The technology sector is made up of companies that, among other things, manufacture consumer electronics and their components, develop software, and provide information technology (IT) services like cloud hosting. Well-known companies in this sector include Microsoft (MSFT), Alphabet (GOOGL), and Facebook (FB). The tech sector, as measured by the Technology Select Sector SPDR ETF (XLK), has outperformed the S&P 500 substantially over the past year. XLK returned 27.9% versus the S&P's 16.3% in the trailing 12-month period. All figures are as of November 18, 2019.
Below, we'll examine the top three stocks in the tech sector for best value, fastest earnings growth, and most momentum.
Technology Stocks with the Best Value
Here are the technology stocks in the S&P 500 with the lowest 12-month trailing price-to-earnings (P/E) ratio in the sector. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
|Tech Stocks with the Best Value|
|Price ($)||Market Cap ($B)||12-Month Trailing P/E|
|HP Inc (HPQ)||20.18||29.9||7.4|
|Micron Technology (MU)||47.71||52.8||8.7|
|Seagate Technology PLC ( STX)||59.08||15.5||9.4|
- HP Inc: HP is a manufacturer of PCs, PC accessories, printers, and ink. They were one of the two companies resulting from the 2014 breakup of Hewlett-Packard, the other being Hewlett Packard Enterprise. HP announced in November that its board of directors had unanimously rejected an unsolicited proposal from Xerox to acquire the computer manufacturing company.
- Micron Technology: Micron Technology makes computer memory devices, such as DRAM and solid state drives. Micron recently announced the release of a 1TB industrial-grade microSD card for cloud video surveillance, a product that the company suggests will eliminate the need for network video recorders.
- Seagate Technology PLC: Seagate Technology is a manufacturer of hard drives and computer storage solutions. The company makes hard disk drives, consumer retail storage products, and more. In its recent fiscal Q1 2020 report, reflecting the quarter ending October 4, Seagate reported a slight decline in revenue and gross margin year-over-year (YOY).
Technology Stocks with the Fastest Earnings Growth
Here are the technology stocks in the S&P 500 with the highest year-over-year earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
|Tech Stocks with the Fastest Growth|
|Price ($)||Market Cap ($B)||EPS Growth (%)|
|Gartner Inc. (IT)||159.94||14.3||192.1|
|Xerox Holdings Corp. ( XRX)||38.94||8.4||120.9|
- Gartner Inc.: Gartner is a research and consulting company. It advises clients on IT, finance, human resources, and supply-chain-management, among other areas. In addition to performing research in a variety of industries, the company organizes and host conferences. On October 31, Gartner reported quarterly earnings, significantly surpassing consensus estimates.
- Qorvo Inc.: Qorvo is a semiconductor manufacturer that makes radio-frequency (RF) chips that let electronics communicate with wireless networks. On October 31, Qorvo announced an ambitious $1 billion share repurchase program.
- Xerox Holdings Corp.: A holding company, Xerox owns subsidiary businesses that manufacture and distribute printers, scanners, and related accessories and equipment. After making an ambitious bid to purchase HP, Xerox was recently rejected by the computing firm's board of directors (see above).
Technology Stocks with the Most Momentum
These are the technology stocks in the S&P 500 that had the greatest total return over the past 12 months.
|Tech Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Lam Research (LRCX)||283.68||41.1||98.5|
|Keysight Technologies Inc. ( KEYS)||109.08||20.5||85.7|
|S&P 500 ( SPY)||N/A||N/A||16.3|
|Technology Select Sector SPDR Fund (XLK)||N/A||N/A||27.9|
- Lam Research Corp: Lam Research manufactures and services equipment used to make microchips. The semiconductor sector is doing well as a whole, measured by the SPDR S&P Semiconductor ETF (XSD), which is up about 48% in the last year. On October 23, Lam reported September quarter revenue of nearly $2.2 billion, down slightly from the previous year.
- KLA Corp: KLA manufactures equipment that helps test and control the microchip manufacturing process. KLA beat consensus estimates when it reported earnings on October 31, generating revenue of $1.4 billion for the period, above guidance.
- Keysight Technologies Inc.: Keysight is a company developing and manufacturing hardware and software for electronic testing and measurement equipment. Keysight recently announced a partnership with FormFactor Inc. and CompoundTek to "accelerate integrated photonics innovations."