Technology Stocks that are Soaring in the Current Market
Analysts have mixed opinions about the direction of the economy, but high-tech stocks remain solid!
The Markets in Perspective
August and September have been particularly brutal for global stock markets. The Chinese equities meltdown has precipitated a flurry of bearish sentiment on bourses from Tokyo to Shanghai, Paris, London and New York. Trillions of dollars have been wiped off global markets, with no apparent end in sight. However, in spite of these fluctuations the U.S. economy is improving. Unemployment is at multi-year lows, inflation is steadily increasing, consumer sentiment is above expectations and general consumption is on the up and up. It should be borne in mind that the current quarter is among the worst for equities in 5 years, but this also provides plenty of value stocks for those interested in entering the financial markets.
Of course, the current state of global markets is anything but stable. However, there are sectors in the economy that are structurally sound and growing. One such sector is the information technology sector, the domain of high-tech stocks like Google, Facebook, Twitter, Yahoo, Apple and others. Deutsche Bank released a research report in which ranking companies in the Fortune 500 list provided interesting insights into corporate expenditure in information technology. In total, some 28 CTOs (Chief Technology Officers) were interviewed, and the general consensus was that expenditure throughout 2015 has remained robust. Given the upbeat sentiment of many in the IT sector, traders and investors have weighed in with their opinions vis-a-vis the best high-tech stocks to invest in and the high-tech stocks to avoid.
Which High-Tech Stocks have fared poorly of Late?
Three of the worst performing individual stocks in the technology sector include SanDisk Corporation (SNDK), Micron (MU) and Yahoo! (YHOO). SanDisk Corporation is involved in the manufacture, development and design of data storage solutions. These include firmware technology, flash memory and proprietary controllers. The stock is currently trading at $49.09 per share on the NASDAQ, with a 1-year return of -49.05% and a year-to-date return of -49.90%. The 52-week high of the stock is $44.28 on the low-end and $106.64 on the high-end.
The second poorly performing technology stock is Micron (NASDAQ: MU). Micron Technology is currently trading at $14.38 per share, with a 52-week trading range of $13.50 on the low-end and $36.59 on the high end. The year-to-date return is -58.93% and the 1-year return is -58.03%. And the third stock on the list of poorly performing technology stocks for 2015 is Yahoo! (NASDAQ: YHOO). Yahoo is currently trading at $28.26 a share, and it recently got a bump in price as a result of the company selling its stake in Alibaba (BABA). The stock has a 52-week trading range of $27.20 on the low-end and $52.62 on the high end. The 1-year return for Yahoo stock is -30.65%, but the real surprise comes with the year-to-date return which is -44.05%. Yahoo has a $26.604 billion market capitalisation at current prices.
It’s not only individual stocks that have come under fire in 2015, its technology exchange traded funds too. Year-on-year earnings for ETFs are going to plunge in 2015, despite the 6.2 percentage point growth in Q1 2015 earnings. Q2 2015 earnings are likely to fall by 4.9 percentage points (year-on-year). Analysts and investors are shying away from cyclical technology stocks as a result of multiple pressures in the global economy (China, Greek debt crisis, Fed rate hike, deflationary pressures in Japan, and commodities price weakness).
Top Performing Technology Stocks
As one might expect, there are winners and there are losers in the technology stocks sector in 2015. While it is true that companies involved in semiconductor manufacturing have taken a huge hit this year, there are technology stocks that are thriving. These include the following: Microsoft (NASDAQ: MSFT), Cognizant Technology Solutions (NASDAQ: CTSH) and Qlik Technologies (NASDAQ: QLIK).
Starting with Microsoft, the stock is currently trading at $43.44 per share and it has a 52-week trading range of $39.72 on the low-end and $50.05 on the high end. The 1-year return is -3.79% and the year-to-date return is -6.48%. At current prices, Microsoft is valued at $347.432 billion. Microsoft is a software company in the technology sector. It will fare well when interest rates rise, and despite some problems with Windows 10 software, shareholders are set for another year of strong earnings from this top-tier technology company. The most recent dividend paid out to Microsoft investors was 3.3%, and Deutsche Bank has the stock priced at $55, with a consensus price target range of $50.17. Banc De Binary economic analysts point to increasing numbers of call options on MSFT in Q2 and Q3 2015 as evidence of increased bullish sentiment.
Cognizant Technology Solutions (NASDAQ: CTSH) is currently trading at $60.58 per share. The 52-week trading range is $42.94 on the low-end and $69.35 on the high end. The stock has a 1-year return of 35.31% and a year-to-date return of 15.04%. At current prices, the market capitalisation is $36.95 billion. Cognizant Technology Solutions is involved in technology services. The current earnings per share is 2.56 and the price/earnings ratio is 23.65. According to Thomson/First Call, the consensus price target is listed at $75.04, while Deutsche Bank has the price target listed at $69.
The last stock on the list is Qlik Technologies (NASDAQ: QLIK). The stock is trading at $35.29 per share, with a 52-week trading range of $22.12 on the low-end and $42.18 on the high end. The 1-year return is 30.51% and the year-to-date return is 14.24%. At current prices, the company’s market capitalisation is $3.259 billion. One of the most interesting aspects of this company is the QlikView Business Directory platform which allows users to synergize sources of data and create highly dynamic visual applications that allow for easy searching and navigation. It is one of the most highly-praised software platforms for the healthcare sector with a wide range of analytics that are of high value to vendors. Q2 licensing revenues topped out at $76.3 million – far greater than forecasts and the best figures in over four years. Maintenance billings and customer license registrations spiked by 35% in the U.S., and over 20% in the EU. Investors like the stock because it has strong growth potential and as a result, Deutsche Bank has priced the stock at $50.