Businesses that offer products and services in electronics, computers, software, artificial intelligence (AI), and other areas connected to information technology make up the technology sector. Companies with the world’s greatest market capitalizations, such as Apple Inc (AAPL), Microsoft Corp (MSFT), and Amazon.com (AMZN), are all part of this sector.
Over the last year, technology stocks, as represented by the Technology Select Sector SPDR Fund (XLK), have outperformed the overall marketplace. Over the past 12 months, XLK has rewarded investors a total return of 12.7%, which is higher than the Russell 1000’s total return of 9.7%.
In order for a tech firm – or any firm for that matter – to succeed, it must have both sales and profitability. As a result, evaluating organizations based on only one growth indicator exposes them to accounting irregularities (such as changes in tax legislation or restructuring charges) that may render one statistic or the other unrepresentative of the business in general. Outliers were defined as companies with a quarterly EPS or sales increase of more than 2,500%. Equally important are “value” and “momentum” stocks, which I may touch on in the coming days, but for now, I’m going to tackle what the stats are indicating to be the fastest-growing stocks so far this year.
Let’s peek behind the curtain at three tech stocks that are buy-rated, growing quickly, and are favorites among analysts. These each would make for very welcome additions to our portfolios:
Microchip Technology Inc (MCHP)
Microchip Technology, Inc (MCHP) is a company that manufactures semiconductors. It is divided into two segments: Semiconductor Products and Technology Licensing. Microcontrollers, development tools, analog, interface, mixed-signal, connection devices, and timing items are all part of the Semiconductor Products business, which designs, develops, manufactures, and markets them. The Technology Licensing category includes technology license fees and royalties for using “SuperFlash” and “Smartbits” – one-time programmable technologies. The firm was created on February 14th, 1989, in Chandler, Arizona.
MCHP had a stellar 2021 when it comes to its financials. The business successfully crushed analysts’ projections on EPS (Earnings-per-share) and revenue for the last four consecutive fiscal quarters. MCHP’s year-over-year numbers are all in the green and display incredible growth. Most notable are its net income growth of 874.59% and EPS growth of 785.71%. MCHP currently pays a dividend yield of 1.42%, with a quarterly payout of 25 cents per share. Its current quarter shows $1.8 billion in sales so far, at $1.25 per share. MCHP has a consensus price target of 96.50 among analysts that provide 12-month price estimates, with a high of 125.00 and a low of 78.00. The median projection reflects a 35.44% increase from its previous price, and the consensus gives MCHP a strong buy rating.
TD Synnex Corp (SNX)
The technology industry is well served by TD Synnex Corp (SNX), which provides distribution, logistics, and integration services. It is divided into two segments: Technology Solutions and “Concentrix.” Peripherals, IT systems, including data center server and storage solutions, system components, software, networking equipment, consumer electronics, and related items are distributed by the Technology Solutions section. Customers in vertical industrial markets can access a variety of strategic solutions and end-to-end business services through the “Concentrix” division. Robert T. Huang created SNX in November of 1980, and it is based in Fremont, California.
SNX has a workforce of around 22,000 people and services over 150,000 clients and providers in over 100 countries. SNX recently established a strategic partnership with Amazon Web Services to help small and medium-sized enterprises and organizations in North America, Latin America, and the Caribbean. SNX also boasts robust financials. It bested the experts’ predictions for EPS and Revenue in each fiscal quarter of 2021 and has year-over-year revenue growth of 155.13%. SNX currently pays a dividend yield of 1.19%, with a quarterly payout of 30 cents per share. Until SNX reports again, it shows us $15.3 billion in sales, at an EPS of $2.73. The consensus price target for SNX from the analysts that provide 12-month predictions is 140.50, with a high of 175.00 and a low of 120.00. The consensus estimate reflects an increase of 38.72% over current pricing, and analysts are telling us to buy SNX.
Western Digital Corp (WDC)
Western Digital Corp (WDC) is a data storage device and solution developer, manufacturer, and provider. Hard disk drives and flash-based memory, the latter of which is a semiconductor technology, are the two primary categories in which it organizes its operations. Roughly 13,700 active patents are held by WDC around the world. WDC is headquartered in San Jose, California, founded by Alvin B. Phillips in 1970.
WDC, like its peers on this list, had a great 2021 when it comes to its books. WDC, like its counterparts, beat the experts’ projections on both EPS and revenue for each fiscal quarter of 2021. What’s perhaps most impressive is its year-over-year growth. Revenue shows 809.68%, EPS has grown 795%, with a rare profit margin growth estimation of 643%. WDC doesn’t currently pay a dividend yield like SNX and MCHP, but don’t let that deter you from consideration. WDC’s current quarter (until it reports again) shows us an EPS of $1.62, with $4.5 billion in sales. WDC has a consensus price target of 73.50 among the analysts that provide 12-month price estimates, with a high of 92.00 and a low of 55.00. The median estimate is up 41.73% from the most recent price, and WDC boasts a solid buy rating.
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