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The technology sector is comprised of businesses that sell goods and services in electronics, software, computers, artificial intelligence, and other industries related to information technology (IT). The sector includes companies with the largest market capitalizations in the world, including Alphabet Inc. (GOOGL), Microsoft Corp. (MSFT), and Amazon.com Inc. (AMZN). The tech sector, as measured by the Technology Select Sector SPDR ETF (XLK), has outperformed the S&P 500 substantially over the past year. The XLK has provided investors with a total return of 54.2% versus the S&P’s 27.0% over the past 12 months. These market performance numbers and the statistics in the tables below are as of January 24.
Here are the top 3 tech stocks with the best value, the fastest earnings growth, and the most momentum.
Best Value Technology Stocks
These are the tech stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
- Seagate Technology Plc.: Seagate Technology is engaged in the development, production, and distribution of data-storage products and solutions. The company offers hard disk drives, other storage products, and data-recovery services.
- Fortive Corp.: Fortive is a diversified company engaged in the design, development, manufacture, and marketing of professional and engineered products, as well as software and services for a range of end-use markets. The company is set to split into two independent, publicly traded companies in the latter half of this year, according to an announcement in September. One company, which will retain the name Fortive, will remain focused on industrial technology. The other, recently named Vontier, will be a global industrial company focused on the transportation and mobility markets.
- HP Inc.: HP offers imaging and printing systems, computing systems, mobile devices, solutions, and services for households and businesses. The company’s products include laser and inkjet printers, scanners, copiers and faxes, personal computers, storage solutions, and other computing and printing systems. In late November, HP rejected another unsolicited proposal from Xerox Holdings Corp. (XRX) to acquire HP. The HP Board of Directors indicated in their rejection letter that the combination of the two companies would not be in the best interest of HP’s shareholders.
Fastest Growing Technology Stocks
These are the tech stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
- ServiceNow Inc.: ServiceNow provides enterprise cloud computing solutions. The company offers cloud-based services that automate workflow within and between the separate departments of an enterprise. ServiceNow announced last week that it has signed an agreement to acquire Loom Systems, a company that sells artificial intelligence (AI) for IT operations, called AIOps in the industry. The acquisition is expected to be completed by the end of this year’s first quarter.
- Gartner Inc.: Gartner is a research and advisory company that provides insight on computer hardware, software, communications, and related information technology.
- Xerox Holdings Corp.: Xerox offers digital print technology and related solutions. The company’s capabilities include imaging and printing, data analytics, as well as the development of secure and automated solutions to improve productivity. Xerox announced last week that it intends to nominate 11 candidates to replace HP’s Board of Directors at HP’s 2020 Annual Meeting of Stockholders. The announcement comes after Xerox earlier this month secured $24 billion in financing in order to complete its proposed combination with HP, a proposal that HP has rejected.
Technology Stocks with the Most Momentum
These are the tech stocks that had the highest total return over the last 12 months.
|Technology Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Advanced Micro Devices Inc. (AMD)||51.71||60.4||161.2|
|Lam Research Corp. (LRCX)||312.42||45.3||129.0|
|Apple Inc. (AAPL)||319.23||1,400.0||110.5|
|S&P 500 (SPY)||N/A||N/A||27.0|
|Technology Select Sector SPDR ETF (XLK)||N/A||N/A||54.2|
- Advanced Micro Devices Inc.: Advanced Micro Devices is a global semiconductor company that offers products such as microprocessors, chipsets, graphics, video and multimedia products, and provides assembling, testing, and packaging services. The company recently announced several promotions and a new executive hire to strengthen its senior leadership team.
- Lam Research Corp.: Lam Research supplies wafer fabrication equipment and services to the semiconductor industry. The company designs, manufactures, markets, and services semiconductor processing systems that are used in the fabrication of integrated circuits.
- Apple Inc.: Apple is engaged in the design, manufacture, and sale of smartphones, personal computers, tablets, wearables and accessories, and a variety of other related software, services, and networking solutions.
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