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Nasdaq Hits Record High on Tech Rally: 5 Solid Buys

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It has been a great 2020 for the Nasdaq despite the coronavirus pandemic taking a toll on the markets. The Nasdaq Composite hit a record high on Jun 9, briefly crossing the 10,000 mark for the first time, with investors’ confidence getting a boost as the economy slowly started reopening.

The rally was driven by the technology sector that includes the top FAANG stocks, Microsoft Corporation (MSFT - Free Report) and Tesla, Inc. (TSLA - Free Report) . Although The Dow Jones Industrial Average fell 1.1% and S&P 500 declined 0.8%, the Nasdaq Composite was up 0.3% on Tuesday.

Nasdaq Hits New High

Although the tech-heavy Nasdaq failed to close above the 10,000 mark, it still finished at a new record high of 9,954. Tuesday’s rally came on the back of sharp gains a day earlier, with the S&P 500 returning to positive territory for 2020.

The sharp gains came even as the official economic arbiter in the United States declared that the economy had entered a recession earlier this year. The National Bureau of Economic Research determined that a “clear peak in monthly economic activity” occurred in February. Nasdaq has surged 11% so far this year.

Tuesday’s rally was lead by Amazon.com, Inc. (AMZN - Free Report) , Apple, Inc. (AAPL - Free Report) , Facebook, Inc. (FB - Free Report) and Microsoft. Amazon and Apple gained 3% and 3.1%, respectively. Facebook’s shares jumped 3.1%, while Microsoft increased 0.8%. All the four stocks closed at new all-time highs. Google parent Alphabet, Inc. (GOOGL - Free Report)  is the only among the five largest tech stocks not to close at an all-time high. It’s still about 5% behind its all-time high of $1,524.87, where it closed on Feb 19.

Tech Stocks Continue to Outperform

After entering bear market in March, following the coronavirus outbreak, Wall Street has made a strong comeback in the past two months on unprecedented stimulus both from the Fed and the government. Now, with U.S. states easing lockdowns and other global economies reopening, there will be an uptick in activities, which should further boost investors’ confidence.

The market rally over the past two months has primarily been led by tech stocks. Big Tech stocks have performed far better than most as newly remote workers have come to rely more than ever on online services. The combined market value of the four companies — Facebook, Apple, Amazon and Microsoft — is now close to $5 trillion.

Our Choices

Much of credit for the bounce in the market goes to the tech companies. They have been leading from the front during the pandemic with their services, which have been helping people in leading their life from home.

And despite the economy reopening, people are becoming more dependent on technology on coronavirus fears. We have chosen five tech stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a VGM Score of A or B that investors can gain from in this scenario. You can see the complete list of today’s Zacks #1 Rank stocks here.

eBay Inc. (EBAY - Free Report) operates as an online shopping site that allows visitors to browse through available products listed for sale or auction through each company's online storefront.

The company’s expected earnings growth rate for the current year is 20.5%. The Zacks Consensus Estimate for current-year earnings has improved 12.9% over the past 60 days. eBay sports a Zacks Rank #1 and VGM Score of B.

Chegg, Inc. (CHGG - Free Report) rents and sells print textbooks, and provides eTextbooks, supplemental materials, homework help, textbook buyback, courses, and college admissions and scholarship services, as well as offers enrollment marketing and brand advertising services.

The company’s expected earnings growth rate for the current year is 33%. The Zacks Consensus Estimate for current-year earnings has improved 13.1% over the past 60 days. Chegg sports a Zacks Rank #1 and has a VGM Score of B.

Box, Inc. (BOX - Free Report)  is a provider of a cloud content management platform. The platform enables internal and external collaboration on content, automation of content-driven business processes, development of custom applications, data protection, security and compliance features.

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 32.4% over the past 60 days. Box carries a Zacks Rank #2 and has a VGM Score of B.

GoDaddy Inc. (GDDY - Free Report) is an Internet domain registrar and web-hosting company that also sells e-business related software and services. The company is engaged in the designing and development of cloud-based technology products for small businesses, Web design professionals and individuals.

The company’s expected earnings growth rate for the current year is 28.1%. The Zacks Consensus Estimate for current-year earnings has improved 12.9% over the past 60 days. GoDaddyhas a Zacks Rank #2 and a VGM Score of B.

ChannelAdvisor Corporation (ECOM - Free Report)  offers cloud-based e-commerce solutions and services. It solutions include marketplaces, comparison shopping, paid search, social campaigns, flex feeds, web stores and rich media. 

The company’s expected earnings growth rate for the current year is 62.5%. The Zacks Consensus Estimate for current-year earnings has improved 32.7% over the past 60 days. ChannelAdvisorhas a Zacks Rank #1 and VGM Score of B.

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