Just as market-wide selling knocked the steam out of tech growth stocks, IBM’s historic acquisition of Red Hat last month reminded investors in this space that smart opportunities are still aplenty in this space—especially when one focuses on well-managed companies and segment leaders.
By their very nature, growth investors are primarily focused on finding companies whose earnings and revenue are expected grow at a rate that outpaces the market. This investment strategy comes with its fair share of risks, but it also brings the exciting possibility of outsized returns—an end goal that every investor desires.
Over the past several years, Wall Street’s most exciting growth stocks have emerged from the technology sector. And despite recent volatility, strong earnings and impressive sales remain the story for many up-and-coming companies in the technology sector. That means that growth investors searching for the next great market-beating stock might want to keep their focus on specific tech stocks.
Luckily, we can pair the proven Zacks Rank with our innovative Style Scores system, which includes a “Growth” category, to find strong growth tech stocks. Investors should note that our Growth category values earnings and sales growth, as well as improvements to a company’s financial statements—including strong cash flows and great return on equity.
With all of this said, check out these three tech stocks for growth investors to consider now:
1. NetApp, Inc. (NTAP - Free Report)
NetApp specializes in hybrid cloud solutions; in other words, it provides data-based services which simplify the management of applications cloud and on-premises environments. NetApp’s products and solutions are in high demand as enterprises around the world continue modernizing and adapting to cloud technology. The stock sports a Zacks Rank #2 (Buy) and sports promising growth characteristics.
Notably, NetApp has a “B” grade for Growth in our Style Scores system. Earnings are projected to improve by more than 29% in the fiscal year ending in April, and that growth is expected to continue to the tune of 14% on a long-term, annualized basis. NetApp has not missed analyst expectations since 2016 and has outperformed estimates by nearly 13% in the past year. The firm is also experiencing cash flow growth of about 25% right now.
2. Attunity Ltd. (ATTU - Free Report)
Attunity is a data integration and big data management solutions company. Its solutions enable access, management, sharing, and distribution of data across enterprise platforms and the Cloud. It boasts an impressive client list that includes half of the Fortune 100 and over 2000 overall customers.
Attunity sports a Zacks Rank #1 (Strong Buy) and is expected to finish the current fiscal year with EPS growth of 550% on revenue growth of 35%. Next year, early estimates have that bottom line improving by another 25% on revenue growth of 20%. Cash flow growth is reaching 48% right now and shares have skyrocketed over 90% in the past six months, even with the market pullbacks we have seen.
3. Twilio Inc. (TWLO - Free Report)
Twilio delivers a cloud-based communications platform that allows developers to send automated phone calls, text messages, and other chat functions. In other words, Twilio APIs can be easily implemented into other software and apps, and the firm is responsible for many of the live chat boxes and programmatic messages you likely receive these days.
TWLO is a Zacks Rank #2 (Buy) and an aggressive earnings growth pick right now, as estimates have its bottom line improving by 152% and 54%, respectively, over the next two fiscal years. Revenue is projected to growth 57% and 30% in the current and next years as well. Moreover, current cash flow growth is hitting over 82%, and the firm certainly holds that “segment leader” position we mentioned earlier.
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 >>