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The U.S. stock market witnessed a solid 2017, and the momentum continued into the first month of 2018. However, when the Dow tanked 1,175 points on Monday, its worst point decline in more than a decade, investors got a rude shock. Losses continued, with the Dow and the S&P 500 entering the correction territory on Thursday.

The immediate trigger for recent losses was a 2.9% year-over-year increase in wages for U.S. workers in January. These gains sparked off inflationary fears which in turn led to speculation that the pace of rate hikes slated for this year would be quickened.

While it’s too early to predict the extent of volatility over the next few days, we can say for sure that there is still ample room for stocks to rebound, especially the growth tech stocks. Given their long-term potential and excellent track record of earnings growth, adding them to your portfolio makes for a prudent option.  

Strong 2017 Performance, Q4 Earnings Growth

Despite recent reverses, tech stocks retain their inherent growth potential and are likely to rebound in the near term. In fact, the technology sector performed exceptionally well in 2017. While the S&P 500 index increased 16.95%, the Technology Select Sector SPDR grew 27.04%.

Tech shares also delivered stupendous earnings throughout the year, and the momentum is expected to continue in the near term. For Q4, the technology sector’s earnings growth is expected to be up 22.1% on 10.5% higher revenues. (Read: Standout Features of the Q4 Earnings Season)

Tax Cuts to Boost Tech Sector

President Donald Trump’s promise of delivering the historic tax relief finally came into effect in 2018 with corporate tax being slashed from 35% to 20%. U.S. economic fundamentals seem to be strong with a slew of upbeat data, strong corporate earnings and tax cuts that are likely to boost the economy further.

Following the tax cuts, tech companies operating globally will be able to bring back a significant amount of foreign profit. This will help repatriate trillions of dollars held as cash reserve overseas at a one-time rate between 8.5% and 15%, significantly below the original 35%.  

Our Choices

Given the key catalysts, technology companies hold the potential to emerge winners in 2018, despite massive sell offs and inflation worries. This is why it makes good sense to add growth-oriented stocks from this space to your portfolio. Our selection is also backed by a good Zacks Growth Score and Zacks Rank.

We have narrowed down our choices with the help of our new style score system.

Our research shows that stocks with a Growth Style Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best investment opportunities in the growth investing space.

Micron Technology (MU - Free Report) is one of the world's leading providers of advanced semiconductor solutions. Through its worldwide operations, Micron manufactures and markets DRAMs, NAND flash memory, CMOS image sensors, other semiconductor components, and memory modules for use in leading-edge computing, consumer, networking and mobile products.

Micron Technology has a Growth Style Score of A. The company has expected earnings growth of more than 100% for the current year. The earnings estimate for the current year has increased 3.5% over the last 30 days. The stock sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shutterfly (SFLY - Free Report) is an Internet-based social expression and personal publishing service. It provides a range of products and services that make it easy, convenient and fun for consumers to upload, edit, enhance, organize, find, share, create, print and preserve digital photos in a creative and thoughtful manner. 

Shutterfly has a Zacks Rank #1 and a Growth Style Score of A. The company has expected earnings growth of 99.29% for the current year. The Zacks Consensus Estimate for the current year has improved by 46% over the last 30 days.

Kulicke and Soffa Industries, Inc. (KLIC - Free Report) is a leading provider of semiconductor packaging and electronic assembly solutions supporting the global automotive, consumer, communications, computing and industrial segments. 

The company has a Zacks Rank #1 and a Growth Style Score of A. It has expected earnings growth of 44% for the current year. The Zacks Consensus Estimate for the current year has improved by 32% over the last 30 days.  

Facebook (FB - Free Report) operates a social networking website worldwide. The company's services are free of charge and available on the Web, mobile Web, and mobile platforms, such as Android and iOS. Its website enables users to connect, share, discover and communicate with each other.

Facebook has a Zacks Rank #1 and a Growth Style Score of A. It has expected earnings growth of 15.7% for the current year. The Zacks Consensus Estimate for the current year has improved by 10% over the last 30 days.

NVIDIA (NVDA - Free Report) is the worldwide leader in graphics processors and media communications devices. The NVIDIA Tesla accelerated computing platform gives modern data centers the power to accelerate both artificial intelligence and high-performance computing workloads.

NVIDIA has a Zacks Rank #2 and a Growth Style Score of A. For the current year, it has expected earnings growth of 11.6% and has witnessed earnings estimate rising 0.4% over the last 30 days.  

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>



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