S&P 500   4,591.67
DOW   35,227.03
QQQ   386.20
S&P 500   4,591.67
DOW   35,227.03
QQQ   386.20
S&P 500   4,591.67
DOW   35,227.03
QQQ   386.20
S&P 500   4,591.67
DOW   35,227.03
QQQ   386.20

There’s Another 20% Still In Store For Big Tech

Monday, July 13, 2020 | Thomas Hughes
There’s Another 20% Still In Store For Big TechWedbush Doubles-Down On Secular Tech Winners

Last week, in a letter to shareholders, Wedbush doubled-down on big-tech names calling for another 20% to 30% upside for secular winners. The analysts say Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT) will be the biggest winners during the next phase of the market but they are not the only ones well-positioned in today’s market.

According to Wedbush, Apple is the best play for the coming 5G revolution while Microsoft will benefit from the push to work-from-home and cloud computing. The price target for both stocks was raised to near-Wall Street highs implying an 11% upside for Apple and 21% for Microsoft. Other names on the list include security/services like Docusign (NASDAQ: DOCU), Cyberark Software (NASDAQ; CYBR), and Fortinet (NASDAQ: FTNT).

While bold, I am not surprised by the note. Tech has been one of the biggest winners from the COVID-19 pandemic because of one thing; the pandemic has proven tech works. More importantly, it has proven that both businesses and consumers need tech in order to survive and accelerated a shift to digital that was already underway. On the one hand, there is a major push into work-from-home, why yes it is possible to work from home, while on the other there is social distancing. What better way to social distance than virtual?

Bank Of America Bullish On Chips

Bank Of America issued a similarly bullish statement on tech but confined the love to the chip-making industry. According to their research, the gaming industry is going to drive increasing demand (among other factors) in the second half of the year. With new consoles expected from both Sony and Microsoft, the analysts are expecting a major product upgrade cycle to begin.

Currently, less than 10% of the gaming market owns a console with chips on par to what will soon be the new standard. This means if gamers want to keep up with the latest games (and we know they do) they’re going to have to buy new machines. Of the chipmakers, Nvidia (NASDAQ: NVDA) and AMD (NASDAQ: AMD) are the best-positioned on the market. They see at least 10% upside on both stocks and maintain a buy rating for each.

Analog Devices (NASDAQ: ADI), coincidentally, just announced a major-merger and guidance upgrade that has shares of its stock on the move. The company is going to buy Maxim Integrated Products in an all-stock deal worth $68 billion. The move is intended to aid Analog Devices push into autonomous vehicles and 5G markets, markets that are both expected to boom in the current/upcoming year. At the same time, Analog Devices upped its full-year guidance underscoring both Wedbush’s and Bank Of American’s bullish stance.

The Earnings Outlook Is Good, Good, Good

The tech sector is going to be impacted by the pandemic that is a fact. What is also a fact is that the impact will be small because tech is transcending the virus in a way that means today’s gains will be in effect for a long time to come. In terms of earnings, the S&P 500 Technology Sector (ARCA: XLK) is expected to see EPS decline by -1.3% in the 2nd quarter. The mitigating factors are that this bar will be easy to beat, signs are already in place that it will be beaten, and if so, EPS is likely to come in positive for the quarter.

Looking forward, the outlook for the next quarter (Q3) is not great, negative growth about -5.0%, but again there are mitigating factors. First is that the analyst’s consensus is probably too low, we’ll get more color on that as the Q2 season unfolds, and second is that full-year consensus is still positive. The current consensus is for full-year growth in 2020 is near 1.2% and likely to begin rising very soon. If there is one thing that can move a market to new highs its rising EPS estimates. Beyond that, EPS growth is expected to accelerate to the mid-teens next year.

There’s Another 20% Still In Store For Big Tech

The Technical Outlook: This Market Is Marching To New Highs

Some markets drift higher and some markets rocket higher but not the XLK. The XLK has been moving steadily higher at a decent but not excessive clip since hitting its post-pandemic bottom. Now trading at new all-time highs, the ETF looks set to continue moving higher over the mid to long term. In the near term, there is a chance prices could pull back to support at the $104 level but that is not a guarantee. If tech is something you think you want to get into now is the time before earnings, but slowly and with caution, always keeping some powder dry in case the market does offer a better buying opportunity.

There’s Another 20% Still In Store For Big Tech
7 Reddit Stocks That Have a Chance to Be Special

As a conservative investor, I have a grudging admiration for the small army of retail traders that are making their dreams come true. I’m talking, of course, about the group of day traders who have made a habit of finding low-priced stocks (particularly those with high short interest) and attempting to send them “to the moon.”

They are called meme stocks, casino stocks, or Reddit stocks (named for the website where some of these traders congregate). It all means the same thing. And as much as I say I admire the traders who have profited from these stocks, I do it from a safe distance.

Many of these stocks were penny stocks. And they were penny stocks for a reason. No amount of speculative rocket fuel is going to change that. But if you look at some of these stocks as objectively as possible, there may be hope.

And in this special presentation, we’re going to look at seven Reddit stocks that might just have a chance to have a life beyond this current mania phase.

View the "7 Reddit Stocks That Have a Chance to Be Special".

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Apple (AAPL)2.7$165.32+2.2%0.53%29.42Buy$166.39
Microsoft (MSFT)3.0$326.19+1.0%0.76%36.49Buy$349.87
CyberArk Software (CYBR)2.2$151.95+0.2%N/A-108.54Buy$191.00
Fortinet (FTNT)2.4$292.04-3.6%N/A87.96Hold$315.91
DocuSign (DOCU)2.3$143.88+6.5%N/A-248.07Buy$260.13
NVIDIA (NVDA)2.5$300.37-2.1%0.05%92.56Buy$332.23
Analog Devices (ADI)3.3$181.06+0.1%1.52%49.07Buy$198.35
Compare These Stocks  Add These Stocks to My Watchlist 


Premium Research Tools

MarketBeat All Access subscribers can access stock screeners, the Idea Engine, data export tools, research reports, and other premium tools.

Discover All Access

Market Data and Calendars

Looking for new stock ideas? Want to see which stocks are moving? View our full suite of financial calendars and market data tables, all for free.

View Market Data

Investing Education and Resources

Receive a free world-class investing education from MarketBeat. Learn about financial terms, types of investments, trading strategies and more.

Financial Terms
Details Here
MarketBeat - Stock Market News and Research Tools logo

MarketBeat empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis. Whether you’re looking for analyst ratings, corporate buybacks, dividends, earnings, economic reports, financials, insider trades, IPOs, SEC filings or stock splits, MarketBeat has the objective information you need to analyze any stock. Learn more about MarketBeat.

MarketBeat is accredited by the Better Business Bureau

© American Consumer News, LLC dba MarketBeat® 2010-2021. All rights reserved.
326 E 8th St #105, Sioux Falls, SD 57103 | U.S. Based Support Team at [email protected] | (844) 978-6257
MarketBeat does not provide personalized financial advice and does not issue recommendations or offers to buy stock or sell any security.

Our Accessibility Statement | Terms of Service | Do Not Sell My Information

© 2021 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see disclaimer. Fundamental company data provided by Zacks Investment Research.