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Tech stocks experienced rough trading on Sep 5. The tech-laden Nasdaq dropped more than 1% primarily due to decline in Facebook, Twitter, Alphabet, Microsoft and Snap shares.
Twitter and Facebook plunged 6.1% and 2.3%, respectively, dragging down the S&P 500. Per Reuters, the S&P 500 technology index fell 1.5%. Moreover, the Technology Select Sector SPDR ETF (XLK) lost 1.3%.
Tech stocks were dealt a blow by rising investor anxiety over increased regulations, particularly in the social media space. Twitter and Facebook executives were grilled by the Senate Intelligence Committee yesterday on issues like fake news, terrorism-related propaganda and foreign interference in the U.S. elections through their platforms.
According to TechCrunch, U.S. lawmakers not only flagged concerns about the ownership of consumer data but also on the manipulation of data that instigates riots and violence.
Concerns further aggravated after the Justice department said that it would meet state attorneys general to discuss concerns whether social media platforms are “intentionally stifling the free exchange of ideas.”
Notably, social media firms have been severely criticized by the U.S. President Donald Trump for bypassing conservative opinions and favoring “left-wing”.
Tech Beams With Prospects
Keeping the bad press aside, we believe the tech sector has immense prospects that should entice investors.
Technology has grown to become a dominant element in our lives. From digitizing retail outlets with automated check-out technology, modernizing payment systems with rigid cybersecurity measures to revolutionizing health care mechanisms and education with credible data-driven insights, we can safely say that the age of technology is here to stay.
Moreover, rapid adoption of cloud, AI, Internet of Things (IoT), autonomous vehicles, advanced driver assisted systems (ADAS), wearables, drones and virtual reality/ augmented reality (VR/AR) devices are fuelling massive growth in the space.
Further, the accelerated deployment of 5G technology — the next wireless revolution — is likely to enhance opportunities.
Hence, we believe investors should get mileage out of yesterday’s dip by building position in tech stocks that are now trading at a discount.
Dip Provides Buying Opportunity for Investors
The immense prospects of the Technology sector will without doubt help Nasdaq and S&P 500 bounce back in the near term. Moreover, by purchasing stocks right after a dip, investors are likely to get a bargain, as the depressed prices do not fully reflect the company’s true long-term fundamentals. This improves chance of capital appreciation over the long haul.
Moreover, we prefer large caps (above $5 billion) owing to their fundamental strength and stability that help them sail through market volatility.
Our Picks
Here are six large-cap tech stocks that flaunt the favorable combination. All of them have a Zacks Rank #2.
CDW Corporation (CDW - Free Report) — Based in Lincolnshire, IL, the company has been witnessing growth across all U.S. channels and international operations. Notably, the company’s customer end-markets and expanding product and technology portfolio are key drivers. The company has a Value Score of A.
CDW has beaten the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 5.56%. The Zacks Consensus Estimate for 2018 earnings has increased 1.6% to $4.97 over the last 60 days, reflecting year-over-year growth of 29.8%.
DXC Technology Company (DXC - Free Report) — Based in Tysons, VA, the company has gained strong traction in the cloud backed by acquisitions and partnerships with the likes of HCL, AT&T, VMware and Microsoft. DXC also has a Value Score of A.
The company has surpassed the Zacks Consensus Estimate in the last four quarters, the average positive surprise being 12.15%. The Zacks Consensus Estimate for 2018 earnings jumped 8 cents to $8.15 over the last 60 days, reflecting year-over-year growth of 2.6%.
Avnet, Inc. (AVT - Free Report) — Based in Phoenix, AZ, Avnet is benefiting from strong performance of its Electronics Components segment. Moreover, acquisitions such as Premier Farnell and Dragon Innovation are likely to bolster its portfolio and expand global operations. The company has a Value Score of B.
Avnet has trumped the consensus estimate in all of the trailing four quarters, the average positive surprise being 5.92%. The Zacks Consensus Estimate for fiscal 2019 earnings is currently pegged at $4.20, up 3.4% over the last 60 days, reflecting year-over-year growth of 17.7%.
Corning Inc. (GLW - Free Report) — New York-based Corning continues to benefit from strength in its Optical Communications, Environmental Technologies and Life Sciences businesses. Solid demand for Gorilla Glass 5 and fiber optics products is a key catalyst. The company has a Value Score of B.
Corning has beaten the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 3.79%. Over the last 60 days, the Zacks Consensus Estimate for 2018 earnings has inched up by a penny to $1.73, reflecting year-over-year growth of 0.6%.
Cypress Semiconductor Corporation — San Jose, CA-based Cypress continues to benefit from strength in its wireless solutions business and higher demand for PSoC products, which are aiding its top line. The company has a Value Score of B.
Cypress has beaten the Zacks Consensus Estimate in the last four quarters, the average positive surprise being 13.92%. The Zacks Consensus Estimate for 2018 earnings has risen 7.2% to $1.34, reflecting a year-over-year increase of 50.6%.
Cypress Semiconductor Corporation Price and Consensus
Skyworks Solutions, Inc. (SWKS - Free Report) — Headquartered in Woburn, Massachusetts, Skyworks benefits from strong demand for its wireless communications engines. The company’s growing clout in the connectivity solutions and 5G markets is a positive.
Skyworks has a Value Score of B. The company has beaten the Zacks Consensus Estimate in the last four quarters, the average positive surprise being 3.59%. The Zacks Consensus Estimate for fiscal 2018 earnings has risen 1.1% to $7.20, reflecting a year-over-year rise of 11.6%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Exploit the Nasdaq Dip With These 6 Tech Stocks
Tech stocks experienced rough trading on Sep 5. The tech-laden Nasdaq dropped more than 1% primarily due to decline in Facebook, Twitter, Alphabet, Microsoft and Snap shares.
Twitter and Facebook plunged 6.1% and 2.3%, respectively, dragging down the S&P 500. Per Reuters, the S&P 500 technology index fell 1.5%. Moreover, the Technology Select Sector SPDR ETF (XLK) lost 1.3%.
Tech stocks were dealt a blow by rising investor anxiety over increased regulations, particularly in the social media space. Twitter and Facebook executives were grilled by the Senate Intelligence Committee yesterday on issues like fake news, terrorism-related propaganda and foreign interference in the U.S. elections through their platforms.
According to TechCrunch, U.S. lawmakers not only flagged concerns about the ownership of consumer data but also on the manipulation of data that instigates riots and violence.
Concerns further aggravated after the Justice department said that it would meet state attorneys general to discuss concerns whether social media platforms are “intentionally stifling the free exchange of ideas.”
Notably, social media firms have been severely criticized by the U.S. President Donald Trump for bypassing conservative opinions and favoring “left-wing”.
Tech Beams With Prospects
Keeping the bad press aside, we believe the tech sector has immense prospects that should entice investors.
Technology has grown to become a dominant element in our lives. From digitizing retail outlets with automated check-out technology, modernizing payment systems with rigid cybersecurity measures to revolutionizing health care mechanisms and education with credible data-driven insights, we can safely say that the age of technology is here to stay.
Moreover, rapid adoption of cloud, AI, Internet of Things (IoT), autonomous vehicles, advanced driver assisted systems (ADAS), wearables, drones and virtual reality/ augmented reality (VR/AR) devices are fuelling massive growth in the space.
Further, the accelerated deployment of 5G technology — the next wireless revolution — is likely to enhance opportunities.
Hence, we believe investors should get mileage out of yesterday’s dip by building position in tech stocks that are now trading at a discount.
Dip Provides Buying Opportunity for Investors
The immense prospects of the Technology sector will without doubt help Nasdaq and S&P 500 bounce back in the near term. Moreover, by purchasing stocks right after a dip, investors are likely to get a bargain, as the depressed prices do not fully reflect the company’s true long-term fundamentals. This improves chance of capital appreciation over the long haul.
It is here that the Zacks Style Score System comes in handy while zeroing in on stocks. Our research shows that stocks with a Value Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) are good investment picks. You can see the complete list of today’s Zacks #1 Rank stocks here.
Moreover, we prefer large caps (above $5 billion) owing to their fundamental strength and stability that help them sail through market volatility.
Our Picks
Here are six large-cap tech stocks that flaunt the favorable combination. All of them have a Zacks Rank #2.
CDW Corporation (CDW - Free Report) — Based in Lincolnshire, IL, the company has been witnessing growth across all U.S. channels and international operations. Notably, the company’s customer end-markets and expanding product and technology portfolio are key drivers. The company has a Value Score of A.
CDW has beaten the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 5.56%. The Zacks Consensus Estimate for 2018 earnings has increased 1.6% to $4.97 over the last 60 days, reflecting year-over-year growth of 29.8%.
CDW Corporation Price and Consensus
CDW Corporation Price and Consensus | CDW Corporation Quote
DXC Technology Company (DXC - Free Report) — Based in Tysons, VA, the company has gained strong traction in the cloud backed by acquisitions and partnerships with the likes of HCL, AT&T, VMware and Microsoft. DXC also has a Value Score of A.
The company has surpassed the Zacks Consensus Estimate in the last four quarters, the average positive surprise being 12.15%. The Zacks Consensus Estimate for 2018 earnings jumped 8 cents to $8.15 over the last 60 days, reflecting year-over-year growth of 2.6%.
DXC Technology Company. Price and Consensus
DXC Technology Company. Price and Consensus | DXC Technology Company. Quote
Avnet, Inc. (AVT - Free Report) — Based in Phoenix, AZ, Avnet is benefiting from strong performance of its Electronics Components segment. Moreover, acquisitions such as Premier Farnell and Dragon Innovation are likely to bolster its portfolio and expand global operations. The company has a Value Score of B.
Avnet has trumped the consensus estimate in all of the trailing four quarters, the average positive surprise being 5.92%. The Zacks Consensus Estimate for fiscal 2019 earnings is currently pegged at $4.20, up 3.4% over the last 60 days, reflecting year-over-year growth of 17.7%.
Avnet, Inc. Price and Consensus
Avnet, Inc. Price and Consensus | Avnet, Inc. Quote
Corning Inc. (GLW - Free Report) — New York-based Corning continues to benefit from strength in its Optical Communications, Environmental Technologies and Life Sciences businesses. Solid demand for Gorilla Glass 5 and fiber optics products is a key catalyst. The company has a Value Score of B.
Corning has beaten the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 3.79%. Over the last 60 days, the Zacks Consensus Estimate for 2018 earnings has inched up by a penny to $1.73, reflecting year-over-year growth of 0.6%.
Corning Incorporated Price and Consensus
Corning Incorporated Price and Consensus | Corning Incorporated Quote
Cypress Semiconductor Corporation — San Jose, CA-based Cypress continues to benefit from strength in its wireless solutions business and higher demand for PSoC products, which are aiding its top line. The company has a Value Score of B.
Cypress has beaten the Zacks Consensus Estimate in the last four quarters, the average positive surprise being 13.92%. The Zacks Consensus Estimate for 2018 earnings has risen 7.2% to $1.34, reflecting a year-over-year increase of 50.6%.
Cypress Semiconductor Corporation Price and Consensus
Cypress Semiconductor Corporation Price and Consensus | Cypress Semiconductor Corporation Quote
Skyworks Solutions, Inc. (SWKS - Free Report) — Headquartered in Woburn, Massachusetts, Skyworks benefits from strong demand for its wireless communications engines. The company’s growing clout in the connectivity solutions and 5G markets is a positive.
Skyworks Solutions, Inc. Price and Consensus
Skyworks Solutions, Inc. Price and Consensus | Skyworks Solutions, Inc. Quote
Skyworks has a Value Score of B. The company has beaten the Zacks Consensus Estimate in the last four quarters, the average positive surprise being 3.59%. The Zacks Consensus Estimate for fiscal 2018 earnings has risen 1.1% to $7.20, reflecting a year-over-year rise of 11.6%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>