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5 Technology Stocks Set to Outperform This Earnings Season
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Technology stocks have had a grand year so far, courtesy of strong demand for cloud-based platforms as well as growing adoption of Artificial Intelligence (AI) solutions, Augmented/Virtual reality (AR/VR) devices, autonomous cars, advanced driver assisted systems (ADAS) and Internet of Things (IoT).
The bullishness reflects on the performance of the Technology Select Sector SPDR ETF (XLK), which has returned 11.2% year to date compared with the S&P 500 Composite’s gain of 5.1%.
Increasing use of the Internet, courtesy of the ubiquitous social media, has been a key driver for technology stocks. Naturally, focus on video streaming has been driving user engagement that is in turn attracting advertising dollars. Notably, real-time analysis of user data supported by AI tools is helping advertisers target the right audience, which is boosting their Return on Investment (ROI).
Further, robust increase in overall IT spending is providing impetus to the tech sector. Per the latest report by Gartner, worldwide IT spending is projected to grow to $3.7 trillion this year.
However, weakness in semiconductors primarily due to intensifying trade tensions, slowing demand from the automotive market and component supply shortage doesn’t bode well for the sector. Moreover, increasing regulations for social media companies like the implementation of EU’s General Data Protection Regulation is an overhang.
How to Make the Right Pick?
With the existence of a number of industry players, finding the right Internet stocks that have the potential to beat earnings can be a daunting task. Our proprietary methodology, however, makes it fairly simple for investors.
You could narrow down the list of choices by looking at stocks that have the combination of a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP.
Earnings ESP is our proprietary methodology for determining stocks that have the best chance to surprise with their next earnings announcement. It provides the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.
Our Choices
Given below are five technology stocks that have the right combination of elements to post an earnings beat this quarter:
Luxembourg-based Globant S.A. (GLOB - Free Report) has a Zacks Rank #3 and an Earnings ESP of +7.31%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The company is expected to report third-quarter 2018 results on Nov 15.
Mountain View, CA-based Intuit (INTU - Free Report) has a Zacks Rank #3 and an Earnings ESP of +3.77%. Intuit is set to report first-quarter fiscal 2019 results on Nov 19.
Los Altos, CA-based Box (BOX - Free Report) has a Zacks Rank #3 and an Earnings ESP of +5.41%. The company is slated to report third-quarter fiscal 2019 results on Nov 28.
Santa Clara, CA-based Palo Alto Networks (PANW - Free Report) has a Zacks Rank #3 and an Earnings ESP of +0.06%. The company is likely to report first-quarter fiscal 2019 results on Nov 29.
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.
Image: Bigstock
5 Technology Stocks Set to Outperform This Earnings Season
Technology stocks have had a grand year so far, courtesy of strong demand for cloud-based platforms as well as growing adoption of Artificial Intelligence (AI) solutions, Augmented/Virtual reality (AR/VR) devices, autonomous cars, advanced driver assisted systems (ADAS) and Internet of Things (IoT).
The bullishness reflects on the performance of the Technology Select Sector SPDR ETF (XLK), which has returned 11.2% year to date compared with the S&P 500 Composite’s gain of 5.1%.
Increasing use of the Internet, courtesy of the ubiquitous social media, has been a key driver for technology stocks. Naturally, focus on video streaming has been driving user engagement that is in turn attracting advertising dollars. Notably, real-time analysis of user data supported by AI tools is helping advertisers target the right audience, which is boosting their Return on Investment (ROI).
Further, robust increase in overall IT spending is providing impetus to the tech sector. Per the latest report by Gartner, worldwide IT spending is projected to grow to $3.7 trillion this year.
However, weakness in semiconductors primarily due to intensifying trade tensions, slowing demand from the automotive market and component supply shortage doesn’t bode well for the sector. Moreover, increasing regulations for social media companies like the implementation of EU’s General Data Protection Regulation is an overhang.
How to Make the Right Pick?
With the existence of a number of industry players, finding the right Internet stocks that have the potential to beat earnings can be a daunting task. Our proprietary methodology, however, makes it fairly simple for investors.
You could narrow down the list of choices by looking at stocks that have the combination of a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP.
Earnings ESP is our proprietary methodology for determining stocks that have the best chance to surprise with their next earnings announcement. It provides the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.
Our Choices
Given below are five technology stocks that have the right combination of elements to post an earnings beat this quarter:
Sunnyvale, CA-based NetApp (NTAP - Free Report) is expected to report second-quarter fiscal 2019 results on Nov 14. The company has an Earnings ESP of +0.83% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
NetApp, Inc. Price and EPS Surprise
NetApp, Inc. Price and EPS Surprise | NetApp, Inc. Quote
Luxembourg-based Globant S.A. (GLOB - Free Report) has a Zacks Rank #3 and an Earnings ESP of +7.31%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The company is expected to report third-quarter 2018 results on Nov 15.
Globant S.A. Price and EPS Surprise
Globant S.A. Price and EPS Surprise | Globant S.A. Quote
Mountain View, CA-based Intuit (INTU - Free Report) has a Zacks Rank #3 and an Earnings ESP of +3.77%. Intuit is set to report first-quarter fiscal 2019 results on Nov 19.
Intuit Inc. Price and EPS Surprise
Intuit Inc. Price and EPS Surprise | Intuit Inc. Quote
Los Altos, CA-based Box (BOX - Free Report) has a Zacks Rank #3 and an Earnings ESP of +5.41%. The company is slated to report third-quarter fiscal 2019 results on Nov 28.
Box, Inc. Price and EPS Surprise
Box, Inc. Price and EPS Surprise | Box, Inc. Quote
Santa Clara, CA-based Palo Alto Networks (PANW - Free Report) has a Zacks Rank #3 and an Earnings ESP of +0.06%. The company is likely to report first-quarter fiscal 2019 results on Nov 29.
Palo Alto Networks, Inc. Price and EPS Surprise
Palo Alto Networks, Inc. Price and EPS Surprise | Palo Alto Networks, Inc. Quote
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 >>