The S&P 500 has continued to hum along in 2019, up roughly 17%. The climb has been driven, in part by large-cap tech stocks like Apple (AAPL - Free Report) and Amazon (AMZN - Free Report) . 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 digital world, it is likely that the industry remains a long-term growth driver.
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 stock has surged 7% since it posted better-than-expected Q1 revenue results (up 26%) and solid user growth (8% daily and monthly) on April 24. FB shares have now soared nearly 50% this year to outpace comebacks from the likes of Netflix (NFLX - Free Report) . Despite the jump, FB stock rests roughly 10% below its 52-week high. The social media power and CEO Mark Zuckerberg have been in the news for all of the wrong reasons for well over a year ago, yet Facebook executives estimate that over 2.7 monthly billion people use at least one of its “family” of services—which includes Facebook, Instagram, WhatsApp, and Messenger—every month on average, or roughly 35% of the global population. This figure alone should help Facebook remain an advertising juggernaut, alongside Google (GOOGL - Free Report) , for years to come.
On top of that, FB has invested in an e-commerce future, which includes its new Checkout on Instagram feature. Zuckerberg also recently detailed plans about how Facebook could start to focus on private encrypted messaging, payments, and other services.
Looking ahead, FB’s full-year 2019 revenues are expected to surge 24% to reach $69.22 billion. FB’s adjusted fiscal year EPS is projected to dip 7% as it spends to improve security and much more. With that said, the company’s adjusted 2020 earnings are projected to soar over 32% above our current-year estimate. Facebook is Zacks Rank #2 (Buy) at the moment and is trading at 23.3X forward 12-month Zacks Consensus EPS estimates. This marks a discount compared to its industry’s 28X average and its own three-year high of 44.3X and 27.6X median, which means FB stock is relatively inexpensive at the moment.
2. Microsoft (MSFT - Free Report)
Microsoft, which reported on the same day as FB, easily beat top and bottom-line estimates. MSFT’s Intelligent Cloud business was once again a standout performer, with unit revenues up 22%. More specifically, its Azure division saw its sales skyrocket 73%. Along with its growing cloud, IoT, and artificial intelligence businesses, which boasts clients such as Walmart (WMT - Free Report) , the company’s more traditional software and hardware divisions have remained strong to help MSFT remain one of the steadiest blue-chip tech stocks on the market. In fact, shares of MSFT have climbed 158% in the last three years to outpace Apple’s 114% and Google’s 67%. During this time, Microsoft stock has also consistently traded at a discount compared to its industry’s average forward P/E.
Since the company reported its Q3 fiscal 2019 financial results, it has earned a ton of positive longer-term earnings estimate revision activity, which helps it earn a Zacks Rank #2 (Buy) and an “A” grade for Momentum in our Style Scores system. Meanwhile, the company’s current full-year revenues are projected to jump 13% to reach $124.85 billion. Investors should note that this growth would come on top of last year’s roughly 14% full-year expansion.
At the bottom end of the income statement, MSFT’s full-year EPS is expected to jump nearly 18%, with fiscal 2020’s figure projected to come in 11.5% higher than our current-year estimate. On top of its exposure to cloud computing, IoT, and more, Microsoft is a dividend payer that has paid out a $0.46 a share quarterly dividend throughout its fiscal 2019, up 9.5% from the prior year’s quarterly payout.
3. Cisco Systems, Inc. (CSCO - Free Report) )
Cisco Systems shares have jumped roughly 29% in 2019 to help the company reach new 52-week highs along the way. Looking ahead, Cisco’s adjusted Q3 fiscal 2019 earnings—which are due out May 15—are projected to pop 9% to reach $0.72 per share. The firm’s current full-year earnings are projected to climb roughly 18% to hit $3.06 per share. Plus, the company’s bottom line is expected to jump 10.5% above our current year estimate in fiscal 2020. Meanwhile, Cisco’s full-year 2019 revenue is projected to pop 4.75% and then come in 3.4% higher in the following year.
Cisco’s positive earnings estimate revision activity helps it earn a Zacks Rank #2 (Buy) right now. CSCO also rocks a “B” grade for Value and is trading just below its industry’s average forward P/E at 18.9X forward 12-month Zacks Consensus EPS estimates. Along with its solid valuation and earnings growth outlook, the historic networking power has expanded its IoT business in recent years in order to better compete going forward. The company offers clients the ability to connect everything from transportation fleets to assembly lines in order to run their operations more efficiently.
Like MSFT, Cisco also pays a quarterly dividend, for a current full-year payout of $1.40 per share and a 2.49% yield. Cisco’s new quarterly dividend marked a 6% increase from the $0.33 per share the firm paid over the last year and a 20% improvement on a two-year stack.
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