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3 Blue Chip Tech Stocks to Buy Now

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The technology sector has dominated Wall Street recently, and despite the sudden return of volatility in global stock markets, that trend should continue well into 2018. While many will feel that they have already missed their chance to win big on tech stocks, there are still plenty of opportunities to cash in as we head further into the calendar year.

Of course, this is not the first notable tech rally. The cloud of the dot-com bubble still lingers over this sector, and plenty on Wall Street remain hesitant to load up on tech stocks because of it.

However, unlike the dot-com bubble, there is real earnings and revenue growth fueling this tech rally. In fact, the average P/E ratio of our “Computer and Technology” sector currently sits at 21.60, which compares favorably to the dot-com era’s average that routinely soared into the 200s.

Another interesting trend in today’s tech rally is that, rather than obsessing over the next big thing, investors seem to rewarding tried-and-true brands for their respectable growth. This means that some of the strongest tech stocks are the household names that consumers already know and love.

With that said, check out these three blue chip tech stocks to buy now:

1.       Nvidia Corporation (NVDA - Free Report)

Thanks to its strategic investments in datacenters and artificial intelligence, Nvidia has emerged as one of Wall Street’s most popular stocks. Of course, the company’s industry-leading GPUs remain its backbone and are the number one choice for PC gamers worldwide. Nvidia shares have gained over 140% within the past year, and now that the stock sports a Zacks Rank #1 (Strong Buy), it is showing few signs of stopping.

Our current consensus estimates are calling for Nvidia to see earnings and revenue growth of more than 28% in the current fiscal year. What’s more, management is strengthening its financial stability with cash flow growth of 124% right now. With shares at 38x forward earnings, the stock is hardly cheap, but that is actually the lowest valuation we have seen for NVDA in nearly a year—another sign that now is a solid time to buy.

 

2.       Facebook, Inc.

Facebook is the world’s premiere social networking website, and through its WhatsApp and Instagram subsidiaries, the company has a stranglehold on internet advertising and communication. Facebook has also invested in original content and livestreaming and now stands ready to become a dominant multimedia force for years to come. The stock is currently a Zacks Rank #2 (Buy) and is widely considered a must-own internet play.

Despite promising to spend more money on security and vetting content in 2018, Facebook is still projected to end the fiscal year with earnings growth of 17%. Meanwhile, shares are trading at a reasonable 25x earnings, and with the stock’s PEG ratio of just 0.94, investors are clearly getting a great price for that aforementioned EPS expansion.

 

3.       Sony Corporation

This Japanese electronics giant has a dominant position with many key products, including audio and video equipment, televisions, displays, semiconductors, electronic components, computers and computer peripherals, and telecommunication equipment. Sony is currently sporting a Zacks Rank #1 (Strong Buy) and looks like a promising tech stock for both the near term and in the coming years.

Sony shares have soared nearly 60% over the past year, but the stock is still trading below 14x earnings and 0.90x sales. Meanwhile, management is generating $2.93 in cash per share, which should strengthen the company’s ability to invest in new technologies. Thanks to softer year-over-year comparisons, earnings growth is expected to fall in the triple digits this fiscal year, but expansion is expected to continue on the top line going forward.

 

Bottom Line

While there are no guarantees in the stock market, several bullish indicators point to continued strength in the tech sector. With corporate tax reform on the horizon and earnings growth already present, these blue chip tech companies should be able to continue their dominance.

Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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