CDK, ZM, and NET are top for value, growth, and momentum, respectively
The technology sector is comprised of businesses that sell goods and services in electronics, software, computers, artificial intelligence (AI), 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), Microsoft Corp. (MSFT), and Amazon.com Inc. (AMZN).
Tech stocks, represented by the Technology Select Sector SPDR ETF (XLK), have outperformed the broader market over the past year. XLK has provided investors with a total return of 34.9% over the past 12 months, above the Russell 1000’s total return of 32.9%. These market performance numbers and statistics in the tables below are as of Aug. 19, 2021.
Here are the top 5 tech stocks with the best value, the fastest growth, and the most momentum.
Value investing is a factor-based investing strategy that involves picking stocks that you believe are trading for less than what they are intrinsically worth, usually by measuring the ratio of the stock’s price to one or more fundamental business metrics. A widely accepted value metric is the price-to-earnings (P/E) ratio. Value investors believe that if a business is cheap compared to its intrinsic value, in this case as measured by its P/E ratio, the stock price may rise faster than others as the price comes back in line with the worth of the company. These are the tech stocks with the lowest 12-month trailing P/E ratio.
|Best Value Tech Stocks|
|Price ($)||Market Cap ($B)||12-Month Trailing P/E Ratio|
|CDK Global Inc. (CDK)||41.63||5.1||5.0|
|HP Inc. (HPQ)||28.22||33.9||10.0|
|Arrow Electronics Inc. (ARW)||117.42||8.4||10.5|
|Intel Corp. (INTC)||52.44||212.8||11.7|
|Synnex Corp. (SNX)||123.27||6.4||12.1|
- CDK Global Inc.: CDK Global provides integrated data and technology solutions to the automotive, heavy truck, recreation, and heavy equipment industries. The company helps automotive dealerships and original equipment manufacturers (OEMs) to optimize and streamline their daily operations. CDK Global has more than 30,000 retail client locations. The company in June completed its acquisition of Roadster Inc., a digital platform for buying and selling cars. CDK Global paid about $360 million for Roadster.
- HP Inc.: HP is a global provider of personal computing, imaging, and printing products and services. The company’s offerings include desktop and notebook computers, workstations, retail point-of-sale systems, displays, printers and hardware, and support and services. HP’s customers include individual consumers, businesses, and governments. The company holds 27,000 patents and operates in 170 countries throughout the world. HP announced in late July that it agreed to acquire Teradici Corp., a provider of remote computing software that enables users to securely access high-performance computing from a range of devices. Financial terms of the agreement, which is expected to close by the end of this year, were not disclosed.
- Arrow Electronics Inc.: Arrow Electronics is a global provider of electronic components, computer products, and enterprising computing solutions to OEMs, contract manufacturers, and other commercial customers. The company distributes batteries, displays, sensors, memory products, and a wide range of other electronic components. It also offers related services, solutions, and software. The company has roughly 20,000 employees worldwide and has more than 180,000 customers in technology manufacturing as well as other industries.
- Intel Corp.: Intel designs and manufactures computer components and related products, including processors, chipsets, server products, memory and storage, ethernet products, wireless connectivity products, and more. Its products are designed for a range of traditional and emerging computing technologies, including edge computing, 5G networks, cloud computing, AI, autonomous driving, and more. Intel employs a global workforce of around 110,600 people. The company recently announced that it has been awarded a contract with the U.S. Department of Defense to provide commercial foundry services for the initial phase of the department’s Rapid Assured Microelectronics Prototypes – Commercial (RAMP-C) program. Under the terms of the agreement, Intel will develop a U.S.-based commercial semiconductor foundry ecosystem, which will be used to manufacture leading-edge custom and integrated circuits and other commercial products for the Department of Defense. Intel’s foundry business, launched earlier this year, will oversee the work. The company noted in its press release that 80% of leading-edge semiconductor manufacturing capacity is concentrated in Asia. The lack of domestic manufacturing capacity poses risks to the U.S.’s longer-term needs for secure microelectronics, Intel said.
- Synnex Corp.: Synnex is a provider of IT solutions and value-added services to the technology industry, including distribution, logistics, and integration services. Its core competencies include IT systems and servers, system components, software, communication and security equipment, and consumer electronics. Synnex distributes over 40,000 technology products from manufacturers around the world and provides technology solutions to more than 25,000 resellers and retail customers. The Republican National Committee (RNC) on July 6 disclosed that hackers had attacked its computer systems by breaching Synnex, one of its contractors. The RNC said no data had been accessed. The hackers responsible for the cyber attack are believed to be linked to Russia’s foreign intelligence service.
These are the top tech stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings per share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
|Fastest Growing Tech Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|Zoom Video Communications Inc. (ZM)||340.93||101.3||722.2||191.4|
|Fidelity National Information Services Inc. (FIS)||134.44||83.0||1,730||17.3|
|CDK Global Inc. (CDK)||41.63||5.1||1,390||1.6|
|Advanced Micro Devices Inc. (AMD)||103.44||125.5||346.2||99.3|
|Nvidia Corp. (NVDA)||197.98||495.0||276.0||68.3|
- Zoom Video Communications Inc.: Zoom Video Communications is a communications technology company that provides a video-first communication platform and web conferencing services. Its cloud platform offers video, voice, content sharing, and chat for mobile devices, desktops, telephones, and conference room systems. Customers can engage in one-on-one chats or conduct large-scale online events with up to 10,000 view-only attendees. In early August, Zoom agreed to pay $85 million to settle a lawsuit alleging that it had violated its users’ privacy rights. The claimants alleged that Zoom had shared users’ personal data with companies such as Facebook Inc. (FB), Google, and LinkedIn, as well as allowing hackers to disrupt Zoom meetings. Zoom, which denied any wrongdoing, also agreed to strengthen its security practices as part of the settlement.
- Fidelity National Information Services Inc.: Fidelity National Information Services, or FIS, is a global provider of technology solutions for merchants, banks, and firms engaged in the capital markets. The company’s technology and services are aimed at finding solutions for the payment, banking, and investment needs of its customers, which number more than 20,000. FIS announced in early August financial results for Q2 of its 2021 fiscal year (FY), the three-month period ended June 30, 2021. Net earnings attributable to common stockholders rose 1,694.7% on revenue growth of 17.3% compared to the year-ago quarter. Net earnings received a boost from higher other income, investment earnings, and provisions for income taxes compared to the second quarter of FY 2020.
- CDK Global Inc.: See above for company description.
- Advanced Micro Devices Inc.: Advanced Micro Devices is a global semiconductor company that provides x86 microprocessors, chipsets, graphics processing units (GPUs), development services, and other high-performance computing, graphics, and visualization technologies. Its products and services are used for gaming, digital platforms, and data centers. The company operates in 35 locations worldwide.
- Nvidia Corp.: Nvidia is a maker of GPUs, a type of computer chip originally designed for computer graphics. Once used primarily for PC gaming, cryptocurrency mining and machine learning have become new major sources of demand for GPUs in recent years. That’s because GPUs also excel at these new tasks. Nvidia reported its most recent quarterly earnings on Aug. 18, 2021. It reported record quarterly earnings of $6.5 billion and its gross margin, key for the highly competitive computer chip business, grew 6% year over year (YOY).
Momentum investing is a factor-based investing strategy that involves investing in a stock whose price has risen faster than the market as a whole. Momentum investors believe that stocks that have outperformed the market will often continue to do so because the factors that caused them to outperform will not suddenly disappear. In addition, other investors, seeking to benefit from the stock’s outperformance, will often purchase the stock, further bidding its price higher and pushing the stock higher still. These are the tech stocks that had the highest total return over the last 12 months.
|Tech Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Cloudflare Inc. (NET)||116.93||37.4||191.9|
|Gartner Inc. (IT)||302.20||25.3||136.8|
|HubSpot Inc. (HUBS)||648.35||30.5||128.2|
|Fortinet Inc. (FTNT)||292.72||47.8||125.3|
|CrowdStrike Holdings Inc. (CRWD)||233.78||52.8||118.3|
|Technology Select Sector SPDR ETF (XLK)||N/A||N/A||34.9|
- Cloudflare Inc.: Cloudflare is a global cloud services provider. Its platform delivers a range of network services that enhance the security and performance of customers’ websites and critical business applications. Roughly 25 million Internet properties utilize Cloudflare’s services, and the company serves about 25 million HTTP requests per second. The company announced in early August financial results for Q2 FY 2021, the three-month period ended June 30, 2021. Cloudflare’s net loss widened to $35.5 million from a net loss of $26.1 million in the year-ago quarter. Revenue, however, rose 52.9% YOY. The company said it was its strongest quarter ever as a public company and that it added a record number of large customers.
- Gartner Inc.: Gartner is a global research and consulting company that helps businesses achieve mission-critical tasks in order to grow their operations. It serves its customers in a wide range of areas, including finance, information technology, legal and compliance, product management, strategy, and supply chain. Gartner serves the needs of more than 14,000 enterprises in over 100 countries.
- HubSpot Inc.: HubSpot provides a cloud-based marketing and sales software platform to help enterprises grow their business. It offers customer relationship management (CRM), content management software (CMS), marketing and sales, and other management solutions. HubSpot serves more than 121,000 customers in more than 120 countries. The company announced in early August financial results for Q2 FY 2021, the three-month period ended June 30, 2021. HubSpot’s net loss narrowed to $24.6 million from a net loss of $29.4 million in the year-ago quarter. Revenue rose 52.6% YOY. The company also announced that Chief Executive Officer (CEO) Brian Halligan will become executive chairman of the board of directors, effective Sept. 7, 2021. Chief Customer Officer Yamini Rangan will take over as the new CEO.
- Fortinet Inc.: Fortinet is a cybersecurity company serving enterprises, service providers, and government organizations worldwide. Its Security Fabric platform leverages AI and machine learning technology to provide its clients with critical security solutions for networked, application, cloud, and mobile environments. The company serves more than 500,000 customers around the world.
- CrowdStrike Holdings Inc.: CrowdStrike Holdings offers a cybersecurity platform that sells products aimed at thwarting computer security breaches, including antivirus, endpoint detection and response, device control, vulnerability management, threat intelligence, and more. The company serves close to 9,900 customers worldwide.
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