The technology sector entails a category of stock that encompass the development, research, and the distribution of technologically based services and goods. This industry offers an array of services and products for enterprises and customers. Besides, the sector is the most attractive investment in any economy.
Best Performing Tech Stocks
The following five stocks have garnered huge gains so far this year. Against all the odds of a volatile market, these tech stocks have managed to stand out and record 70%+ returns in over five months.
Generally, the stock market is at its best this year in more than two decades. Tech stocks are on the lead this year, an aspect that is in line with the theme of markets in the last decade. The Nasdaq-100 index is up 21% year-to-date as opposed to the 17% gain for the S&P 500.
Shares in Trade Desk have doubled year-to-date with a 15% burst in the past month. The online advertising marketplace received a boost following comments from Jerome Powell, the Federal Reserve chairman, who considers lowering interest rates to guarantee the growth of the U. S economy.
Besides, Mark Levine, Pivotal Researcher increased his price target on June 5 from $255 to $265. This target is a pointer to an upside potential of 14%. Levine perceives continuous share gains for Trade Desk relative to other Demand Side Platforms. He adds that a regulatory analysis of Google yields a net positive to this tech stock.
Nonetheless, other analysts such as Brian Schwartz are more cautious. His $210 price target point to 10% downside from the existing share price. However, this one of the top 10 analysts echoes a better 2019 outlook and his buying rate post-strong Q1 results.
He believes that a combination of leading software vendors, higher growth and margins and the view of being more aggressive on modern and new platform technologies as compared to its rivals, will allow Tech desk sustain a premium valuation.
E-commerce platform Shopify has seen shares increase by 111% year-to-date. The company gave a report for Q1 and guidance for the year instigation the ongoing rally. In the last month, stocks continue to climb 10%. Brian Essex has downgraded SHOP from Hold-to-Sell with a price target of $209– which converts to 29% downside from current levels.
Of great concern is that much of Shopify’s revenue is transaction-based as opposed to subscription-based. The recurrence and reliability of subscription-based revenue are aspects that make it preferable.
Recent earnings results highlight that subscriptions now constitute 44% of SHOP revenue from 47% from the previous quarter. Essex claims that the scale and durability of subscription models give SaaS the ability to command high multiples.
This Latin American technology market trendsetter topped the technology stock through the first half of this year. It has 280 million registered users in 18 countries. Last year, MELI stock battled as traders were apprehensive about the impending competition with Amazon (NASDAQ: AMZN) in the firm’s critical Latin American domains.
Nevertheless, the stock has ‘more than doubled in 2019’ as MELI has reported growth in aspects like revenue and gross merchandise value. Besides, the secular growth account that supports the corporation is quite healthy, and the firm has managed to expand at a healthy rate regardless of Amazon’s industry rivalry.
MELI stock currently trades at 13-times in relation to forward sales, and that is an enormous multiple for an online retail market. A majority of retail marketplace stock trade forward sales between 3- to 9-times.
Cadence Design Systems
As one of the leading tech stock, CDNS is renowned as a large electronics design venture. By the end of June this year, Forbes stated that the software company’s stock had risen by 64.14%. Also, shares have risen steadily in spite of the small decrease in April and a more considerable one in May.
Since then, the stock has recovered from such temporary price declines and has continued to encounter steady growth once more. The company reported second-quarter 2019 financial outcomes, and various insights can be deduced as follows:
- The revenue for this year’s second quarter was $580 million as compared to $518 million documented for the same duration in 2018.
- In terms of GAAP, Cadence attained a 23% operating margin and realized net income worth $107 million, which can also be quantified, on a diluted basis, as $0.38 per share in 2019’s second quarter. On the CONTRARY, in the same time-frame in 2018, the operating margin was 18% and $75 million net income, or $0.27 for every share on a diluted basis.
According to the Chief Executive Officer, Lip-Bu Tan, Cadence accomplished substantial operating outcomes for the second quarter of this year and continues to be a market leader in innovation, launching essential new products such as the Protium™ X1 Enterprise Prototyping Platform and Spectre® X.
Advanced Micro Devices
Even though AMD is a small chip company, its growth is quite remarkable. The incredible turnaround that has been witnessed over the past few years has been championed by:
- New products
- Improved profitability
Although the revenue plans for the current quarter dropped, the firm indicated that the second-quarter earnings matched expectations. On July 16, AMD stock reached a ‘13-year high of 34.86’ and has stirred up a round-trip sell indicator when it eliminated a 16% return from a current buy point. As of now, the AMD stock is at a sell, in view of IBD MarketSmith charts. The stock is among the best performers in the PHLX semiconductor index SOX, +2.95% this year.
The market value of the firm’s stock has ballooned from below $10 billion at the beginning of 2019 to over $30 billion at the close of August 5 (Monday, last week). The company promises new products, which has caused investors to speculate significant gains.
Moreover, Lisa Cu, the firm’s CEO anticipates getting AMD back to the 25% market share it previously enjoyed in servers. Presently, the company is at around 3.2%. However, with the secular move to big data, autonomous vehicles, and cloud computing, top-chip companies are experiencing significant benefits.
As NVIDIA and Intel keep on soaring in these markets, AMD is demonstrating it has the requisite technology to capture a substantial share, too.
In the last five years, the stock has increased by almost 600%. Analysts project AMD to experience a 39% increase in its earnings this year and 35% annually in the next five years. With such projections in mind, we can conclude that AMD’s stock is a buy.