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Five Tech Stocks That Have Weathered Coronavirus Impact
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Fears over the emergence of Coronavirus as a global pandemic led to a record weekly slump in the U.S. market last week. As of Feb 28, the Dow Jones, the S&P 500, and the Nasdaq depreciated 11%, 8.6%, and 4.5%, respectively on a year-to-date (YTD) basis.
Though the Coronavirus has had a sector-wide impact, the U.S. tech sector has been more resilient compared with other sectors. The Technology Select Sector SPDR Fund (XLK - Free Report) is down 3.6% YTD, while Energy Select Sector SPDR Fund, Financial Select Sector SPDR Fund, and Industrial Select Sector SPDR Fund have lost 24.6%, 13.6%, and 10.3%.
Buy Tech Stocks for Long-Term Investment
The Tech sector’s resiliency can be attributed to the massive long-term growth prospects of tech stocks. The sector remains attractive owing to continuous digital transformations. Rapid adoption of cloud computing, along with ongoing infusion of AI and machine learning, has been a major growth driver for the stocks.
The accelerated deployment of 5G technology — the next-generation wireless revolution — is likely to spur further growth. Moreover, blockchain, IoT, autonomous vehicles, AR/VR, and wearables are other growth prospects.
Additionally, tech companies are cash rich, which provides the cushion to remain afloat amid adverse business environment. Per their latest quarterly results, the FAAMG stocks (Facebook, Amazon, Apple, Microsoft, and Alphabet’s Google) have a cumulative cash and short-term investments of more than $460 billion.
Furthermore, semiconductor industry — the backbone of the Technology sector — is anticipated to make a turnaround this year. According to World Semiconductor Trade Statistics (WSTS), annual global semiconductor sales are expected to witness growth of 5.9% in 2020 and 6.3% in 2021. Last year, the global semiconductor sales declined 12.1%, according to data compiled by The Semiconductor Industry Association (SIA).
Therefore, one can opt for tech stocks which have weathered the Coronavirus impact so far and have robust fundamentals. These stocks have greater possibilities to rise further once the impact of Coronavirus cools down.
Our Pick
Here, we have zeroed in on five tech stocks that could enrich your portfolio in 2020 and beyond.
Per the Zacks’ proprietary methodology, stocks with such favorable combinations offer solid investment opportunities.
Tech Stocks that Weathered Coronavirus Impact
Dropbox, Inc. (DBX - Free Report) offers platform that enables users to store and share files, photos, videos, songs and spreadsheets. A strong focus on product innovation and introduction of features like Dropbox Spaces, Paper and Extensions are anticipated to boost its userbase. Further, integration with leading applications like Zoom Video, Slack and Atlassian will likely expand the Dropbox paying user base, which reached 14.3 million in third-quarter 2019.
Dropbox currently sports a Zacks Rank #1 and has a Growth Score of A. Additionally, the long-term (3-5 years) expected EPS growth rate for the company is pegged at 22.2%. The stock has gained 9.2% year to date.
NVIDIA (NVDA - Free Report) is gaining from solid growth in GeForce desktop and notebook GPUs, which is aiding its gaming revenues. Moreover, an increase in Hyperscale demand is a tailwind for this Zacks #2 Ranked stock’s data-center business. Additionally, ray-traced gaming, rendering, high-performance computing, AI and self-driving cars are key growth prospects.
NVIDIA has a Growth Score of A. Additionally, the long-term expected EPS growth rate for the company is pegged at 12.7%. The stock has rallied 14.8% so far this year.
NVIDIA Corporation Price, Consensus and EPS Surprise
Atlassian Corporation Plc (TEAM - Free Report) is engaged in designing, developing, licensing and maintaining of software and the provisioning of software hosting services. Atlassian is poised to benefit from the ongoing digitization of work at organizations. During second-quarter fiscal 2020, the company added more than 5,000 new clients, bringing the total customer count to 164,790.
The Zacks Rank #2 stock has a Growth Score of A. The long-term expected EPS growth rate is 22.3%. Atlassian stock has countered the Coronavirus impact with its share price appreciating 20.5% in the year-to-date period.
Atlassian Corporation PLC Price, Consensus and EPS Surprise
Alteryx, Inc. provides self-service data analytics software platform. The company is witnessing continuous rise in its client base, mainly on increasing demand for a self-service data-science and analytics platform. Also, improved awareness of the company’s brand and solutions, particularly among Global 2000 clients, is boosting its customer base.
Alteryx currently carries a Zacks Rank #2 and has a Growth Score of B. In addition, the long-term expected EPS growth rate for the company is pegged at 50.6%. The stock has rallied 39.5% this year so far.
MSCI Inc. (MSCI - Free Report) is benefiting from robust demand for custom and factor index modules, as well as the increasing adoption of the ESG solution into the investment process. Apart from this, the company’s open architecture approach, which enables it to integrate content from any third-party application, is likely to keep fueling d user growth.
At present, MSCI carries a Zacks Rank of 2 and has a Growth Score of B. Also, the long-term expected EPS growth rate for the company is pegged at 10%. The stock has gained 14.4%, year to date.
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Five Tech Stocks That Have Weathered Coronavirus Impact
Fears over the emergence of Coronavirus as a global pandemic led to a record weekly slump in the U.S. market last week. As of Feb 28, the Dow Jones, the S&P 500, and the Nasdaq depreciated 11%, 8.6%, and 4.5%, respectively on a year-to-date (YTD) basis.
Though the Coronavirus has had a sector-wide impact, the U.S. tech sector has been more resilient compared with other sectors. The Technology Select Sector SPDR Fund (XLK - Free Report) is down 3.6% YTD, while Energy Select Sector SPDR Fund, Financial Select Sector SPDR Fund, and Industrial Select Sector SPDR Fund have lost 24.6%, 13.6%, and 10.3%.
Buy Tech Stocks for Long-Term Investment
The Tech sector’s resiliency can be attributed to the massive long-term growth prospects of tech stocks. The sector remains attractive owing to continuous digital transformations. Rapid adoption of cloud computing, along with ongoing infusion of AI and machine learning, has been a major growth driver for the stocks.
The accelerated deployment of 5G technology — the next-generation wireless revolution — is likely to spur further growth. Moreover, blockchain, IoT, autonomous vehicles, AR/VR, and wearables are other growth prospects.
Additionally, tech companies are cash rich, which provides the cushion to remain afloat amid adverse business environment. Per their latest quarterly results, the FAAMG stocks (Facebook, Amazon, Apple, Microsoft, and Alphabet’s Google) have a cumulative cash and short-term investments of more than $460 billion.
Furthermore, semiconductor industry — the backbone of the Technology sector — is anticipated to make a turnaround this year. According to World Semiconductor Trade Statistics (WSTS), annual global semiconductor sales are expected to witness growth of 5.9% in 2020 and 6.3% in 2021. Last year, the global semiconductor sales declined 12.1%, according to data compiled by The Semiconductor Industry Association (SIA).
Therefore, one can opt for tech stocks which have weathered the Coronavirus impact so far and have robust fundamentals. These stocks have greater possibilities to rise further once the impact of Coronavirus cools down.
Our Pick
Here, we have zeroed in on five tech stocks that could enrich your portfolio in 2020 and beyond.
These stocks also have favorable combinations of a Growth Score of A or B, and a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Per the Zacks’ proprietary methodology, stocks with such favorable combinations offer solid investment opportunities.
Tech Stocks that Weathered Coronavirus Impact
Dropbox, Inc. (DBX - Free Report) offers platform that enables users to store and share files, photos, videos, songs and spreadsheets. A strong focus on product innovation and introduction of features like Dropbox Spaces, Paper and Extensions are anticipated to boost its userbase. Further, integration with leading applications like Zoom Video, Slack and Atlassian will likely expand the Dropbox paying user base, which reached 14.3 million in third-quarter 2019.
Dropbox currently sports a Zacks Rank #1 and has a Growth Score of A. Additionally, the long-term (3-5 years) expected EPS growth rate for the company is pegged at 22.2%. The stock has gained 9.2% year to date.
Dropbox, Inc. Price, Consensus and EPS Surprise
Dropbox, Inc. price-consensus-eps-surprise-chart | Dropbox, Inc. Quote
NVIDIA (NVDA - Free Report) is gaining from solid growth in GeForce desktop and notebook GPUs, which is aiding its gaming revenues. Moreover, an increase in Hyperscale demand is a tailwind for this Zacks #2 Ranked stock’s data-center business. Additionally, ray-traced gaming, rendering, high-performance computing, AI and self-driving cars are key growth prospects.
NVIDIA has a Growth Score of A. Additionally, the long-term expected EPS growth rate for the company is pegged at 12.7%. The stock has rallied 14.8% so far this year.
NVIDIA Corporation Price, Consensus and EPS Surprise
NVIDIA Corporation price-consensus-eps-surprise-chart | NVIDIA Corporation Quote
Atlassian Corporation Plc (TEAM - Free Report) is engaged in designing, developing, licensing and maintaining of software and the provisioning of software hosting services. Atlassian is poised to benefit from the ongoing digitization of work at organizations. During second-quarter fiscal 2020, the company added more than 5,000 new clients, bringing the total customer count to 164,790.
The Zacks Rank #2 stock has a Growth Score of A. The long-term expected EPS growth rate is 22.3%. Atlassian stock has countered the Coronavirus impact with its share price appreciating 20.5% in the year-to-date period.
Atlassian Corporation PLC Price, Consensus and EPS Surprise
Atlassian Corporation PLC price-consensus-eps-surprise-chart | Atlassian Corporation PLC Quote
Alteryx, Inc. provides self-service data analytics software platform. The company is witnessing continuous rise in its client base, mainly on increasing demand for a self-service data-science and analytics platform. Also, improved awareness of the company’s brand and solutions, particularly among Global 2000 clients, is boosting its customer base.
Alteryx currently carries a Zacks Rank #2 and has a Growth Score of B. In addition, the long-term expected EPS growth rate for the company is pegged at 50.6%. The stock has rallied 39.5% this year so far.
Alteryx, Inc. Price, Consensus and EPS Surprise
Alteryx, Inc. price-consensus-eps-surprise-chart | Alteryx, Inc. Quote
MSCI Inc. (MSCI - Free Report) is benefiting from robust demand for custom and factor index modules, as well as the increasing adoption of the ESG solution into the investment process. Apart from this, the company’s open architecture approach, which enables it to integrate content from any third-party application, is likely to keep fueling d user growth.
At present, MSCI carries a Zacks Rank of 2 and has a Growth Score of B. Also, the long-term expected EPS growth rate for the company is pegged at 10%. The stock has gained 14.4%, year to date.
MSCI Inc Price, Consensus and EPS Surprise
MSCI Inc price-consensus-eps-surprise-chart | MSCI Inc Quote
Looking for Stocks with Skyrocketing Upside?
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Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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