The S&P 500 has continued to hum along in 2019 as it tries to erase the fourth quarter downturn that was driven, in part, by a tech stock pullback. As the rebound pushes forward, it seems likely that money will continue to flow into strong, consistent companies with businesses that can withstand near-term headwinds.
Therefore, some of the world’s leaders in technology, which have dominated Wall Street in recent years, are back on the menu. Tech has been at the helm of our historic bull market, and in our increasingly interconnected and digital world, it is likely that the industry remains a long-term growth driver.
Clearly, some of the volatility has made some investors more skeptical, 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. Yet, unlike the dot-com bubble, sustainable revenue and earnings expansion has fueled tech.
There are, of course, concerns about a global economic slowdown. This might mean that investors interested in tech search for companies that have proven their strength for years and look poised for solid expansion. With that said, let’s check out three blue chip tech stocks to consider buying right now.
1. Facebook (FB - Free Report)
Facebook’s 2018 setbacks have been well documented, but despite all of the user data worries its global monthly active user total climbed 9% in Q4 to reach 2.32 billion. FB stock has also regained momentum, with shares up over 23% this year. In the end, Facebook, like Google (GOOGL - Free Report) , will remain highly attractive to marketers as non-ad supported platforms from Netflix (NFLX - Free Report) , Amazon (AMZN - Free Report) , and soon enough Disney (DIS - Free Report) , Apple (AAPL - Free Report) , and AT&T (T - Free Report) , make consumers harder to reach.
Facebook expects Instagram to become more popular and its Stories feature has caught on quickly. Meanwhile, Facebook has invested in its Marketplace platform as it tries to compete with the likes of eBay (EBAY - Free Report) , along with its dedicated video offering, augmented reality, and more. Looking ahead, our current Zacks Consensus Estimate calls for Facebook’s Q1 revenues to jump 25% to reach $14.96 billion, with fiscal 2019’s top-line expected to expand by over 23%.
Mark Zuckerberg’s company has also seen its longer-term earnings estimate revision activity trend upward in a major way over the last 30 days to help it earn a Zacks Rank #2 (Buy). Plus, FB stock is trading at just 21X forward Zacks earnings estimates and its shares rest 26% below their 52-week high.
2. Cisco Systems, Inc. (CSCO - Free Report)
Cisco Systems is a historic networking and tech giant that has expanded beyond its routers and switches into the Internet of Things and more, offering clients the chance to connect everything from transportation fleets to assembly lines. CSCO’s expansion into IoT seems poised to pay off in the long run as the industry booms. The firm posted stronger-than-expected earnings and revenue results last quarter. And Cisco stock has surged 13% over the last month to more than double the S&P’s expansion, while continuing to hit new 52-week highs.
Cisco’s current quarter earnings are projected to climb nearly 17% on the back of 3.4% revenue growth. Plus, the company’s full-year bottom-line growth is expected to come in slightly higher, with double-digit EPS growth projected in the following year as well. CSCO has also experienced a large amount of positive earnings estimate revision activity, with the most positivity coming for fiscal 2019 and 2020, to help it earn its Zacks Rank #2 (Buy). Furthermore, Cisco is a dividend payer that has consistently raised its quarterly payout over the years and is trading in line with its industry’s average P/E at 17.9X forward EPS estimates.
3. Sony Corporation (SNE - Free Report)
This Japanese electronics giant has a dominant position with many key products, including audio and video equipment, televisions, displays, semiconductors, game consoles, computers and computer peripherals, and telecommunication equipment. Sony shares have moved roughly sideways over the past year, as the broader consumer electronics market dipped 5%. Despite this 12-month performance, SNE stock is up over 50% in the last two years. SNE is also trading at about 10.4X forward earnings and has a PEG ratio of 1.06, both of which present discounts to their industry averages.
Meanwhile, management is generating $5.94 in cash per share, which should strengthen the company’s ability to invest in new technologies. Earnings growth is expected to be 68% in the current fiscal year. Lastly, SNE sports a Zacks Rank #2 (Buy) at the moment, along with “A” grades for both Value and Growth in our Style Scores system.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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