Many technology stocks experienced sky-rocketing rallies last year thanks to pandemic-driven changes in businesses’ and consumers’ operational practices, spending habits and lifestyles. Because the new trends that drove the performance of tech stocks are expected to continue this year, 2021 may well prove to be another great year for the sector.
The significant outperformance of the technology sector is evident in iShares U.S. Technology ETF’s (IYW) returns of 47.6% over the past year. In comparison, the SPDR S&P 500 ETF Trust’s (SPY) gained 18.6% over the same period.
While many expect the demand for tech solutions to reduce with the world economy gradually returning to the old normal, this prediction may be ill-founded for companies that are innovating to capitalize on the long-term trends.
Companies like ServiceNow, Inc. (NOW), Fortinet, Inc. (FTNT), and Acacia Communications, Inc. (ACIA) have strong track records and fundamental strength. These stocks have delivered double-digit price gains over the past year and we believe are positioned to keep gaining in the coming months based on revenue and earnings growth.
ServiceNow, Inc. (NOW)
NOW provides a range of cloud-based solutions to simplify enterprise operations. The company has worldwide operations. NOW’s stock has gained 72.5% over the past year.
NOW recently launched its ServiceNow Vaccine Administration Management solution that helps with the distribution of vaccines. The company has also integrated its services with Twilio to assist workplace communications.
For the quarter ended December 31, 2020, the company saw an increase in subscription revenues of 32% year-over-year. The company also saw 23% growth in customers during that period.
NOW is expected to see revenue growth of 27.5% for the quarter ended March 31, 2021 and 26.9% in 2021. The company’s EPS is estimated to grow 18.8% in 2021 and at a rate of 24.3% per annum over the next five years.
NOW’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary ratings system.
It has a grade of B for Growth, Sentiment, Momentum, and Quality. In the 60-stock Software – Business industry, it is ranked #18.
In total, we rate NOW on eight different levels. Beyond what we stated above we also have given NOW grades for Stability and Value. Get all the NOW ratings here.
Fortinet, Inc. (FTNT)
FTNT offers cyber security services to organizations and governments. The company has worldwide operations. FTNT’s stock has risen 33.3% over the past year.
The company recently announced its XDR, which is an AI-powered solution for threat detection, investigation, and response. FTNT is also offering free courses on cyber security to bridge industries’ knowledge gap.
For the quarter ended September 30, 2020 the company saw an increase in revenue of 19% year-over-year. Its billings grew 20% during the same period.
FTNT’s revenue is estimated to increase 16.2% for the quarter ended March 31, 2021 and 15.6% in 2021. Its EPS is expected to rise 11.3% in 2021 and 19.1% per year over the next five years.
It is no surprise that FTNT has an overall rating of B, which equates to Buy in our POWR Ratings system. FTNT has a grade of A for Quality. In the 25-stock Software – Security industry, it is ranked #9.
Click here to see the additional POWR Ratings for FTNT (Value, Growth, Stability, Momentum, and Sentiment).
Acacia Communications, Inc. (ACIA)
ACIA develops and markets high-speed coherent interconnect products. The company has worldwide operations. ACIA’s stock has gained 67.1% over the past year.
ACIA recently announced that it will be acquired by Cisco for $4.5 billion. This has led to a surge in the price of its stock, which may continue in the near future.
For the quarter ended September 30, 2020, ACIA saw a 32% increase in revenue versus the same period last year. The company’s EPS gained 56% during the same period.
ACIA is expected to see a revenue growth of 20.7% for the quarter ended March 31, 2021 and 14.9% in 2021. The company’s EPS is estimated to grow 10.3% in 2021 and 25.9% for the quarter ended March 31, 2021.
It is no surprise that ACIA has an overall rating of B, which equates to Buy in our POWR Ratings system. ACIA has a grade of B for Quality, Growth, and Sentiment. In the 57-stock Technology – Communication/Networking industry, it is ranked #21.
Click here to see the additional POWR Ratings for ACIA (Value, Stability, and Momentum).
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NOW shares were trading at $578.90 per share on Wednesday afternoon, down $4.61 (-0.79%). Year-to-date, NOW has gained 5.17%, versus a 2.46% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaryaman Aashind
Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks. More...
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|FTNT||Get Rating||Get Rating||Get Rating|
|ACIA||Get Rating||Get Rating||Get Rating|