Money can still be made in tech
Seven S&P 500 stocks that have room to grow
Tech stocks are coming alive and adding billions to the wealth of tech titans. But don’t worry: You haven’t completely missed the tech-stock money-making machine.
There are still seven technology stocks in the Standard & Poor’s 500 index — including First Solar, Facebook and Salesforce.com — that analysts think will be worth 20% or more in 18 months than they are now, according to a USA TODAY analysis of data from S&P Global Market Intelligence. These stocks show, for various reasons, there’s still money to be made in technology stocks despite the run-up in the entire sector.
Tech stocks have finally joined the market’s rally and are turning into a driving force. The Technology Select Sector SPDR exchange-traded fund is up 5.3% over the past month, making it the best-performing of all 10 sectors in the S&P 500 during that time. The tech rally is a big reason why the S&P 500 is up 1.4% over the past month and hitting new highs.
The tech-stock rally has intensified over the past month due to solid earnings reported from the companies. Tech stocks in the S&P 500 reported 1.2% higher secondquarter profit, which was nearly 7 percentage points better than what was expected in early July, says S&P Global.
Investors seem to be positioning themselves for the tech profit bonanza around the corner. S&P 500 tech companies are expected to report 14.4% higher adjusted earnings in Q1 of 2017, third only to expected earnings growth in materials companies of 22.8% and financials at 17.1%.
Some of the tech stocks with the highest potential upside are those that have been beaten down or left out of the market rally. Solar equipment maker First Solar is the tech stock analysts see the most upside in. First Solar is expected to be worth 55% more in 18 months than it is now.
Part of that upside, though, can be explained by the fact First Solar shares are down 19% over the past month. The shares have been hit by “uncertainty in the solar industry” due to “potential oversupply of (solar) modules,” says Ben Kallo, analyst at Baird. Analysts expect the company’s adjusted profit to fall by nearly a quarter in the current fiscal year. There’s no slowdown in sight for Facebook. Shares are already up 6.1% over the past month, and analysts think the social media giant’s shares will be worth 24% more in 18 months. Analysts expect the company’s adjusted earnings this year to jump 72% and another 28% in fiscal 2018. Investors jumping into tech stocks now might feel like they’re missing the party. EBay shares have soared 18% the past month and are now trading where analysts think they should be worth in 18 months. But there’s plenty of opportunity. On average, analysts think the 67 tech stocks in the S&P 500 will be worth 6.6% more in 18 months.