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 42.6% over the past 12 months, above the Russell 1000's total return of 38.1%. These market performance numbers and statistics in the tables below are as of July 16, 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)||48.33||5.9||5.8|
|HP Inc. ( HPQ)||27.52||33.1||9.8|
|Synnex Corp. ( SNX)||111.60||5.8||10.9|
|Arrow Electronics Inc. ( ARW)||109.85||8.1||11.4|
|Intel Corp. ( INTC)||54.97||222.0||12.4|
- 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 early June that it 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 serves individual consumers, businesses of all sizes, and government customers. The company holds 27,000 patents and operates in 170 countries throughout the world. HP announced in early June that it completed its acquisition of HyperX, the gaming division of Kingston Technology Co., for $425 million. The company first announced the agreement to acquire HyperX in late February 2021.
- 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.
- 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 caters to 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 has been exploring a deal to purchase semiconductor manufacturer GlobalFoundries Inc., which could be worth $30 billion, according to people familiar with the matter, in a July 15 news report. The deal, which would be Intel's largest acquisition ever, is not guaranteed. If completed, it would advance the company's plans to manufacture more chips for other companies. Intel has already pledged this year to invest more than $20 billion to expand its chip-making capacity amid a global semiconductor shortage.
These are the top tech stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings per share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
|Fastest Growing Tech Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|Zoom Video Communications Inc. ( ZM)||361.97||106.7||722.2||191.4|
|PTC Inc. ( PTC)||140.20||16.4||1,430||28.4|
|CDK Global Inc. (CDK)||48.33||5.9||1,390||1.6|
|Datto Holding Corp. ( MSP)||26.80||4.3||952.4||16.2|
|Western Digital Corp. ( WDC)||64.20||19.7||950.0||-0.9|
- 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 room systems. Customers can engage in one-on-one chats or conduct large-scale online events with up to 10,000 view-only attendees. Zoom recently announced that it has agreed to acquire Five9 Inc. (FIVN), a provider of cloud contact center solutions, in an all-stock transaction valued at approximately $14.7 billion. The transaction, which is expected to close in the first half of 2022, would combine Zoom's communications platform with Five9's intelligent cloud contact center in order to change the way businesses connect with their customers.
- PTC Inc.: PTC is a provider of software and technology services. The company works with manufacturers to boost efficiency savings by integrating augmented reality, internet of things (IoT), computer aided design (CAD), and product lifecycle management (PLM) technology into a variety of products. PTC employs a team of roughly 6,200 on a global basis.
- CDK Global Inc.: See above for company description.
- Datto Holding Corp.: Datto Holding provides cloud-based software and security services for delivery by managed service providers (MSPs). The company's innovative technology solutions provide cyber resilience, efficiency, and growth for MSPs. Datto has more than 20 global locations and employs more than 1,600 people.
- Western Digital Corp.: Western Digital is a developer and manufacturer of data storage devices and solutions serving the IT and the infrastructure that makes the proliferation of data possible. It offers a portfolio of technologies, storage devices, systems, and solutions through its WD, SanDisk, G-Technology, and Western Digital brands. The company has about 13,500 active patents and employs approximately 63,800 people worldwide.
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)||102.66||31.9||192.5|
|Enphase Energy Inc. ( ENPH)||163.45||22.2||183.1|
|HubSpot Inc. ( HUBS)||559.59||26.2||160.3|
|CommScope Holding Co. Inc. ( COMM)||20.60||4.2||152.8|
|CrowdStrike Holdings Inc. ( CRWD)||249.96||56.4||147.3|
|Technology Select Sector SPDR ETF (XLK)||N/A||N/A||42.6|
- 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. In early May, Cloudflare announced financial results for Q1 of its 2021 fiscal year (FY), the three-month period ended March 31, 2021. The company's net loss widened to $40.0 million from $32.7 million in the year-ago quarter despite a 51.3% year-over-year (YOY) rise in revenue. Cloudflare's interest expenses were significantly higher compared to the year-ago quarter, contributing to the bigger loss in the recent quarter.
- Enphase Energy Inc.: Enphase Energy is a global energy technology company that provides energy management solutions. It designs and manufactures solar panels, energy storage, and other products. The company has installed more than 34 million solar microinverters on over 1.4 million homes.
- 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 business management solutions. HubSpot serves more than 113,000 customers in over 120 countries.
- CommScope Holding Co. Inc.: CommScope provides infrastructure solutions for communication and entertainment networks worldwide. Its wired and wireless network solutions enables service providers to deliver media, voice, IP data services, and Wi-Fi to their subscribers. The company employs roughly 30,000 people in order to serve customers in more than 150 countries.
- 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.
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 to 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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