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3 Tech Stocks for Growth Investors to Buy Now

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The market’s Q4 volatility knocked the wind out of tech growth stocks, but enough moments of excitement—including IBM’s historic acquisition of Red Hat in October—reminded investors that smart opportunities are still aplenty in this space, especially when one focuses on well-managed companies and segment leaders.

By their very nature, growth investors are primarily focused on finding companies whose earnings and revenue are expected grow at a rate that outpaces the market. This investment strategy comes with its fair share of risks, but it also brings the exciting possibility of outsized returns—an end goal that every investor desires.

Over the past several years, Wall Street’s most exciting growth stocks have emerged from the technology sector. And despite recent volatility, strong earnings and impressive sales remain the story for many up-and-coming companies in the technology sector. That means that growth investors searching for the next great market-beating stock might want to keep their focus on specific tech stocks.

Luckily, we can pair the proven Zacks Rank with our innovative Style Scores system, which includes a “Growth” category, to find strong growth tech stocks. Investors should note that our Growth category values earnings and sales growth, as well as improvements to a company’s financial statements—including strong cash flows and great return on equity.

With all of this said, check out these three tech stocks for growth investors to consider now:

1. Attunity Ltd.

Attunity is a data integration and big data management solutions company. Its solutions enable access, management, sharing, and distribution of data across enterprise platforms and the Cloud. It boasts an impressive client list that includes half of the Fortune 100 and over 2000 overall customers.

Attunity sports a Zacks Rank #2 (Buy) and is expected to finish the current fiscal year with EPS growth of 550% on revenue growth of 35%. Next year, early estimates have that bottom line improving by another 25% on revenue growth of 20%. Cash flow growth is reaching 48% right now and shares have added over 44% in the past six months, even with the market pullbacks we have seen.

 

2. Twilio Inc. (TWLO - Free Report)

Twilio delivers a cloud-based communications platform that allows developers to send automated phone calls, text messages, and other chat functions. In other words, Twilio APIs can be easily implemented into other software and apps, and the firm is responsible for many of the live chat boxes and programmatic messages you likely receive these days.

TWLO is a Zacks Rank #2 (Buy) and an aggressive earnings growth pick right now, as estimates have its bottom line improving by 158% and 44%, respectively, in the next two full fiscal years. Revenue is projected to growth 57% and 32% in the current and next years as well. Moreover, current cash flow growth is hitting over 82%, and the firm certainly holds that “segment leader” position we mentioned earlier.

 

3. FireEye, Inc.

FireEye is a cybersecurity company with offerings tailored to enterprises and governments. The firm has quietly had one of the best years in the cybersecurity industry, tallying two consecutive profitable quarters that smashed earnings estimates to the tune of 200% and 100%. Still, the stock pulled back from its highs and into the correction zone.

This makes the value case a little interesting here. Most valuation metrics are still stretched, but FEYE’s P/S ratio of 4.3 is a steep discount to the industry’s average of 7.3. The P/S is a useful indicator for rising tech firms, as some investors prefer to look at revenue over things that can be hurt by growing pains, such as earnings.

This is still a remarkable growth stock, though. Sporting a “B” grade in the Growth category of our Style Scores system, FEYE is expected to finish the fiscal year with EPS growth of 150%. That is expected to continue at a rate of 142% in 2019. Moreover, FEYE has a long-term projected earnings growth rate of 16%.

 

 

Zacks' Top 10 Stocks for 2019

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