Tech stocks were the darling of investors this year despite the coronavirus epidemic. In fact, the global social distancing standards adopted to mitigate the spread of the virus have forced people to stay at home, get angry online and work and learn at home.
The sail has not been as fluid for the tech sector as it has also hit rough waters in between. President Donald Trump’s warning about a temporary suspension of immigration due to the spread of the virus dealt a blow to tech stocks in mid-April. The US technology sector is heavily dependent on immigrants.
Certain sectors of the technology industry – cloud computing, the Internet and video games – are already benefiting from the stay-at-home trends. But these corners that have been the victims of social distancing can also turn around with the full reopening of economies.
Expanding the presence and going beyond the main activity has become the mantra of big tech companies in recent times. In an effort to be part of the video game industry (which has grown tremendously amid blockages), Facebook also launched its first game streaming app, Facebook Gaming, on April 21. Such initiatives will bear fruit in the medium term.
Technological revenues are expected to increase by 2.8% in the first quarter of 2020 thanks to revenues up by 6.2%. This contrasts with a 12.5% drop in profits from the S&P 500 and a 2.1% increase in revenues. The tech sector is one of the very few outperformers in otherwise optimistic earnings trends.
These stocks have seen next quarter earnings estimates increase by at least 5% in the past four weeks. Their price as a percentage of the 52-week high-low range (H-L) remains less than or equal to 90%. A value of 100 indicates that the stock is trading at a 52-week high and vice versa. The rise in prices over the past four weeks is more than 15%. The stocks also have a Zacks Rank # 1 (Strong Buy), 2 (Buy) or 3 (Hold).
The developer and distributor Zacks Rank # 1 of high performance compound semiconductor substrates, as well as optoelectronic semiconductor devices, comes from a favorable Zacks industry (ranked among the 19% of the 250+ industries in the Zacks universe). The 52-week H-L percentage price is 85.60%, indicating upside potential for the stock. Estimates of next quarter profits increased by 61.67%.
The supplier of software as a service and solutions for the Internet of Things for Zacks Rank # 3 comes from a favorable Zacks industry (15% of the best). The profit estimate has increased by 42.86% in the past four weeks. The percentage price of the 52 week H-L range is 72.78%.