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Technology stocks, particularly big tech stocks, haven’t been very popular this year, and for good reason. The tech sector has lost 26.4% of its value year to date versus the S&P 500, which lost 15.7%.
Investors have been piling into energy stocks perhaps to keep up to speed with the havoc inflation is creating within their portfolios. And also, because it’s common knowledge that everyone did their tech shopping during the pandemic and it’s now time to shop for partying, for entertainment, travel and such things.
But not all tech stocks are built the same. Some are continuing to grow despite the odds. That’s why we picked them for discussion today.
Of course, it helps that digital advertising solutions provider Perion Network (PERI - Free Report) , integrated manufacturing solutions provider Sanmina (SANM - Free Report) , the leading semiconducctor foundry Taiwan Semiconductor Manufacturing (TSM - Free Report) and broad-based technology distributor WESCO International (WCC - Free Report) also carry a Zacks Rank #1, because that shows they’ve recently done well and analysts have resultantly, seen fit to raise their estimates on them. The numbers prove the point.
Perion beat analyst estimates by 24.4%, with its 2022 and 2023 estimates moving up a respective 6.3% and 20.2%.
Sanmina for its part beat by 13.0%, and the last 30 days saw a 7.8% increase in its 2022 estimate, as well as a 6.3% increase in its 2023 estimate.
WESCO beat by 8.0%. The Zacks Consensus Estimate for 2022 and 2023 increased a respective 6.6% and 5.1%.
Taiwan Semiconductor beat by 3.3% with analysts holding their 2022 estimates steady while allowing the 2023 estimate to drop a penny.
All four belong within the top 16% of Zacks-classified industries, which further increases their chances of outperformance, according to our analysis of historical data.
Another reason to like these stocks is their long-term growth potential.
Analysts currently expect Perion to grow at a rate of 25.00% over the long term.
Taiwan Semiconductor is expected to grow 24.15%.
Analysts estimate that Sanmina can grow 12.00% in the long term.
WESCO is expected to grow 10%.
In the current environment, when there is quite a bit of talk about a recession, if not right now then at least over the next 12-16 months, it makes sense to choose stocks that analysts expect will grow strongly in the long term.
And finally, it’s a matter of valuation. Now as much as ever, it’s important that we pick stocks that aren’t too expensive. With these four stocks, there’s no chance of doing that:
Perion is valued at 11.23X forward twelve months’ earnings, close to its lowest point of 10.36X over the past year. It is also much cheaper than the S&P 500’s 17.39X.
Sanmina’s valuation of 11.49X earnings is close to its median value of 10.22X over the past year. Of course, this trails the S&P by a mile.
Taiwan Semiconductor is currently valued at just 12.86X forward earnings, which is just above its lowest point of 12.38X over the past year.
In the case of WESCO, the stock’s current valuation is 8.32X, which is between its lowest and median points of 6.63X and 11.11X.
One-Month Price Performance
Image Source: Zacks Investment Research
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What Do These Tech Stocks All Have in Common?
Technology stocks, particularly big tech stocks, haven’t been very popular this year, and for good reason. The tech sector has lost 26.4% of its value year to date versus the S&P 500, which lost 15.7%.
Investors have been piling into energy stocks perhaps to keep up to speed with the havoc inflation is creating within their portfolios. And also, because it’s common knowledge that everyone did their tech shopping during the pandemic and it’s now time to shop for partying, for entertainment, travel and such things.
But not all tech stocks are built the same. Some are continuing to grow despite the odds. That’s why we picked them for discussion today.
Of course, it helps that digital advertising solutions provider Perion Network (PERI - Free Report) , integrated manufacturing solutions provider Sanmina (SANM - Free Report) , the leading semiconducctor foundry Taiwan Semiconductor Manufacturing (TSM - Free Report) and broad-based technology distributor WESCO International (WCC - Free Report) also carry a Zacks Rank #1, because that shows they’ve recently done well and analysts have resultantly, seen fit to raise their estimates on them. The numbers prove the point.
Perion beat analyst estimates by 24.4%, with its 2022 and 2023 estimates moving up a respective 6.3% and 20.2%.
Sanmina for its part beat by 13.0%, and the last 30 days saw a 7.8% increase in its 2022 estimate, as well as a 6.3% increase in its 2023 estimate.
WESCO beat by 8.0%. The Zacks Consensus Estimate for 2022 and 2023 increased a respective 6.6% and 5.1%.
Taiwan Semiconductor beat by 3.3% with analysts holding their 2022 estimates steady while allowing the 2023 estimate to drop a penny.
All four belong within the top 16% of Zacks-classified industries, which further increases their chances of outperformance, according to our analysis of historical data.
Another reason to like these stocks is their long-term growth potential.
Analysts currently expect Perion to grow at a rate of 25.00% over the long term.
Taiwan Semiconductor is expected to grow 24.15%.
Analysts estimate that Sanmina can grow 12.00% in the long term.
WESCO is expected to grow 10%.
In the current environment, when there is quite a bit of talk about a recession, if not right now then at least over the next 12-16 months, it makes sense to choose stocks that analysts expect will grow strongly in the long term.
And finally, it’s a matter of valuation. Now as much as ever, it’s important that we pick stocks that aren’t too expensive. With these four stocks, there’s no chance of doing that:
Perion is valued at 11.23X forward twelve months’ earnings, close to its lowest point of 10.36X over the past year. It is also much cheaper than the S&P 500’s 17.39X.
Sanmina’s valuation of 11.49X earnings is close to its median value of 10.22X over the past year. Of course, this trails the S&P by a mile.
Taiwan Semiconductor is currently valued at just 12.86X forward earnings, which is just above its lowest point of 12.38X over the past year.
In the case of WESCO, the stock’s current valuation is 8.32X, which is between its lowest and median points of 6.63X and 11.11X.
One-Month Price Performance
Image Source: Zacks Investment Research