As the last of the Q2 earnings reports start to trickle in, it’s time for investors to reflect on the most impressive reports of the season. One of the best ways to make quick profits is to ride a stock’s post-earnings momentum, and that means investors will want to focus on companies that recently surpassed expectations.
It should therefore come as no surprise that our attention would naturally turn to the technology sector. Tech companies have been among the hottest stocks on Wall Street this year, and the most recent earnings season should only extend that success.
According to our Zacks Sector Rank data, about 70% of the companies in our “Computer and Technology” sector beat or met their consensus earnings estimates this quarter. This has helped the sector gain about 4.35% over the past month, which has outpaced the S&P 500’s modest 2.14% uptick.
So which tech stocks led the way? How can investors cash in on the post-earnings momentum? Check out these three Zacks Rank #1 (Strong Buy) tech stocks that just crushed earnings estimates now:
1. Kemet Corporation (KEM - Free Report)
Kemet and its subsidiaries make up one of the world’s largest manufacturers of solid tantalum capacitors and multilayer ceramic capacitors, the two fastest growing sectors of the U.S. capacitor industry. KEM recently posted earnings of 32 cents per share, smashing the Zacks Consensus Estimate of 18 cents by an impressive 78%.
Kemet’s total revenues were up about 48% year-over-year, but due to a delay in the closing of a recent acquisition, these figures missed our consensus estimates. Still, the stock has soared since its report, and with a strong Zacks Rank and “A” grades for Value, Momentum, and VGM, it could be poised to move even higher soon.
2. Yelp Inc. (YELP - Free Report)
Yelp is an industry leading, community-based website centered around providing feedback on local businesses and restaurants. The company has also increased its marketplace/e-commerce offerings over the past few years. Just a few days ago, Yelp posted a surprise profit of 9 cents per share, surpassing the Zacks Consensus Estimate by 400%.
Yelp recently sold its Eat24 delivery service to GrubHub (GRUB) for $287.5 million in a deal that will also allow Yelp users to order food online directly through GrubHub. In the most recent quarter, revenues were up 20% and paying ad accounts grew 18%. The company has witnessed a tidal wave of positive estimate revisions for the current and upcoming fiscal years, and the stock currently sports “A” grades for Value and Momentum.
3. Appfolio, Inc. (APPF - Free Report)
AppFolio offers cloud-based software solutions for property management and legal industries. The company’s AppFolio Property Manager is a leading solution for property management, while its MyCase application is ideal for practitioners and small law firms. In the latest quarter, AppFolio posted earnings of 8 cents per share, cruising past the Zacks Consensus Estimate by 900%.
AppFolio now has quite the impressive earnings streak; the company has surpassed consensus estimates by an average of over 290% in each of the trailing four quarters. Furthermore, sales are growing at more than a 30% rate, helping the stock earn an “A” grade for Growth. Overall, AppFolio is a solid pick in the booming cloud computing space.
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
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