The market is enjoying a nice bounce as the S&P 500 closed the last week above the 4,000 level. Next week will certainly prove to be important with a very important CPI report, an FOMC meeting, and options expiration which tends to exacerbate volatility.
To recap how we got here: the market bottomed in mid-June around 3,600. From there, it climbed 18% to reach 4,300 before turning lower following Fed Chair Powell’s hawkish speech at Jackson Hole. It dropped all the way to 3,900 early this week but found support at these levels and closed the week above 4,000.
There is an interesting array of competing bullish and bearish forces. Inflation seems to have peaked in the US, while more real-time growth measures like jobless claims and consumer spending are perking up. However, bearish factors remain like a hawkish Fed and a slowing, global economy.
Amid this challenging environment, investors should consider tech stocks given that they have been in a bear market for more than a year and would be beneficiaries of falling inflation. Here are 3 top tech stocks that investors should consider:
Veeva Systems (VEEV)
VEEV is at the intersection of several, bullish booming trends. These include enterprise software, cloud computing, healthcare, and pharmaceuticals.
The healthcare sector’s growth is fueled by demographics due to an aging population in developed countries all over the world, increased government spending, and the constant stream of innovations that lead to new treatments. Healthcare spending as a share of GDP has risen to 18% in 2020, from under 12% in 1990.
However, VEEV is actually a software and cloud computing company that comes with more growth and higher margins. Unlike many stocks in the software and cloud space, there are high barriers to entry which means limited competition. For investors, it translates into a deep and wide moat and leads to high rates of recurring revenue.
Given these positives, it’s not surprising that VEEV has an overall B rating, which translates to a Buy in our POWR Ratings system. It also has an A for Quality as it’s one of the leading stocks in a large total addressable market with only a handful of competitors.
VEEV also has a B for growth makes sense given its double-digit earnings and revenue growth and positioning at the intersection of two large and growing markets – healthcare and cloud computing. Click here to see more of VEEV’s POWR Ratings including grades for Value, Momentum, and Stability.
EXPE is one of the largest online booking companies in the world. It operates through multiple segments including Expedia, Vrbo, Hotels.com, Orbitz, Travelocity, and Wotif. In addition, it offers a range of travel and non-travel verticals, including corporate travel management, airlines, travel agents, online retailers, and financial institutions.
Like many travel stocks, EXPE is seeing a huge surge in revenues and bookings due to people’s pent-up demand for travel. However, the stock price has languished due to the market’s concern of a slowdown and potential recession. Long-term investors can look past this and focus on the overall growth of the online booking sector.
Its combination of growth and value makes the stock quite attractive. EXPE has a forward P/E of 10.2 which is significantly cheaper than the S&P 500. More impressive is analysts’ forecast of $9 per share in earnings in 2023 and P/FCF of 4.
These are among the major reason why EXPE is rated a B which equates to a Buy rating. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree. B-rated stocks have posted an average annual performance of 21.1% which compares favorably to the S&P 500’s average annual 8.0% gain.
QLYS is a pioneer and leading provider of cloud-based IT, security, and compliance solutions. The company offers Qualys Cloud Apps, Threat Protection, Continuous Monitoring, Multi-Vector Endpoint Detection and Response, and Web Application Scanning, among other solutions. Its customers include enterprises, government entities, and small and medium-sized businesses across several industries.
QLYS has been an impressive outperformer as it’s only down 10% YTD and is up 19.8% over the past year. The major factor is that unlike so many other tech and cloud-based stocks, it’s continued to see impressive growth in terms of earnings and free cash flow. Additionally, the need for security regarding cloud-based applications continues to grow at a faster rate than in other markets, and QLYS is one of the premier companies in this space.
In its last quarter, QLYS had revenue growth of 17%, and an increase in operating income of 27%. Next quarter, analysts expect this pace of growth to continue with an 18% increase in revenue and 31% jump in operating income.
What makes them “MUST OWN“?
All 9 picks have strong fundamentals and are experiencing tremendous momentum. They also contain a winning blend of growth and value attributes that generates a catalyst for serious outperformance.
Even more important, each recently earned a Buy rating from our coveted POWR Ratings system where the A rated stocks have gained +31.10% a year.
Click below now to see these top performing stocks with exciting growth prospects:
Want More Great Investing Ideas?
REVISED: 2023 Stock Market Outlook (includes top 7 picks)
ON shares closed at $71.67 on Friday, up $1.12 (+1.59%). Year-to-date, ON has gained 5.52%, versus a -13.76% rise in the benchmark S&P 500 index during the same period.
About the Author: Jaimini Desai
Jaimini Desai has been a financial writer and reporter for nearly a decade. His goal is to help readers identify risks and opportunities in the markets. He is the Chief Growth Strategist for StockNews.com and the editor of the POWR Growth and POWR Stocks Under $10 newsletters. Learn more about Jaimini’s background, along with links to his most recent articles. More...
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|VEEV||Get Rating||Get Rating||Get Rating|