For Immediate Release
Chicago, IL – June 27, 2018 – Zacks Equity Research highlights eGain Corporation (EGAN - Free Report) as the Bull of the Day, Ichor Holdings (ICHR - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Amazon.com, Inc. (AMZN - Free Report) , Nvidia Corporation (NVDA - Free Report) and Facebook, Inc. (FB - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Throughout the technology sector’s dominant streak as the leader of this market’s incredible bull run, it has been familiar behemoths like Nvidia, Facebook and Netflix leading the way. These stocks might still have some life in them, but as of late, we have finally started to see money flow into small caps—suggesting that a whole new batch of tech stocks could be at play.
One small tech firm we have our eyes on right now is eGain Corporation, a provider of customer engagement cloud solutions. The firm offers B2C companies a simple and affordable suite of products which deliver multichannel customer service through a single interaction and knowledge management platform.
Not only is eGain a small cap tech stock, but it is also focused on one of the hottest growth markets in the sector: cloud computing. This clearly checks multiple boxes for investors right now, and the stock has skyrocketed more than 650% over the past year. But eGain is still sporting a Zacks Rank #1 (Strong Buy) and looks like it could move higher based on a number of favorable metrics.
This chart helps illustrate both the extent to which EGAN has climbed, and why it has soared so much. As we can see, the stock has been consistently moving higher over the past year, and that is because its earnings outlook has also been improving.
Looking even closer, we can see that, just two months ago, eGain was projected to see a loss of 10 cents per share. Now, the firm is expected to see adjusted profits of 6 cents per share for the fiscal year ending in June. Meanwhile, the Zacks Consensus Estimate for earnings in eGain’s upcoming fiscal year has moved from -$0.07 to $0.13 per share in that same time.
This positive estimate revision activity is what has earned the stock its #1 (Strong Buy) designation. These recent revisions imply that analysts are just now catching up to eGain’s earnings improvements, and that could mean the stock has room to run higher.
Bear of the Day:
Many of the market’s top semiconductor companies have watched their momentum run out of steam in recent months, and that means investors might want to think about reducing their exposure to chip stocks, especially those that have been underperforming lately.
There are still plenty of reasons to be bullish on semiconductors as a whole, with niche chipmakers delivering quality solutions for new secular growth markets like IoT, AI, and autonomous vehicles.
But as a whole, semiconductor manufacturers have started to feel volatility at levels which have not been felt for years. For instance, the VanEck Vectors Semiconductor ETF is on track for its first negative quarter since the third quarter of 2015.
A lot of this negative pressure is coming from sluggish guidance among top semiconductor firms, and for investors, that should also cause concerns down the supply chain and into chip equipment companies. One particular supplier to be weary of right now is Ichor Holdings.
Before diving into Ichor specifically, we should note that some analysts have begun pointing to semis as a potential source of continued volatility.
“Tech is fine. However, semis is the part of the sector that you want to stay away from,” said Oppenheimer analyst Ari Wald on CNBC’s “Trading Nation” this week. “It’s losing its leadership. Versus the tech sector this industry has been making lower highs since March. It’s really starting to break down more recently. This is a warning.”
The SMH fund is made up of the 25 largest chip stocks traded on U.S. exchanges, so ICHR is not a holding. But as a key supplier of subsystems and engineering solutions to this industry, Ichor is going to be influenced by the health of these businesses.
This industry volatility is already causing pressure on Ichor’s earnings outlook. Within the past 30 days, the Zacks Consensus Estimate for ICHR’s 2018 earnings has slumped 10 cents, and the company has witnessed negative revisions to its current quarter, next quarter, and full-year EPS estimates recently.
This negative revision activity has earned ICHR a Zacks Rank #5 (Strong Sell). Shares have lost nearly 10% over the past year, including a 15% drop in just the past month.
3 Blue-Chip Tech Stocks to Buy Now
The sudden return of volatility to global stock markets has created buying opportunities in large-cap tech stocks as the sector’s investors look to rebound from recent selloffs. The world’s tech leaders have dominated Wall Street over the past two years, and now, investors might have a fresh chance to buy a few previously red-hot stocks at a discount.
Of course, this recent volatility has made some investors hesitant, with bearish traders quick to draw similarities between this latest tech rally and the infamous dot-com bubble of the late 90s and early 2000s.
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 21.3, 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. Amazon.com, Inc.
Amazon does not need much of an introduction, but investors should always remember that the company has its hands in much more than just the e-commerce business that brought it fame. The Seattle-based firm is now a legitimate brick-and-mortar retailer, cloud computing provider, entertainment media publisher, and more. AMZN is also currently sporting a Zacks Rank #2 (Buy).
Amazon’s track record speaks for itself, as shares have gained nearly 70% in the trailing one-year period. The stock has shrugged off market-wide volatility and continues to test new highs. Earnings are expected to improve by a staggering 180% this year, with sales surging nearly 34%. AMZN is a staple stock that should appease investors looking for near-term strength and long-term, buy-and-hold gains.
2. Nvidia Corporation
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 57% within the past year, and since the stock is still sporting a Zacks Rank #1 (Strong Buy), it is showing few signs of stopping.
Nvidia is still in an aggressive growth cycle, with current estimates calling for the firm to see EPS and revenue growth of 61% and 36%, respectively, this fiscal year. And of course, Nvidia has made a habit out of crushing expectations. Management is also improving its finances, generating cash flow growth of nearly 67%. Valuations are stretched, but investors should be willing to pay a premium for a company with Nvidia’s proven success and continued potential.
3. Facebook, Inc.
Facebook found itself at a bit of an impasse earlier this year as its handling of user data garnered significant public and regulatory scrutiny. But the company never felt much in terms of actual regulatory action, and so far, its revenue growth has significantly outpaced new costs associated with upping security and vetting content.
FB is holding a Zacks Rank #2 (Buy) and looks like one of the internet industry’s top picks once again. Earnings and revenue are expected to improve by 24% and 41%, respectively, in 2018. Meanwhile, the stock has a PEG of just 1.1, so investors are getting a good price for that earnings growth. Plus, at 25.6x forward earnings, FB is the cheapest it has been in quite some time.
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About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
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