The technology sector is composed 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 Fund (XLK), have outperformed the broader market over the past year. XLK has provided investors with a total return of 42.3% over the past 12 months, above the iShares Russell 1000 ETF’s (IWB) total return of 33.5%. These market performance numbers and statistics in the tables below are as of Nov. 18, 2021.
Here are the top five tech stocks with the best value, fastest growth, and 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, then 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)||40.91||4.8||4.8|
|HP Inc. (HPQ)||30.93||35.7||9.6|
|Arrow Electronics Inc. (ARW)||125.22||8.7||9.6|
|Intel Corp. (INTC)||50.23||204.3||9.8|
|Dell Technologies Inc. (DELL)||56.00||42.9||11.6|
- 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 announced in late September an agreement to acquire Salty Dot Inc., a provider of automobile insurance software. The financial terms of the transaction were not disclosed.
- 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. On Oct. 20, 2021, HP announced that it was increasing its annual dividend by approximately 29% to $1 per share.
- Arrow Electronics Inc.: Arrow Electronics is a global provider of electronic components, computer products, and enterprise 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 more than 180,000 customers in technology manufacturing and 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 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. In late October, Intel announced that it has collaborated with Google Cloud to develop a new category of chip called an "infrastructure processing unit", or IPU. The chip is aimed at simplifying developer access to technology in Google Cloud data centers, reducing overhead costs and improving the efficiency of CPUs.
- Dell Technologies Inc.: Dell Technologies designs, develops, and manufactures a range of integrated technology solutions, products, and services. Its products include desktops, workstations, notebooks, displays, projectors, and more. The company also offers multi-cloud, big data, and storage solutions to meet a wide variety of its customers' needs. Dell serves 98% of Fortune 500 companies and employs a sales force of more than 40,000 people. The company announced in early November that it has completed the spinoff of its 81% equity ownership of VMware Inc., creating an independent software company. VMware distributed a special cash dividend of $11.5 billion to its shareholders. Dell received $9.3 billion in the transaction and said it will use the funds to pay down debt.
These are the top tech stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and most recent quarterly YOY earnings per share (EPS) growth. Both sales and earnings are critical factors in a company’s success. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.
|Fastest Growing Tech Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|Gartner Inc. (IT)||335.02||27.6||826.3||16.3|
|Fidelity National Information Services Inc. (FIS)||110.44||67.3||766.7||9.7|
|NVIDIA Corp. (NVDA)||292.61||731.5||276.0||68.3|
|ServiceNow Inc. (NOW)||684.93||136.3||416.7||31.3|
|Sunrun Inc. (RUN)||55.14||11.4||-60.7||109.2|
- Gartner Inc.: Gartner is a global research and consulting company that helps businesses achieve mission-critical tasks to grow their operations. It helps customers in areas such as finance, information technology, legal and compliance, product management, strategy, and supply chain. Gartner's customer base includes 14,000 enterprises in over 100 countries.
- Fidelity National Information Services Inc.: Fidelity National Information Services (FIS) provides financial technology solutions for merchants, banks, and firms engaged in capital markets. Its technology and services provide solutions for the payment, banking, and investment needs of its more than 18,000 customers. FIS announced in early November financial results for Q3 of its 2021 fiscal year (FY), the three-month period ended Sept. 30, 2021. Net earnings attributable to its common stockholders rose 690.0% on revenue growth of 9.7% compared to the year-ago quarter. The company said that its strong cash flow during the quarter allowed it to accelerate the pace of its share buybacks without sacrificing its ability to execute on its growth-focused merger and acquisition (M&A) strategy.
- NVIDIA Corp.: NVIDIA is a maker of GPUs, a type of computer chip originally designed for computer graphics. GPUs, once used primarily for personal computer (PC) gaming, have been increasingly used for cryptocurrency mining and machine learning in recent years. NVIDIA's products are also used in other markets, including gaming, professional visualization, data center, and automotive.
- ServiceNow Inc.: ServiceNow is a software company that offers a cloud platform enabling its enterprise customers to manage a range of digital workflows. Its platform is aimed at helping businesses to optimize their productivity, develop customer loyalty, and create cross-enterprise workflow applications. The company has about 6,900 enterprise customers globally.
- Sunrun Inc.: Sunrun is a solar energy company that provides residential solar panels and battery storage solutions. The company designs, develops, and installs solar energy systems primarily for residential customers. It also provides maintenance services for those systems. Sunrun has 8,500 full-time employees, as of the end of 2020. The company announced in early November financial results for Q3 FY 2021 ended Sept. 30, 2021. Net income attributable to Sunrun's common stockholders fell 35.6% YOY despite a more than doubling of revenue YOY. The company's operating expenses rose at a faster rate than revenue, hurting net income.
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 (%)|
|Bill.com Holdings Inc. (BILL)||324.38||33.3||228.3|
|Cloudflare Inc. (NET)||211.80||68.2||221.1|
|Fortinet Inc. (FTNT)||341.35||55.8||188.3|
|Zscaler Inc. (ZS)||356.00||49.4||160.5|
|HubSpot Inc. (HUBS)||838.41||39.6||135.7|
|iShares Russell 1000 ETF||N/A||N/A||33.5|
|Technology Select Sector SPDR Fund (XLK)||N/A||N/A||42.3|
- Bill.com Holdings Inc.: Bill.com provides cloud-based software that simplifies, digitizes, and automates back-office operations for small and midsize businesses (SMBs). The company's focus is helping SMBs to manage their cash inflows and outflows. Bill.com Holdings serves more than 80% of the top 100 U.S. accounting firms. The company announced in early September that it completed its acquisition of Invoice2go, a mobile-first accounts receivable software provider, for approximately $625 million.
- Cloudflare Inc.: Cloudflare is a global cloud services provider. Its platform delivers network services that enhance the security and performance of customers’ websites and critical business applications. About 25 million Internet properties use Cloudflare’s services, and the company operates data centers in more than 250 cities worldwide.
- 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 clients with security solutions for networked, application, cloud, and mobile environments. The company has more than 500,000 customers around the world.
- Zscaler Inc.: Zscaler is a cloud-based information security company that provides an integrated platform designed to help enterprises transition from network infrastructure to the cloud. Its platform offers secure access to the Internet and software-as-a-service (SaaS) applications. The platform's security systems offer access control, threat prevention, and data protection.
- HubSpot Inc.: HubSpot provides a cloud-based marketing and sales software platform to help enterprises grow. It offers customer relationship management (CRM), content management software (CMS), marketing and sales, and other management solutions. HubSpot serves more than 128,000 customers in more than 120 countries. The company announced in early November financial results for Q3 FY 2021 ended Sept. 30, 2021. HubSpot's net loss narrowed to $13.7 million from $22.5 million in the year-ago quarter. Revenue rose 48.5% YOY.
The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.
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