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The technology sector had a terrific first-half 2019 despite the U.S.-China trade woes. Notably, the Technology Select Sector SPDR (XLK) has returned 25.9% year to date, outperforming the S&P 500’s rally of 16%.
Tech’s outperformance can be attributed to rapid adoption of cloud computing and strong demand for AI-based solutions. The secular growth trend in data is helping technology companies infuse machine and deep learning into their solutions.
Additionally, increasing allegiance to online gaming, music and video-streaming services is a major growth driver. Improvement in Internet speed and penetration globally deserves a special mention in this regard.
Further, proliferation of IoT that is facilitating connected devices and smart homes is a key catalyst. The accelerated deployment of 5G technology and faster-than-expected growth in robotics set the stage for more development.
Trade Talk Resumption Bodes Well
Moreover, a probable resumption of trade talks between the United States and China, post the G20 meeting between U.S. President Donald Trump and China President Xi Jingping, bodes well for the sector.
The temporary halt on imposing tariff on an additional $300 billion is expected to benefit tech companies like Apple.
Trump also eased restrictions on Chinese telecom giant Huawei to buy some additional U.S. products. The decision bodes well for Google and chip makers like Micron, Broadcom, Intel and Xilinx.
Notably, tech-heavy Nasdaq has gained 20.1% on a year-to-date basis.
Picking the Winning Stocks
The aforesaid factors are expected to benefit the tech sector in the second half of 2019.
Here, with the help of the Zacks Stock Screener, we pick five tech stocks that either flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). Our research shows that stocks with Zacks Rank #1 or 2 and VGM Score of A or B offer good investment opportunities. All the stocks have a market cap of more than $1 billion.
Further, these stocks have outperformed the S&P 500 on a year-to-date basis.
Year-to-date Price Performance
Top Picks
Hawthorne, CA-based OSI Systems (OSIS - Free Report) currently sports a Zacks Rank #1 and a VGM Score of A. The company has a market cap of $2.04 billion and its shares have returned 53.6% on a year-to-date basis.
OSI outpaced the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 24.22%.
The Zacks Consensus Estimate for fiscal 2019 has remained steady at $4.22 over the last 60 days.
The company has a market cap of $6.38 billion and has returned 21.2% year to date.
Ciena outperformed the Zacks Consensus Estimate in the last four quarters, delivering average positive surprise of 18.83%.
The Zacks Consensus Estimate for its ongoing year’s earnings moved up 9.9% to $1.99 in 60 days’ time.
Santa Rosa, CA-based Keysight Technologies (KEYS - Free Report) has average positive earnings surprise of 16.11% for the preceding four quarters. The stock currently carries a Zacks Rank #2 and a VGM Score of A.
Shares of Keysight, which has a market cap of $16.90 billion, has returned 44.6% year to date.
The Zacks Consensus Estimate for its fiscal 2019 earnings has moved up 8.2% to $4.23 in the past 60 days.
Irvine, CA-based Alteryx currently has a Zacks Rank #2 and a VGM Score of B. Shares have returned 83.4% on a year-to-date basis.
Alteryx has a market cap of $6.82 billion. The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average positive surprise being 22.9%.
The Zacks Consensus Estimate for fiscal 2019 stayed at 43 cents over the past 60 days.
Currently, Mountain View, CA-based Intuit (INTU - Free Report) carries a Zacks Rank #2 and a VGM Score of B. The company has a market cap of $67.75 billion.
Shares have returned 32.7% on a year-to-date basis.
Intuit recorded average positive earnings surprise of 55.51% over the preceding four quarters. Moreover, the consensus mark for fiscal 2019 has increased 2% to $6.70 in 60 days’ time.
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
5 Top-Ranked Tech Stocks to Buy in 2H19
The technology sector had a terrific first-half 2019 despite the U.S.-China trade woes. Notably, the Technology Select Sector SPDR (XLK) has returned 25.9% year to date, outperforming the S&P 500’s rally of 16%.
Tech’s outperformance can be attributed to rapid adoption of cloud computing and strong demand for AI-based solutions. The secular growth trend in data is helping technology companies infuse machine and deep learning into their solutions.
Additionally, increasing allegiance to online gaming, music and video-streaming services is a major growth driver. Improvement in Internet speed and penetration globally deserves a special mention in this regard.
Further, proliferation of IoT that is facilitating connected devices and smart homes is a key catalyst. The accelerated deployment of 5G technology and faster-than-expected growth in robotics set the stage for more development.
Trade Talk Resumption Bodes Well
Moreover, a probable resumption of trade talks between the United States and China, post the G20 meeting between U.S. President Donald Trump and China President Xi Jingping, bodes well for the sector.
The temporary halt on imposing tariff on an additional $300 billion is expected to benefit tech companies like Apple.
Trump also eased restrictions on Chinese telecom giant Huawei to buy some additional U.S. products. The decision bodes well for Google and chip makers like Micron, Broadcom, Intel and Xilinx.
Notably, tech-heavy Nasdaq has gained 20.1% on a year-to-date basis.
Picking the Winning Stocks
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The aforesaid factors are expected to benefit the tech sector in the second half of 2019.
Here, with the help of the Zacks Stock Screener, we pick five tech stocks that either flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). Our research shows that stocks with Zacks Rank #1 or 2 and VGM Score of A or B offer good investment opportunities. All the stocks have a market cap of more than $1 billion.
Further, these stocks have outperformed the S&P 500 on a year-to-date basis.
Year-to-date Price Performance
Top Picks
Hawthorne, CA-based OSI Systems (OSIS - Free Report) currently sports a Zacks Rank #1 and a VGM Score of A. The company has a market cap of $2.04 billion and its shares have returned 53.6% on a year-to-date basis.
OSI outpaced the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 24.22%.
The Zacks Consensus Estimate for fiscal 2019 has remained steady at $4.22 over the last 60 days.
Hanover, MD-based Ciena Corporation (CIEN - Free Report) also flaunts a VGM Score of A and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company has a market cap of $6.38 billion and has returned 21.2% year to date.
Ciena outperformed the Zacks Consensus Estimate in the last four quarters, delivering average positive surprise of 18.83%.
The Zacks Consensus Estimate for its ongoing year’s earnings moved up 9.9% to $1.99 in 60 days’ time.
Santa Rosa, CA-based Keysight Technologies (KEYS - Free Report) has average positive earnings surprise of 16.11% for the preceding four quarters. The stock currently carries a Zacks Rank #2 and a VGM Score of A.
Shares of Keysight, which has a market cap of $16.90 billion, has returned 44.6% year to date.
The Zacks Consensus Estimate for its fiscal 2019 earnings has moved up 8.2% to $4.23 in the past 60 days.
Irvine, CA-based Alteryx currently has a Zacks Rank #2 and a VGM Score of B. Shares have returned 83.4% on a year-to-date basis.
Alteryx has a market cap of $6.82 billion. The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average positive surprise being 22.9%.
The Zacks Consensus Estimate for fiscal 2019 stayed at 43 cents over the past 60 days.
Currently, Mountain View, CA-based Intuit (INTU - Free Report) carries a Zacks Rank #2 and a VGM Score of B. The company has a market cap of $67.75 billion.
Shares have returned 32.7% on a year-to-date basis.
Intuit recorded average positive earnings surprise of 55.51% over the preceding four quarters. Moreover, the consensus mark for fiscal 2019 has increased 2% to $6.70 in 60 days’ time.
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 >>