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3 Soaring Tech Stocks to Buy Now for Coronavirus Growth and Beyond

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All three major U.S. indexes surged to start the week on the back of positive coronavirus vaccine news, which came as economies around the world slowly begin to reopen from their coronavirus-induced lockdowns. Plus, Fed Chairman Jay Powell’s 60 Minutes interview on Sunday highlighted why investors are likely set to remain in ‘don’t fight the Fed’ mode.

Wall Street has been looking ahead to the coronavirus recovery for the better part of two months. And investors haven’t seemed deterred by some rough quarterly earnings results, which are expected to get far worse in Q2—when we will hopefully see the full impact of the coronavirus shutdown.

Despite the uncertainty, tech stocks from giants like Facebook and Apple (AAPL - Free Report) to Zoom (ZM - Free Report) have proved resilient. And some stocks within the broader tech industry have hit new highs on the back of impressive growth during the coronavirus pandemic. Let’s dive into three of these growth-focused tech stocks that investors might want to buy right now…

Inphi Corporation

Inphi makes semiconductor components and optical subsystems and is a leader in data movement interconnects between and inside data centers. Inphi’s Q1 results wowed Wall Street on May 7, with revenue up 70%. Higher demand for cloud and telecom products helped drive sales, as did the inclusion of eSilicon, which it officially purchased in January.

Inphi’s record top-line growth came on top of the year-ago period’s 37% expansion. The firm was already benefiting from a data center boom, the transition to 5G, and more. And CEO Ford Tamer expects the “significant paradigm shifts” caused by the coronavirus, from remote work to e-commerce, might encourage “further acceleration of bandwidth upgrades.” IPHI shares surged after its release, with the stock now up over 50% in 2020 and 235% in the past two years.

IPHI is currently trading right near new highs, which is no easy task amid the uncertainty. And its strong earnings revision activity helps it earn a Zacks Rank #2 (Buy) at the moment. Our Zacks estimates call for Inphi’s adjusted FY20 earnings to surge 66%, on 66% higher revenue.

The compnay, which helps “move big data fast, around the globe" is projected to follow up this growth with double-digit sales and earnings growth in FY21. Inphi is also part of a highly-ranked Zacks industry and sports an “A” grade for Growth and a “B” for Momentum in our Style Scores system.

Chegg (CHGG - Free Report)

Chegg began as an online textbook hub geared toward college students. This remains a solid niche within an Amazon (AMZN - Free Report) -dominated e-commerce market. Today, Chegg refers to itself as a “direct-to student learning platform,” having expanded its portfolio to include online tutors, test prep, and more.

Digital learning was already growing in popularity prior to the pandemic. "Our belief is that, in every industry, a crisis often accelerates the inevitable and that is what we see happening in higher education,” CEO Dan Rosensweig said in prepared Q1 remarks.

Chegg’s Q1 sales jumped 35%, with its services revenue up 33%. CHGG projects that its Q2 subscriber growth will “be greater than 45%.” Looking ahead, CHGG’s full-year sales are expected to jump roughly 35% to hit $552.65 million, which would top FY19’s 28% expansion. Meanwhile, Chegg’s adjusted fiscal year EPS figures are projected to jump 33% and 22%, respectively in the next two years.

Shares of Chegg have soared over 120% in the last two months and over 50% since its Q1 release on May 4. This growth is also part of a longer positive trend that has seen CHGG stock skyrocket over 675% in the last five years. And Chegg’s bottom-line revision strength helps it hold a Zacks Rank #1 (Strong Buy), within an industry that sits in the top 11% of our more than 250 Zacks industries.

Some investors might want to wait for a pullback, but Wall Street could continue to scoop up stocks that can expand during these times. And longer-term investors might want to view Chegg as a bet on the future of education becoming more digitally focused, especially as costs and student debt grow out of control.

ServiceNow (NOW - Free Report)

ServiceNow provides cloud-based services and solutions to its over 6,200 enterprise customers. The digital workflow firm was added to the S&P 500 index in November 2019 and has expanded its partnership with Microsoft (MSFT - Free Report) to help it sell to highly regulated industries and house its full SaaS offerings on MSFT’s popular Azure cloud. Now topped our Q1 earnings and sales estimates at the end of April, with subscription revenue up 34%.

The firm also closed the quarter with 933 customers with over $1 million in annual contract value, which marked 30% expansion from the year-ago period. “This pandemic has allowed us to engage our customers in new ways, enabling them to focus on their most critical workflows,” ServiceNow CEO Bill McDermott said in prepared remarks. “Businesses are splitting apart old value chains and reassembling them in end-to-end, mobile-first experiences on the Now Platform.”

ServiceNow shares are up nearly 40% in 2020 to rest near new highs. This run is part of a larger 280% surge over the last three years. Peeking ahead, our Zacks estimates call for NOW’s revenue to climb over 25% in both fiscal 2020 and 2021 to reach $5.44 billion.

Meanwhile, NOW’s adjusted fiscal year earnings are projected to jump 28% and 26.5%, respectively. ServiceNow currently holds a Zacks Rank #2 (Buy), alongside an “A” grade for Growth and a “B” for Momentum. And NOW executives remain confident about the firm’s “path to $10 billion in revenue and beyond.”

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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