We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
4 Top Tech Stocks to Buy on Signs of Easing Inflation
Read MoreHide Full Article
Consumer prices in the United States have now started to show signs of easing after hitting a 40-year high last summer. Per the U.S. Bureau of Labor Statistics, the consumer price index (CPI) increased by 6.5% on a year-over-year basis in December, less than November’s 7.1%, and registered the smallest 12-month jump since October 2021.
The annual rate of increase of CPI has now declined for the sixth month in a row. To put things into perspective, November’s 7.1% annual increase in CPI was less than October’s year-over-year increase of 7.7%.
In June, the CPI had surged by 9.1% year over year. What’s more, on a month-over-month basis, the CPI declined by 0.1% in December and notched its first drop since the commencement of the coronavirus pandemic in 2020.
The cost of living eased primarily due to a fall in gasoline prices. Since last summer, gas prices continued to plummet, and gave households a major relief. Nevertheless, a slowdown in inflation gave confidence that the Federal Reserve may curtail the pace of interest rate increases this year, and not push the economy into a recession. Lest we forget, the Fed had unleashed a barrage of rate hikes last year to bring down sky-high inflation.
The central bank had increased interest rates by 50 basis points last month, and that followed a three-quarter point rate hike four times in a row. But here and now as inflation slows again, the fed-funds futures shows that there is a 96.2% chance of interest rates rising by only 25 basis points in February, according to the CME FedWatch Tool.
Meanwhile, the possibility of slower rate increases bodes well for growth-oriented tech stocks. This is because higher interest rates do impact tech stocks’ future cash inflows, reduce their reinvestments into innovation and curb their growth prospects.
The beleaguered tech stocks, by the way, from almost all areas including e-commerce, payment sections, and cloud computing, to name a few, rocketed higher on Jan 12 after CPI showed inflation easing. Similarly, the tech-laden Nasdaq, which had a miserable 2022, was able to carve out a fourth straight winning streak yesterday.
With tech stocks roaring back to life, it’s prudent for investors to place bets on solid tech companies such as Axcelis Technologies, Inc. (ACLS - Free Report) , Decisionpoint Systems, Inc. (DPSI - Free Report) , Paycom Software, Inc. (PAYC - Free Report) and Zscaler, Inc. (ZS - Free Report) for superb returns.
These stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy), and a VGM Score of A or B. Here V stands for Value, G for Growth, and M for Momentum, and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axcelis Technologies is a leading producer of ion implantation equipment used in the fabrication of semiconductors. Presently, Axcelis Technologies has a Zacks Rank #1 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up nearly 4 % over the past 60 days. ACLS’ expected earnings growth rate for the current year is 73.3%.
Decisionpoint Systems is engaged in providing enterprise mobility and radio frequency identification technologies. Currently, Decisionpoint Systems has a Zacks Rank #1 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 50% over the past 60 days. DPSI’s expected earnings growth rate for the current year is 500%.
Paycom Software is a provider of cloud-based human capital management software as a service solution for integrated software for both employee records and talent management processes. Presently, Paycom Software has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 0.2% over the past 60 days. PAYC’s expected earnings growth rate for the current year is 31.3%.
Zscaler is one of the world’s leading providers of cloud-based security solutions. Currently, Zscaler has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 5.1% over the past 60 days. ZS’ expected earnings growth rate for the current year is 79.7%.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
4 Top Tech Stocks to Buy on Signs of Easing Inflation
Consumer prices in the United States have now started to show signs of easing after hitting a 40-year high last summer. Per the U.S. Bureau of Labor Statistics, the consumer price index (CPI) increased by 6.5% on a year-over-year basis in December, less than November’s 7.1%, and registered the smallest 12-month jump since October 2021.
The annual rate of increase of CPI has now declined for the sixth month in a row. To put things into perspective, November’s 7.1% annual increase in CPI was less than October’s year-over-year increase of 7.7%.
In June, the CPI had surged by 9.1% year over year. What’s more, on a month-over-month basis, the CPI declined by 0.1% in December and notched its first drop since the commencement of the coronavirus pandemic in 2020.
The cost of living eased primarily due to a fall in gasoline prices. Since last summer, gas prices continued to plummet, and gave households a major relief. Nevertheless, a slowdown in inflation gave confidence that the Federal Reserve may curtail the pace of interest rate increases this year, and not push the economy into a recession. Lest we forget, the Fed had unleashed a barrage of rate hikes last year to bring down sky-high inflation.
The central bank had increased interest rates by 50 basis points last month, and that followed a three-quarter point rate hike four times in a row. But here and now as inflation slows again, the fed-funds futures shows that there is a 96.2% chance of interest rates rising by only 25 basis points in February, according to the CME FedWatch Tool.
Meanwhile, the possibility of slower rate increases bodes well for growth-oriented tech stocks. This is because higher interest rates do impact tech stocks’ future cash inflows, reduce their reinvestments into innovation and curb their growth prospects.
The beleaguered tech stocks, by the way, from almost all areas including e-commerce, payment sections, and cloud computing, to name a few, rocketed higher on Jan 12 after CPI showed inflation easing. Similarly, the tech-laden Nasdaq, which had a miserable 2022, was able to carve out a fourth straight winning streak yesterday.
With tech stocks roaring back to life, it’s prudent for investors to place bets on solid tech companies such as Axcelis Technologies, Inc. (ACLS - Free Report) , Decisionpoint Systems, Inc. (DPSI - Free Report) , Paycom Software, Inc. (PAYC - Free Report) and Zscaler, Inc. (ZS - Free Report) for superb returns.
These stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy), and a VGM Score of A or B. Here V stands for Value, G for Growth, and M for Momentum, and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axcelis Technologies is a leading producer of ion implantation equipment used in the fabrication of semiconductors. Presently, Axcelis Technologies has a Zacks Rank #1 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up nearly 4 % over the past 60 days. ACLS’ expected earnings growth rate for the current year is 73.3%.
Decisionpoint Systems is engaged in providing enterprise mobility and radio frequency identification technologies. Currently, Decisionpoint Systems has a Zacks Rank #1 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 50% over the past 60 days. DPSI’s expected earnings growth rate for the current year is 500%.
Paycom Software is a provider of cloud-based human capital management software as a service solution for integrated software for both employee records and talent management processes. Presently, Paycom Software has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 0.2% over the past 60 days. PAYC’s expected earnings growth rate for the current year is 31.3%.
Zscaler is one of the world’s leading providers of cloud-based security solutions. Currently, Zscaler has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 5.1% over the past 60 days. ZS’ expected earnings growth rate for the current year is 79.7%.