Technology continues to lead the over market to new highs and many leading newsletter advisors remain bullish on the sector’s long-term prospects. Several MoneyShow.com contributors highlight their favorite ideas in the high-tech space.
Square posted 60% revenue growth and announced the launch of its newest platform, Square for Restaurants, which allows food service managers to utilize human resources more effectively from the time diners are seated to the moment they swipe their card across a Square reader.
Dorsey touts the new offering as the key to capturing new accounts in this market. We’re looking forward to seeing how fast adoption unfolds. Now, with the company rolling out payroll services to go with its traditional payment processing system, the long-term growth picture is even more vibrant. We reiterate our recommendation on Square.
Jack Dorsey is also the CEO of
From literally zero in 2006, there are over 335 million active users today — and that’s after purging 70 million inactive or robot-driven accounts. Back in 2007, the company recorded about 20,000 tweets per day. Compare this to more recent figures of over 500 million tweets per day.
The company is on track to book $530 million in profit this year, up a solid 60% from 2017. From here, we anticipate 20% bottom-line growth for the foreseeable future. Twitter is back in the cultural spotlight. It’s relevant again.
Jack Dorsey came back three years ago after leaving the company in 2008. There are lots of things to like about this arrangement. Firstly, Dorsey has taken the job without pay. His sole compensation will depend on how well the stock performs.
The second thing to like is that Dorsey announced he was gifting one-third of his stock to employees. How does that sound to get the creative juices flowing in the trenches? We are believers in Twitter and consider now to be a great opportunity to buy or add to shares.
Tony Daltorio, Growth Stock Advisor
Apple’s latest phones are the first devices anywhere to include a chip (A12 Bionic) made with 7 nanometer process technology. That means the width of the features etched on to the silicon has reached a new level of miniaturization, down from the previous 10 nanometers. The chips are designed by Apple but manufactured by Taiwan Semi. But there is much more involved here than just size. Apple’s chip includes a specialized accelerator for machine learning known as a neural processing unit.
With the promise of applications that can learn from masses of data, this is where much of the effort in new hardware design is now focused. Taiwan Semiconductor will be the likely the primary beneficiary as advanced technology investment grows too expensive for all but the leading industry players, as advanced technology becomes more of a “winner takes all” business.
Mark Skousen, Forecasts & Strategies
Our technology stocks continue to rise in value. Graphics chipmaker
Its exponential sales growth is due in large measure to the supply shortage in graphics processing units (GPUs) and the increasing popularity of multiplayer PC gaming and eSports. Investors and analysts are impressed with the company’s new Turing GPU. Turing is the world’s first GPU that enables developers to achieve cinematic quality in their video games.
Analysts expect NVIDIA to increase free cash flow by 54% next year to $4.5 billion. It will continue to buy back stock and pay a modest dividend equal to $1.25 billion (up 25% from last year). Wall Street firm Needham has just raised its target price to $350 a share.
I also like the undervalued semiconductor maker
The stock is now selling at a 20% discount from its highs, after failing to meet Street estimates for demand. Still, revenues are rising and are up 63% in the past year to $20 billion. Net income has gone from a loss a year ago to $9.8 billion this year.
And the shares are dirt cheap, offering an incredible bargain opportunity. The stock is selling for under 6 times earnings, which is super cheap for a tech stock. And its price/earnings to growth (PEG) ratio is only 0.18 (anything less than 1 is considered excellent). By anyone’s definition, this is a value play.
Stephen Leeb, Investing Daily's The Complete Investor
Two top picks in the commercial cybersecurity area are
Judging firewalls is inherently difficult since by their nature they have to be opaque. So in assessing a cybersecurity company you need to rely on customer satisfaction surveys and on the company’s financial results. Fortinet has consistently ranked at the top of customer sentiment surveys, which was a major reason for our original recommendation.
Today Fortinet, whose revenues have multiplied more than sixfold since 2009, has a forward earnings trajectory that should exceed 20% and perhaps approach 25% or even higher. As an added kicker, it has high free cash flow and nearly $1.5 billion in net cash, with a debt-free balance sheet. Given the company’s exceptional financial position and skill sets, it remains a strong recommendation despite having more than doubled since we first bought it.
Palo Alto is comparably attractive and has a similar business model, with net cash after all debt positive. Palo Alto is larger than Fortinet, which has the advantage of giving it a larger base of client companies that are likely to renew their contracts. But based on surveys and performance metrics related to their firewalls, Fortinet appears to have a slight edge. In addition, as a smaller company it has more room to grow. But both are great companies that give you high-quality stakes in U.S. commercial cybersecurity.
Rob DeFrancesco, Tech-Stock Prospector
In the future, more healthcare devices will get connected to the Internet of Things, while consumers will increasingly utilize their smartphones and watches for continuous health monitoring, leading to an even greater onslaught of medical data.
Healthcare organizations of all types first need to be able to manage and integrate all of that Big Data — both structured and unstructured. Then, they can apply analytics and artificial intelligence technology to the data to unlock insights used to boost performance, enhance quality control, improve the patient experience and reduce costs.
Tableau Software, a holding in our Small-Cap Portfolio, is one vendor working to improve healthcare IT. The firm’s data visualization solutions reduce the time it takes to gain general business intelligence from raw medical information, as well as find specific answers. For healthcare providers formerly using
Richard Moroney, Dow Theory Forecasts
In some ways,
In 2016, Microsoft sold its troubled
Its growth accelerated in the year ended June, with sales up 14% and per-share profits 18%, versus respective three-year annualized growth rates of 6% and 13%. Intelligent Cloud revenue rose 18% for the year and 23% in the June quarter, with most of the growth in server products and cloud services. Microsoft’s Azure platform, which provides software, infrastructure and services for cloud computing networks, posted 89% revenue growth in the June quarter.
Not surprisingly, given its huge installed customer base, the company generates massive and consistent cash flows. Over the last year, Microsoft recorded nearly $44 billion in operating cash flow. That cash allows the company to build up its cloud network, make niche acquisitions and buy back shares. Microsoft paid out $12.7 billion in dividends last year. The stock seems capable of continued double-digit sales and profit growth. The stock is being added to our Buy List.
Mike Cintolo, Cabot Top Ten Trader
Zendesk sells software solutions for the $20 billion (and growing) customer service industry and has a reputation for designing sleek and client-friendly products that help businesses catch and keep clients, offer technical support and communicate through chat, talk and messaging applications. The company has put up terrific numbers since it went public in 2014.
Second quarter earnings trounced expectations (again) when Zendesk reported 40% revenue growth and EPS of $0.03 (beating by $0.03). Investors also liked to hear that growth is accelerating, implying things will go Zendesk’s way in the back half of the year. The company also announced a partnership with WhatsApp (which has 1.5 billion monthly users) to allow consumers to interact with businesses directly through that app.
The biggest news since the earnings report is that Zendesk has acquired Base CRM, which will bring sales force automation (SFA) functionality to its current product lineup; Base has 5,000 users, mostly small businesses, and most believe the move will be another tailwind that will boost Zendesk’s revenues to $1 billion (130% more than last year’s tally) in 2020.
That means 30% plus revenue growth this year and next, plus triple-digit EPS growth (granted, off a small base of a few pennies). Bottom line, Zendesk is a rapidly growing, new age software provider that institutional investors are gobbling up. Since the stock’s breakout in January this year, the action has been outstanding.
John Buckingham, The Prudent Speculator
We continue to hold that the Internet of Things offers a tremendous growth opportunity. Although Intel makes plenty of consumer-oriented products for a broad array of devices, a shift towards higher-end processors and an increase in capital expenditures should help the company stay well ahead of the competition for the foreseeable future.
We like the diverse revenue stream, low levels of debt and 2.5% dividend yield. Intel also repurchased more than 117 million shares for $5.8 billion in the first half of 2018.
After a strong start to 2018, hard disk drive maker Seagate has had a challenging few months. Although the company’s EPS came in better than expected in the June quarter ($1.62 vs. $1.45 est.), the shares slumped on the expectation of higher costs in the upcoming quarter and the long-time CFO’s departure.
While we believe there is still plenty of money to be made in the spinning drive space, especially as enterprise storage demand increases (specifically related to cloud customers), we think that new management will need to be creative to solve the solid-state drive competition problem.
With plenty of cash flow and a solid balance sheet, Seagate completed its $1.3 billion investment in
