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Nasdaq Set to Outperform 2019 on Digitization Push: 5 Picks
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The year 2020 is likely to remain coronavirus-stricken as the availability of a vaccine by this year-end looks unlikely. Let’s take a look at the performance of Nasdaq Composite year to date to trace any impact of the COVID-19 outbreak that resulted in more than two months in lockdowns of global economies, including the United States. Let's briefly discuss how Nasdaq Composite has remained pandemic-proof so far this year.
Impressive Performance by Nasdaq Composite
Nasdaq Composite ended 2019 providing 35.2% return — its best performance in six years. The tech-laden index started 2020 from where it ended last year. Barring a cornavirus-induced short bear market and market turmoil in September, the index maintained its north bound trajectory.
On Oct 12, the Nasdaq Composite gained 2.6% to close at 11,876.26, marking its best daily performance since Sep 9. Year to date, the tech-heavy index is up 32.4%. The index continued its upward journey since the beginning of this year to Feb 19, after which it succumbed to the coronavirus-led market mayhem and reached its trough at 6,631.42 on Mar 23.
Since Mar 24, the Nasdaq Composite witnessed an astonishing rally of 82.1% till Sep 2, when the index recorded its all-time high of 12,074.06. Thereafter, the tech-laden index halted its rally in September due to concerns related to the overvaluation of the technology sector. Notably, the index has regained momentum and restarted its northbound journey since the beginning of this month.
Technology Sector Drives Wall Street
The Technology Select Sector SPDR (XLK), one of the 11 broad sectors of the S&P 500 Index, is the best performer rallying 34.7% year to date. The technology sector lost around 10% during September's market turmoil, which made the sector's valuation more attractive.
Notably, last year, which recorded the best performance of Wall Street in six years, technology stocks drove the overall market. This year, the technology sector is again leading the recovery from the unprecedented health-hazard-led economic devastation.
Momentum Likely to Continue
Let's consider that the coronavirus related problems will stay in 2020 and no vaccine or a definite line of treatment will appear in the near future. The technology sector will to thrive. The outbreak of coronavirus globally has established digitization as the new normal for what is being touted as going to be a very long time.
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 to one another has opened 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.
Several financial market experts and watchers have also warned that tech stocks will lose investors' preference once the spread of the deadly virus is contained. the reopening of U.S. and global economies will make major stocks of other sectors more lucrative.
Yet, we must not forget that rising demand for high-tech products has been a silver lining 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 has boosted the overall technology sector.
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 five large-cap (market capital > $10 billion) Nasdaq stocks that popped more than 20% in the past three months. These stocks have strong growth potential and robust earnings estimate revisions for 2020, indicating the strength of their business model. 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 five picks in the past three months.
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). The Zacks Consensus Estimate for current-year earnings has improved 9.7% over the last 30 days. The stock price has soared 89.1% in the past three months.
Entegris Inc. (ENTG - Free Report) develops, manufactures, and supplies microcontamination control products, specialty chemicals, and advanced materials handling solutions for manufacturing processes in the semiconductor and other high-technology industries in North America, Taiwan, South Korea, Japan, China, Europe, and Southeast Asia. It operates through three segments: Specialty Chemicals and Engineered Materials (SCEM), Microcontamination Control (MC) and Advanced Materials Handling (AMH).
The Zacks Rank #2 company has an expected earnings growth rate of 23.8% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the last 30 days. The stock price has jumped 44.1% in the past three months.
Copart Inc. (CPRT - Free Report) provides online auction and a wide range of remarketing services to process and sell salvage and clean title vehicles. The Zacks Rank #1 company has an expected earnings growth rate of 12.1% for the current year (ending July 2021). The Zacks Consensus Estimate for the current year has improved 1.1% over the last 30 days. The stock price has climbed 40.2% in the past three months.
Insulet Corp. (PODD - Free Report) is a leading developer, manufacturer and marketer of the Omnipod Insulin Management System. The Zacks Rank #1 company has an expected earnings growth rate of 73.7% for the current year. The Zacks Consensus Estimate for the current year has improved 17.9% over the last 60 days. The stock price has advanced 25.4% in the past three months.
Intuit Inc. (INTU - Free Report) provides financial management and compliance products and services for small businesses, consumers, self-employed and accounting professionals. The Zacks Rank #2 company has an expected earnings growth rate of 8.7% for the current year (ending July 2021). The Zacks Consensus Estimate for the current year has improved 0.1% over the last 7 days. The stock price has surged 23% in the past three months.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Nasdaq Set to Outperform 2019 on Digitization Push: 5 Picks
The year 2020 is likely to remain coronavirus-stricken as the availability of a vaccine by this year-end looks unlikely. Let’s take a look at the performance of Nasdaq Composite year to date to trace any impact of the COVID-19 outbreak that resulted in more than two months in lockdowns of global economies, including the United States. Let's briefly discuss how Nasdaq Composite has remained pandemic-proof so far this year.
Impressive Performance by Nasdaq Composite
Nasdaq Composite ended 2019 providing 35.2% return — its best performance in six years. The tech-laden index started 2020 from where it ended last year. Barring a cornavirus-induced short bear market and market turmoil in September, the index maintained its north bound trajectory.
On Oct 12, the Nasdaq Composite gained 2.6% to close at 11,876.26, marking its best daily performance since Sep 9. Year to date, the tech-heavy index is up 32.4%. The index continued its upward journey since the beginning of this year to Feb 19, after which it succumbed to the coronavirus-led market mayhem and reached its trough at 6,631.42 on Mar 23.
Since Mar 24, the Nasdaq Composite witnessed an astonishing rally of 82.1% till Sep 2, when the index recorded its all-time high of 12,074.06. Thereafter, the tech-laden index halted its rally in September due to concerns related to the overvaluation of the technology sector. Notably, the index has regained momentum and restarted its northbound journey since the beginning of this month.
Technology Sector Drives Wall Street
The Technology Select Sector SPDR (XLK), one of the 11 broad sectors of the S&P 500 Index, is the best performer rallying 34.7% year to date. The technology sector lost around 10% during September's market turmoil, which made the sector's valuation more attractive.
Notably, last year, which recorded the best performance of Wall Street in six years, technology stocks drove the overall market. This year, the technology sector is again leading the recovery from the unprecedented health-hazard-led economic devastation.
Momentum Likely to Continue
Let's consider that the coronavirus related problems will stay in 2020 and no vaccine or a definite line of treatment will appear in the near future. The technology sector will to thrive. The outbreak of coronavirus globally has established digitization as the new normal for what is being touted as going to be a very long time.
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 to one another has opened 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.
Several financial market experts and watchers have also warned that tech stocks will lose investors' preference once the spread of the deadly virus is contained. the reopening of U.S. and global economies will make major stocks of other sectors more lucrative.
Yet, we must not forget that rising demand for high-tech products has been a silver lining 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 has boosted the overall technology sector.
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 five large-cap (market capital > $10 billion) Nasdaq stocks that popped more than 20% in the past three months. These stocks have strong growth potential and robust earnings estimate revisions for 2020, indicating the strength of their business model. 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 five picks in the past three months.
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). The Zacks Consensus Estimate for current-year earnings has improved 9.7% over the last 30 days. The stock price has soared 89.1% in the past three months.
Entegris Inc. (ENTG - Free Report) develops, manufactures, and supplies microcontamination control products, specialty chemicals, and advanced materials handling solutions for manufacturing processes in the semiconductor and other high-technology industries in North America, Taiwan, South Korea, Japan, China, Europe, and Southeast Asia. It operates through three segments: Specialty Chemicals and Engineered Materials (SCEM), Microcontamination Control (MC) and Advanced Materials Handling (AMH).
The Zacks Rank #2 company has an expected earnings growth rate of 23.8% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the last 30 days. The stock price has jumped 44.1% in the past three months.
Copart Inc. (CPRT - Free Report) provides online auction and a wide range of remarketing services to process and sell salvage and clean title vehicles. The Zacks Rank #1 company has an expected earnings growth rate of 12.1% for the current year (ending July 2021). The Zacks Consensus Estimate for the current year has improved 1.1% over the last 30 days. The stock price has climbed 40.2% in the past three months.
Insulet Corp. (PODD - Free Report) is a leading developer, manufacturer and marketer of the Omnipod Insulin Management System. The Zacks Rank #1 company has an expected earnings growth rate of 73.7% for the current year. The Zacks Consensus Estimate for the current year has improved 17.9% over the last 60 days. The stock price has advanced 25.4% in the past three months.
Intuit Inc. (INTU - Free Report) provides financial management and compliance products and services for small businesses, consumers, self-employed and accounting professionals. The Zacks Rank #2 company has an expected earnings growth rate of 8.7% for the current year (ending July 2021). The Zacks Consensus Estimate for the current year has improved 0.1% over the last 7 days. The stock price has surged 23% in the past three months.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>