Investors love the technology sector, and for understandable reasons.
For starters, companies within the realm often operate in rapidly evolving industries with rising demand, allowing them to generate significant top and bottom line growth.
In addition, the sector is known for disrupting traditional business models and creating new markets, leading to substantial returns for investors who can ‘get in early.’
Still, the increased volatility many stocks in the sector carry spooks some investors, perhaps steering them away altogether. However, by targeting low-beta technology stocks, we can limit volatility.
While low-beta tech stocks may not experience the same rapid growth as higher-beta technology stocks, they can provide steady, long-term growth potential due to their stability.
Three low-beta tech stocks – NetEase (NTES - Free Report) , Microsoft (MSFT - Free Report) , and VMware – could all be considerations for those seeking exposure to the sector paired with a more conservative approach.
Below is a chart illustrating the performance of all three in 2023, with the S&P 500 blended in as a benchmark.
Let’s take a closer look at each one.
NetEase
NetEase is an Internet technology company engaged in the development of applications, services, and other technologies for the Internet in China. Analysts have increased their earnings estimates across nearly all timeframes, helping land the stock into a favorable Zacks Rank #2 (Buy).
NetEase shares provide an income stream paired with exposure to technology; currently, NTES shares yield 1.2% annually, nicely above the Zacks Computer and Technology sector average of 0.8%.
Impressively, the company has grown its payout by more than 30% just over the last five years.
Microsoft
Microsoft shares have been hot in 2023 as investors flock to large-cap technology companies with established operations. Currently, the technology titan is a Zacks Rank #3 (Hold).
The technology titan posted mixed results in its latest release, falling short of revenue expectations modestly but delivering a 2.2% bottom line beat. The market appreciated the results, with MSFT shares climbing nicely post-earnings.
Microsoft also rewards its shareholders via its annual dividend, currently yielding a sector-beating 1%. And just over the last year, the company’s payout has grown by an impressive 10%.
VMWare
VMware is the pioneer in developing core x86 server virtualization software solutions with the goal of helping businesses in their digital transformation journey.
The company posted better-than-expected results in its latest release, exceeding the Zacks Consensus EPS Estimate by more than 7%. Quarterly revenue totaled $3.7 billion, 2% ahead of expectations and improving 5% year-over-year.
In addition, VMW shares are cheap on a relative basis, with the current 17.2X forward earnings multiple sitting nowhere near the 31.5X five-year median or Zacks sector average.
Bottom Line
Everybody loves tech stocks for their breakneck growth. Still, some may be intimidated by the increased volatility the sector has become known for, perhaps steering them away.
However, targeting low-beta technology stocks, such as – NetEase (NTES - Free Report) , Microsoft (MSFT - Free Report) , and VMware – provide exposure to the sector paired with a more conservative approach.
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The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
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Investors love the technology sector, and for understandable reasons.
For starters, companies within the realm often operate in rapidly evolving industries with rising demand, allowing them to generate significant top and bottom line growth.
In addition, the sector is known for disrupting traditional business models and creating new markets, leading to substantial returns for investors who can ‘get in early.’
Still, the increased volatility many stocks in the sector carry spooks some investors, perhaps steering them away altogether. However, by targeting low-beta technology stocks, we can limit volatility.
While low-beta tech stocks may not experience the same rapid growth as higher-beta technology stocks, they can provide steady, long-term growth potential due to their stability.
Three low-beta tech stocks – NetEase (NTES - Free Report) , Microsoft (MSFT - Free Report) , and VMware – could all be considerations for those seeking exposure to the sector paired with a more conservative approach.
Below is a chart illustrating the performance of all three in 2023, with the S&P 500 blended in as a benchmark.
Let’s take a closer look at each one.
NetEase
NetEase is an Internet technology company engaged in the development of applications, services, and other technologies for the Internet in China. Analysts have increased their earnings estimates across nearly all timeframes, helping land the stock into a favorable Zacks Rank #2 (Buy).
NetEase shares provide an income stream paired with exposure to technology; currently, NTES shares yield 1.2% annually, nicely above the Zacks Computer and Technology sector average of 0.8%.
Impressively, the company has grown its payout by more than 30% just over the last five years.
Microsoft
Microsoft shares have been hot in 2023 as investors flock to large-cap technology companies with established operations. Currently, the technology titan is a Zacks Rank #3 (Hold).
The technology titan posted mixed results in its latest release, falling short of revenue expectations modestly but delivering a 2.2% bottom line beat. The market appreciated the results, with MSFT shares climbing nicely post-earnings.
Microsoft also rewards its shareholders via its annual dividend, currently yielding a sector-beating 1%. And just over the last year, the company’s payout has grown by an impressive 10%.
VMWare
VMware is the pioneer in developing core x86 server virtualization software solutions with the goal of helping businesses in their digital transformation journey.
The company posted better-than-expected results in its latest release, exceeding the Zacks Consensus EPS Estimate by more than 7%. Quarterly revenue totaled $3.7 billion, 2% ahead of expectations and improving 5% year-over-year.
In addition, VMW shares are cheap on a relative basis, with the current 17.2X forward earnings multiple sitting nowhere near the 31.5X five-year median or Zacks sector average.
Bottom Line
Everybody loves tech stocks for their breakneck growth. Still, some may be intimidated by the increased volatility the sector has become known for, perhaps steering them away.
However, targeting low-beta technology stocks, such as – NetEase (NTES - Free Report) , Microsoft (MSFT - Free Report) , and VMware – provide exposure to the sector paired with a more conservative approach.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How To Profit From Trillions On Spending For Infrastructure >>
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