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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 such as Apple Inc. (AAPL), Alphabet Inc. (GOOGL), and Microsoft Corp. (MSFT). Tech stocks, as represented by the Technology Select Sector SPDR ETF (XLK), have dramatically outperformed the broader market over the past 12 months, providing investors with a total return of 45.5% compared to the S&P 500’s 22.6%. These market performance numbers and the statistics in the tables below are as of February 21.
Here are the top 3 tech stocks with the best value, the fastest earnings growth, and the most momentum.
Best Value Tech 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.
NortonLifeLock Inc.: NortonLifeLock engages in the consumer cyber safety business, offering solutions that enable consumers to protect their electronic devices, online privacy, identity, and home networks. The company announced several leadership appointments in November 2019: Vincent Pilette was named Chief Executive Officer (CEO), Samir Kapuria was appointed President, and Matthew Brown was given the role of Interim Chief Financial Officer (CFO).
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 earlier this month its intention to launch a tender offer on or around March 2, 2020 for all of the outstanding shares of common stock of HP Inc. (HPQ) at a price per share of $24.00. HP has rejected previous proposals from Xerox and last week announced that it was adopting a shareholder rights plan that would guard against coercive tactics of a single shareholder to gain control of the company without paying all shareholders an appropriate premium for that control, thus making Xerox’s intended takeover more difficult to carry out.
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.
Fastest Growing Tech 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. The company announced at the end of January that it had signed an agreement to acquire Passage AI, a conversational AI platform company based in California. ServiceNow believes the acquisition will help it to advance its native AI capabilities, and the announcement follows the week-earlier announcement of its agreement to acquire Loom Systems, another AI company.
NortonLifeLock Inc.: See above for company description.
Cadence Design Systems Inc.: Cadence Design Systems provides solutions that enable its customers to design electronics products. The company offers software technology, as well as design and consulting services and technology that can be used in the design and development of complex chips and electronic systems, including semiconductors. Cadence announced earlier this month that it has acquired Integrand Software Inc. as part of its plan to accelerate innovation in the 5G RF communications space.
Tech Stocks with the Most Momentum
These are the tech stocks that had the highest total return over the last 12 months.
|Tech Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Advanced Micro Devices Inc. (AMD)||57.27||67.0||139.1|
|Leidos Holdings Inc. (LDOS)||119.27||16.9||96.7|
|NVIDIA Corp. (NVDA)||308.70||198.2||95.5|
|S&P 500 (SPY)||N/A||N/A||22.6|
|Technology Select Sector SPDR ETF (XLK)||N/A||N/A||45.5|
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.
Leidos Holdings Inc.: Leidos Holdings is a global science and technology company engaged in the provision of scientific, engineering, systems integration, and technical services and solutions in the areas of national security, engineering, and health. The company announced earlier this month that it had entered a definitive agreement to acquire the Security Detection and Automation businesses of L3Harris Technologies Inc. (LHX) for $1 billion cash.
NVIDIA Corp.: NVIDIA engages in the design, development, and manufacture of computer graphics processors, chipsets, and related multimedia software.
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