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Wall Street has been extremely volatile over the last one and half months on account of the coronavirus pandemic. Almost all of the industries have been affected as the United States and the global economy is currently under either full or partial lockdown. Notably, enforcing the practice of social distancing has emerged as the best way to contain this deadly virus in absence of any vaccine or line of treatment.
However, a closer look into the technology sector reveals that a few stocks from this sector have actually skyrocketed in the past month defying coronavirus-induced mayhem. Investment in those stocks with a favorable Zacks Rank will be a prudent decision at this juncture.
Technology Sector Suffers a Blow
In financial literature, technology sector is known as high growth aggressive sector. During severe market downturn, growth stocks likely to suffer the most. Consequently, recent weakness of the technology stocks does not come as a surprise.
However, the situation was aggravated by the fact that almost all U.S. tech behemoths are highly dependent on China for their business. China plays the role of both the low-cost supplier as well as largest market of high-tech products. With the coronavirus outbreak starting in China and then spreading across the world, it completely destroyed the global supply-chain. Notably, China currently accounts for around 16% of the global economy.
Ray of Hope
Nevertheless, Wall Street has been exhibiting an overall northbound movement in the last three weeks. The three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — declined to their recent low level on Mar 23 after entering into the bear market territory.
However, in the past month, the S&P 500 gained 1.6% while the Technology Select Sector SPDR (XLK), one of the eleven broad sectors of the benchmark index, gained 3.7%, only second to the Materials Select Sector SPDR (XLB), which advanced 5.9%. Moreover, for the week ended Apr 9, the XLK rallied 10.5%, marking its best weekly performance since the week ended May 17, 2002.
Our Top Picks
We have narrowed down our search to five technology stocks that popped more than 20% in the past month and still have upside left. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy).
The chart below shows the price performance of our five picks in the past month.
ManTech International Corp. (MANT) is a leading provider of innovative technologies and solutions for mission-critical national security programs for the Intelligence Community, the Departments of Defense, State, Homeland Security, and Justice, the Space Community and other U.S. federal government customers.
The Zacks Rank #1 company has an expected earnings growth rate of 7.6% for the current year. The Zacks Consensus Estimate for the current-year earnings has improved 2.6% over the past 30 days. The stock price has surged 21.5% in the past month.
Koninklijke Philips N.V. (PHG) is a global health technology company operating through Diagnosis & Treatment, Connected Care and Personal Health segments. It has ramped up production of patient vital signs monitors and portable ventilators and medical consumables for non-invasive and invasive ventilation to treat coronavirus-infected patients.
The Zacks Rank #1 company has an expected earnings growth rate of 3.5% for the current year. The Zacks Consensus Estimate for the current-year earnings has improved 1.3% over the past 30 days. The stock price has appreciated 20.2% in the past month.
CrowdStrike Holdings Inc. (CRWD) provides cloud-delivered solutions for next-generation endpoint protection in the United States, Australia, Germany, India, Romania, and the United Kingdom. It offers 11 cloud modules on its Falcon platform through software as a service subscription-based model that covers various security markets.
The Zacks Rank #2 company has an expected earnings growth rate of 71.4% for the current year (ending January 2021). The Zacks Consensus Estimate for the current-year earnings has improved 42.9% over the past 30 days. The stock price has soared 53.8% in the past month.
Cadence Design Systems Inc. (CDNS) offers products and tools that help customers to design electronic products. Through System Design Enablement strategy it offers software, hardware, services and reusable IC design blocks to electronic systems and semiconductor customers.
The Zacks Rank #2 company has an expected earnings growth rate of 10.5% for the current year. The Zacks Consensus Estimate for the current-year earnings has improved 3.8% over the past 60 days. The stock price has jumped 25.9% in the past month.
Science Applications International Corp. (SAIC) is one of the leading IT and professional services provider, primarily to the U.S. government. The Zacks Rank #2 company has an expected earnings growth rate of 9.9% for the current year (ending January 2021). The Zacks Consensus Estimate for the current-year earnings has improved 0.2% over the past 30 days. The stock price has climbed 23.3% in the past month.
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