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Top 5 Technology Services Stocks for a Likely Year-End Rally
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The U.S. Business Services space has been benefitting from the strong fundamentals of the economy. Despite facing a record-high interest rate and extremely tight monetary control by the Fed, this sector has provided double-digit returns year to date.
Within this sector, the technology services industry is mature, with demand for services in good shape. Revenues, income and cash flows are anticipated to gradually reach the pre-pandemic levels, aiding most industry players to pay out stable dividends.
Growth in the technology services industry has increased the number of remote workers in the wake of the pandemic. In this era of digital transformation, enterprises are actively seeking a common ground between on-premise and cloud infrastructure that will enable them to provide flexible and easy-to-adopt hybrid solutions.
The business software industry is gaining from robust demand for multi-cloud-enabled software solutions, given the ongoing transition from legacy platforms to modern cloud-based infrastructure.
The industry players are incorporating artificial intelligence and tools like machine learning in their applications to make the same more dynamic and result-oriented. Elevated demand for enterprise software, which is ramping up productivity and improving the decision-making process, is a key catalyst.
Year to date, the Zacks Defined Business Services sector has provided a double-digit return of 12.7% and the Technology Services industry has rallied an impressive 33%. Since it ranks within the top half of Zacks Ranked Industries, we expect the technology services industry to outperform the market over the next 3 to 6 months.
Our Top Picks
We have narrowed our search to five technology services stocks that have popped year to date and have solid upside left. These stocks have seen positive earnings estimate revisions in the last 30 days. 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 year to date.
Image Source: Zacks Investment Research
Palantir Technologies Inc. (PLTR - Free Report) builds and deploys software platforms for the intelligence community in the United States to assist in counterterrorism investigations and operations. PLTR provides Palantir Gotham, a software platform that enables users to identify patterns hidden deep within datasets, ranging from signals intelligence sources to reports from confidential informants.
Zacks Rank #1 Palantir Technologies has an expected revenue and earnings growth rate of 16.5% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 8.7% over the last 30 days. The stock price of PLTR has jumped 232.4% year to date.
AppLovin Corp. (APP - Free Report) is engaged in building a software-based platform for mobile app developers to enhance the marketing and monetization of their apps in the United States and internationally. APP provides a technology platform that enables developers to market, monetize, analyze and publish their apps.
Zacks Rank #2 AppLovin has an expected revenue and earnings growth rate of 19.8% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 11.5% over the last 30 days. The stock price of APP has soared 275.1% year to date.
Duolingo Inc. (DUOL - Free Report) operates as a mobile learning platform in the United States, China, the United Kingdom, and internationally. DUOL offers courses in 40 different languages, including Spanish, English, French, German, Italian, Portuguese, Japanese, and Chinese through its Duolingo app. DUOL also provides a digital language proficiency assessment exam.
Zacks Rank #1 Duolingo has an expected revenue and earnings growth rate of 42.6% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the last seven days. The stock price of DUOL has climbed 204.3% year to date.
Futu Holdings Ltd. (FUTU - Free Report) is a technology company that offers a digitized brokerage platform. FUTU is primarily engaged in online brokerage services and margin financing services. It provides investing services through its digital platform, Futu NiuNiu, an integrated application accessible through any mobile device, tablet or desktop.
Zacks Rank #1 Futu Holdings has an expected revenue and earnings growth rate of 31% and 65.9%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.4% over the last 30 days. The stock price of FUTU has advanced 53.9% year to date.
Paymentus Holdings Inc. (PAY - Free Report) provides cloud-based bill payment technology and solutions. PAY offers electronic bill presentment and payment services, enterprise customer communication, and self-service revenue management to billers and financial institutions through a software-as-a-service technology platform. PAY serves utility, financial service, insurance, government, telecommunication, and healthcare industries.
Zacks Rank #1 Paymentus Holdings has an expected revenue and earnings growth rate of 22.3% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 17.6% over the last 30 days. The stock price of PAY has surged 110% year to date.
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Top 5 Technology Services Stocks for a Likely Year-End Rally
The U.S. Business Services space has been benefitting from the strong fundamentals of the economy. Despite facing a record-high interest rate and extremely tight monetary control by the Fed, this sector has provided double-digit returns year to date.
Within this sector, the technology services industry is mature, with demand for services in good shape. Revenues, income and cash flows are anticipated to gradually reach the pre-pandemic levels, aiding most industry players to pay out stable dividends.
Growth in the technology services industry has increased the number of remote workers in the wake of the pandemic. In this era of digital transformation, enterprises are actively seeking a common ground between on-premise and cloud infrastructure that will enable them to provide flexible and easy-to-adopt hybrid solutions.
The business software industry is gaining from robust demand for multi-cloud-enabled software solutions, given the ongoing transition from legacy platforms to modern cloud-based infrastructure.
The industry players are incorporating artificial intelligence and tools like machine learning in their applications to make the same more dynamic and result-oriented. Elevated demand for enterprise software, which is ramping up productivity and improving the decision-making process, is a key catalyst.
Year to date, the Zacks Defined Business Services sector has provided a double-digit return of 12.7% and the Technology Services industry has rallied an impressive 33%. Since it ranks within the top half of Zacks Ranked Industries, we expect the technology services industry to outperform the market over the next 3 to 6 months.
Our Top Picks
We have narrowed our search to five technology services stocks that have popped year to date and have solid upside left. These stocks have seen positive earnings estimate revisions in the last 30 days. 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 year to date.
Image Source: Zacks Investment Research
Palantir Technologies Inc. (PLTR - Free Report) builds and deploys software platforms for the intelligence community in the United States to assist in counterterrorism investigations and operations. PLTR provides Palantir Gotham, a software platform that enables users to identify patterns hidden deep within datasets, ranging from signals intelligence sources to reports from confidential informants.
Zacks Rank #1 Palantir Technologies has an expected revenue and earnings growth rate of 16.5% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 8.7% over the last 30 days. The stock price of PLTR has jumped 232.4% year to date.
AppLovin Corp. (APP - Free Report) is engaged in building a software-based platform for mobile app developers to enhance the marketing and monetization of their apps in the United States and internationally. APP provides a technology platform that enables developers to market, monetize, analyze and publish their apps.
Zacks Rank #2 AppLovin has an expected revenue and earnings growth rate of 19.8% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 11.5% over the last 30 days. The stock price of APP has soared 275.1% year to date.
Duolingo Inc. (DUOL - Free Report) operates as a mobile learning platform in the United States, China, the United Kingdom, and internationally. DUOL offers courses in 40 different languages, including Spanish, English, French, German, Italian, Portuguese, Japanese, and Chinese through its Duolingo app. DUOL also provides a digital language proficiency assessment exam.
Zacks Rank #1 Duolingo has an expected revenue and earnings growth rate of 42.6% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the last seven days. The stock price of DUOL has climbed 204.3% year to date.
Futu Holdings Ltd. (FUTU - Free Report) is a technology company that offers a digitized brokerage platform. FUTU is primarily engaged in online brokerage services and margin financing services. It provides investing services through its digital platform, Futu NiuNiu, an integrated application accessible through any mobile device, tablet or desktop.
Zacks Rank #1 Futu Holdings has an expected revenue and earnings growth rate of 31% and 65.9%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.4% over the last 30 days. The stock price of FUTU has advanced 53.9% year to date.
Paymentus Holdings Inc. (PAY - Free Report) provides cloud-based bill payment technology and solutions. PAY offers electronic bill presentment and payment services, enterprise customer communication, and self-service revenue management to billers and financial institutions through a software-as-a-service technology platform. PAY serves utility, financial service, insurance, government, telecommunication, and healthcare industries.
Zacks Rank #1 Paymentus Holdings has an expected revenue and earnings growth rate of 22.3% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 17.6% over the last 30 days. The stock price of PAY has surged 110% year to date.