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6 Must-Buy Tech Giants at Deep Discount Amid Recent Turmoil

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Wall Street rebounded on Sep 9, after facing a terrible pull down in the last three trading days, which were the worst-performing days in a row since April. This happened after markets opened this month on a strong note, continuing the momentum of the last five months' rally. Historically, September is known as the worst-performing month in Wall Street. Market participants started panicking that the coronavirus-defying rally would terminate this month.

Technology Sector Leads Market Mayhem

The technology sector pulled down the overall market after being the predominant driver for the impressive showing over the last five months. It was technology that had helped Wall Street to exit a coronavirus-induced short bear market and form a new bull market. However, on the due course of market's V-shaped recovery from its recent trough on Mar 23, technology stocks got overvalued, as stated by many financial experts.

Within the S&P 500 Index, the technology sector plunged 12.6% from Sep 3 to Sep 8. The tech-heavy Nasdaq Composite plummeted 10.3% and entered into correction territory, marking the index's worst-ever performance in three consecutive days.

However, the recent turmoil in this sector has resulted in a handful of technology stocks with a favorable Zacks Rank trading at a deep discount to their 52-week high price that they recorded within the past month. At this stage, investment in these stocks likely to be prudent.

Tech Momentum to Continue

We must not forget that the growing demand for high-tech superior products has been a catalyst for the sector in an otherwise tough environment. A series of breakthroughs in 5G wireless network, cloud computing, predictive analysis, AI, self-driving vehicles, digital personal assistants and IoT, have boosted the overall space.

Let's consider that the coronavirus-related problems will stay in 2020 and no vaccine or a definite line of treatment appears in the near future. The technology sector would become one of the biggest beneficiaries being the new normal for communication.

As social distancing is keeping near and dear ones away, people, especially the citizens of emerging and less-developed countries, are reaching out more than ever with smartphones, tablets or notebooks.

The thrust for digitization is likely to come from two sides. Individuals who enjoy immense benefits of digital platforms are less likely to go back to their old habits. The new way of connecting has opened up a new world for them. Also, business entities will be more interested in cloud computing, automation and artificial intelligence to establish smooth supply chain systems.  

Therefore, coronavirus or no coronavirus, the north bound journey of the technology sector is likely to continue.

Our Top Picks  

We have narrowed down our search to six technology stocks based on four criteria. First, we have selected tech behemoths (market capital > $50 billion) as these companies have a  well-established business model and strong brand value. Second, these stocks have strong short-term and long-term (3-5 years) growth potential.

Third, all these stocks witnessed robust earnings estimate revisions in the last 7 to 60 days, indicating solid business prospects. Finally, each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows the price performance of our six picks in the past month.

 

salesforce.com.inc. (CRM - Free Report) is the leading provider of on-demand Customer Relationship Management software, which enables organizations to better manage critical operations such as sales force automation, customer service and support, marketing automation, document management, analytics and custom application development.

The Zacks Rank #1 company has an expected earnings growth rate of 25.1% for the current year (ending January 2021). Its long-term growth rate is 18% compared with 8.8% of the S&P 500 Index. The Zacks Consensus Estimate for the current year has improved by 25.9% over the last 30 days. The stock is currently trading at a 13.4% discount to its 52-week high price of $284.5 recorded on Sep 2.  

Zoom Video Communications Inc. (ZM - Free Report) provides a video-first communications platform worldwide. Demand for its remote work platform and solutions is expected to remain robust as some form of social distancing will be required until a vaccine or any effective treatment for coronavirus is developed.

The Zacks Rank #1 company has an expected earnings growth rate of more than 100% for the current year (ending January 2021). Its long-term growth rate is 25% compared with 8.8% of the S&P 500 Index. The Zacks Consensus Estimate for current-year earnings has improved by 79.4% over the last 30 days. The stock is currently trading at a 22.7% discount to its 52-week high price of $478 recorded on Sep 1.  

Apple Inc. (AAPL - Free Report) designs, manufactures and sells iPhone, iPad, iPod, Apple TV, Mac personal computers, Apple Watch, HomePod and AirPods. These devices are powered by the iOS, macOS, watchOS and tvOS operating systems.

The Zacks Rank #2 company has an expected earnings growth rate of 8.8% for the current year (ending September 2020). Its long-term growth rate is 10.7% compared with 8.8% of the S&P 500 Index. The Zacks Consensus Estimate for the current year has improved 4.9% over the last 60 days. The stock is currently trading at a 17.6% discount to its 52-week high price of $137.98 recorded on Sep 2.  

Facebook Inc. (FB - Free Report) is the world’s largest social media platform. Its portfolio offering evolved from a single Facebook app to multiple apps like photo and video sharing app Instagram and WhatsApp messaging app.

The Zacks Rank #2 company has an expected earnings growth rate of 25.4% for the current year. Its long-term growth rate is 18.9% compared with 8.8% of the S&P 500 Index. The Zacks Consensus Estimate for current-year earnings has improved by 11.2% over the last 60 days. The stock is currently trading at a 20.8% discount to its 52-week high price of $1,146.91 recorded on Aug 16.

Applied Materials Inc. (AMAT - Free Report) provides manufacturing equipment, services and software to the semiconductor, display and related industries. Moreover, it has been gaining considerable success in expanding beyond semiconductors. Rapid growth in large-format TVs has opened up opportunities for Applied Materials.

The Zacks Rank #2 company has an expected earnings growth rate of 33.9% for the current year (ending October 2020). Its long-term growth rate is 14.1% compared with 8.8% of the S&P 500 Index. The Zacks Consensus Estimate for current-year earnings has improved by 6.8% over the last 30 days. The stock is currently trading at a 26.6% discount to its 52-week high price of $69.9 recorded on Aug 14.

Shopify Inc. (SHOP - Free Report) provides a cloud-based multi-channel commerce platform for small and medium-sized businesses in Canada, the United States, the United Kingdom, Australia and internationally.

The Zacks Rank #2 company has an expected earnings growth rate of more than 100% for the current year. Its long-term growth rate is 32.5% compared with 8.8% of the S&P 500 Index. The Zacks Consensus Estimate for current-year earnings has improved by 4.5% over the last 7 days. The stock is currently trading at a 20.8% discount to its 52-week high price of $1,146.91 recorded on Sep 1.  

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>