarters with an average positive surprise of 10.24%.
Micron has a Zacks Rank #2 and a Momentum Style Score of A. The stock has gained 34.3% year to date.
Headquartered in Teaneck, NJ, Cognizant Technology Solutions Corporation (CTSH - Free Report) is a leading provider of information technology, consulting and business process outsourcing services. The company has a Zacks Rank #2 and a Momentum Style Score of A.
Cognizant is benefiting from domain expertise and accretive acquisitions that have enabled it to harness the ongoing digital transition. The company has outpaced the Zacks Consensus Estimate in the trailing four quarters with an average positive surprise of 10.24%.
The stock has returned 17.2% on a year-to-date basis.
Networking products provider Cisco Systems Inc. (CSCO - Free Report) is gaining on strong contribution from acquisitions and expanding footprint in the security, Infrastructure Platforms and applications market. The company has beaten the Zacks Consensus Estimate in three of the last four quarters with an average positive surprise of 2.98%.
Cisco has a Zacks Rank #2 and a Momentum Style Score of B. Shares have returned 15.7% year to date.
Fortive Corporation (FTV - Free Report) is a diversified industrial growth company. Accretive acquisitions and strength in developed markets along with automation businesses in North America are driving growth. The company outperformed the Zacks Consensus Estimate in the trailing four quarters with an average positive surprise of 4.69%.
Fortive has a Zacks Rank #2 and Momentum Style Score of B. Shares have returned 8.3% year to date.
Hewlett Packard Enterprise Company (HPE - Free Report) is poised well on acquisitions of SimpliVity, Cloud Cruiser and Nimble Storage. These have enhanced its capabilities in providing solutions that addresses the needs of hybrid IT model. The company has beaten the Zacks Consensus Estimate in three of the trailing four quarters with an average positive surprise of 11.71%.
HPE has a Zacks Rank #2 and a Momentum Style Score of B. Shares have returned 31.9% year to date.
Don’t Even Think About Buying Bitcoin Until You Read This
The most popular cryptocurrency skyrocketed last year, giving some investors the chance to bank 20X returns or even more. Those gains, however, came with serious volatility and risk. Bitcoin sank 25% or more 3 times in 2017.
Zacks has just released a new Special Report to help readers capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
Image: Bigstock
6 Large-Cap Technology Stocks for Momentum Investors
Momentum investing calls for a continuous appraisal of stocks, which ensures that an investor does not pick a beaten-down name and overlook a thriving one. Momentum investors buy high on the anticipation that the stock will only ascend further in the short-to-intermediate term.
We believe the recent stock market upsurge presents an ideal buying opportunity for momentum investors. The market is highly anticipated to continue its bullish run driven by an improving macro-economic scenario. Notably, the Conference Board Leading Economic Index for the United States increased in January, which supports continuing economic growth.
Moreover, positive impact of recent tax-reform on company earnings, which will be more prominent in the current quarter, is expected to provide a significant boost to the bull market.
Technology Momentum Continues
Technology has been one of the most lucrative sectors for investors, year to date. The technology-heavy NASDAQ Composite (IXIC) is up almost 7.6% as compared with S&P 500’s growth of roughly 2%.
The Technology Select Sector SPDR ETF (XLK) has also gained 8.2% on a year-to-date basis. Powershares QQQ ETF (QQQ) has also increased 9%.
The sector is benefiting from increasing demand for cutting-edge technology such as cloud computing, Big Data, Internet of Things (IoT), wearables, AR/VR headsets, drones, self-driving cars and artificial intelligence (AI).
Although technology stocks will benefit less from the corporate tax cuts, they hoard huge cash overseas and are poised to benefit the most from Trump's repatriation policy. Moreover, higher domestic cash level will make the technology stocks less susceptible to an anticipated interest rate hike in 2018.
Further, improving liquidity level will allow these companies to spend more on the emerging technologies like ADAS, IoT and AR/VR.
Spending to Grow Exponentially
BlackRock expects ADAS market to grow at least 20% each year through 2025, creating significant growth opportunity for manufacturers of camera lenses, sensors and other items.
Per market research firm IDC, global spending on robotics and drones solutions will increase 22.1% year over year to $103.1 billion in 2018. This spending is projected to grow at a CAGR of 25.4% over 2018-20121 time frame to $218.4 billion.
Moreover, global spending on IoT will grow 14.6% year over year to reach $772.5 billion in 2018. IDC predicts global spending on IoT to surpass $1 trillion mark in 2020 and reach $1.1 trillion by 2021.
In addition to these positive data, IT spending is expected to grow. Gartner now projects global IT spending for 2018 to rise 4.5%, up from 3.8% in 2017.
Our Picks
The trick to achieve success in momentum investing is based on the risk-appetite of the investor. Momentum investing is not for the faint-hearted and success comes only to those who can effectively ride the upswing and brave the downswing of the market with the same élan. It is here that the Zacks Style Score System can come in handy.
We use the Zacks Momentum Style Score to pick stocks. The style score indicates the best time to buy a stock and take advantage of its momentum with a highest probability of success. Moreover, we prefer large caps due to their fundamental strength and stability amid increasing volatility in markets.
Back-tested results show that stocks with Momentum Style Scores of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) handily outperform other stocks.
Here, we have identified six great momentum stocks, each having market cap of more than $15 billion.
NVIDIA Corporation (NVDA - Free Report) offers graphics chip processors and related software for a wide range of visual computing platforms. The Santa Clara, CA-based company has returned 24.6% year to date, substantially outperforming the S&P 500 index.
NVIDIA’s robust product portfolio that caters to the AI, deep learning, datacenter and driverless cars industries presents significant growth prospect. Notably, the company has beaten the Zacks Consensus Estimate in the trailing four-quarters with an average positive surprise of 40.76%.
NVIDIA has a Momentum Style Score of A and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Micron Technology Inc. (MU - Free Report) is a well known provider of Dynamic Random Access Memory (“DRAM”) and NAND flash memory. Since a major portion of the revenues are derived from DRAM sales, rising prices due to paucity in supply bodes well for the company.
Micron has beaten the Zacks Consensus Estimate in the preceding four quarters with an average positive surprise of 10.24%.
Micron has a Zacks Rank #2 and a Momentum Style Score of A. The stock has gained 34.3% year to date.
Headquartered in Teaneck, NJ, Cognizant Technology Solutions Corporation (CTSH - Free Report) is a leading provider of information technology, consulting and business process outsourcing services. The company has a Zacks Rank #2 and a Momentum Style Score of A.
Cognizant is benefiting from domain expertise and accretive acquisitions that have enabled it to harness the ongoing digital transition. The company has outpaced the Zacks Consensus Estimate in the trailing four quarters with an average positive surprise of 10.24%.
The stock has returned 17.2% on a year-to-date basis.
Networking products provider Cisco Systems Inc. (CSCO - Free Report) is gaining on strong contribution from acquisitions and expanding footprint in the security, Infrastructure Platforms and applications market. The company has beaten the Zacks Consensus Estimate in three of the last four quarters with an average positive surprise of 2.98%.
Cisco has a Zacks Rank #2 and a Momentum Style Score of B. Shares have returned 15.7% year to date.
Fortive Corporation (FTV - Free Report) is a diversified industrial growth company. Accretive acquisitions and strength in developed markets along with automation businesses in North America are driving growth. The company outperformed the Zacks Consensus Estimate in the trailing four quarters with an average positive surprise of 4.69%.
Fortive has a Zacks Rank #2 and Momentum Style Score of B. Shares have returned 8.3% year to date.
Hewlett Packard Enterprise Company (HPE - Free Report) is poised well on acquisitions of SimpliVity, Cloud Cruiser and Nimble Storage. These have enhanced its capabilities in providing solutions that addresses the needs of hybrid IT model. The company has beaten the Zacks Consensus Estimate in three of the trailing four quarters with an average positive surprise of 11.71%.
HPE has a Zacks Rank #2 and a Momentum Style Score of B. Shares have returned 31.9% year to date.
Don’t Even Think About Buying Bitcoin Until You Read This
The most popular cryptocurrency skyrocketed last year, giving some investors the chance to bank 20X returns or even more. Those gains, however, came with serious volatility and risk. Bitcoin sank 25% or more 3 times in 2017.
Zacks has just released a new Special Report to help readers capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
See 4 crypto-related stocks now >>