Optimism over a potential vaccine for coronavirus, unprecedented government stimulus and an uptick in economic activities, with lockdown measures starting to ease, are mainly driving the U.S. stock market. While the coronavirus outbreak has had a sector-wide impact economically, the U.S. tech sector has been more resilient compared with others so far this year.
The Technology Select Sector SPDR ( XLK Quick Quote XLK - Free Report) has rallied 14% so far this year. The ETF has outperformed the gains of all three major U.S. indices. The Nasdaq Composite has gained 12.1% year to date, while the Dow Jones and the S&P 500 have lost 9.5% and 4%, respectively. The coronavirus outbreak has opened up newer avenues of growth for tech companies, particularly cloud computing, Internet services and cybersecurity providers, which are expected to benefit from the ongoing work from home, web-based learning and remote health diagnosis trends. Rising incidences of coronavirus infections is a tailwind for these companies. Shift in consumer preference for Internet-based services attributable to the work-and-learn-from-home necessity will likely increase demand for smartphones, PCs, notebooks and peripheral accessories. There has also been an increase in demand for cloud storage. Therefore, data-center operators are enhancing their capacities to accommodate the demand spike for cloud services. Additionally, the sector’s resiliency can be attributed to the impressive long-term growth prospects of tech companies owing to continuous digital transformations. Rapid adoption of cloud computing, and the ongoing integration of AI and machine learning have been major growth drivers. Moreover, growing demand for e-commerce, contactless delivery through drones and digital payment highlight the urgency for accelerated 5G network development. Meanwhile, blockchain, IoTs, smartphones, autonomous vehicles, storage solutions, AR/VR and wearables, networking and connectivity solutions — including Wi-Fi as well as Wi-Fi/Bluetooth integrated SOCs — and the need for high-speed data in both communications networks and data centers offer significant growth opportunities. Our Picks Per the Zacks’ proprietary methodology, stocks with the combination of a Growth Score of A or B and a Zacks Rank #2 (Buy) offer solid investment opportunities. Based on this, here we pick four technology stocks currently trading for less than $20 a share that have strong fundamentals and are well-poised for further growth in the rest of 2020. You can see . the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here Moreover, the highly oversold market offers some cheap stocks with stellar prospects. While these stocks trade under $20 and can be more volatile than their costlier peers, strong bottom-line projections and positive estimate revisions in recent times point toward momentum in the mid-term, especially after the coronavirus crisis dissipates. Rambus ( RMBS Quick Quote RMBS - Free Report) is gaining on the growing momentum of tokenization solutions. In addition to mobile payments and retail, the company has expanded tokenization offerings in markets like account-based payments, e-commerce and blockchain. Rambus has also rolled out Vaultify Trade that provides bank-grade tokenization for blockchain. Currently, Rambus has a market cap of $1.66 billion and a Growth Score of A. The stock is currently priced at $15.2 per share. Notably, the consensus mark for 2020 earnings have increased 7.7% to 98 cents per share over the past 60 days.
Rambus, Inc. Price and Consensus