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3 Mid Cap Tech Stocks Primed to Outperform (HOOD, AZPN, VRT)
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In an environment where technology continues to reshape industries and drive growth, mid cap tech stocks offer a unique opportunity for investors. These companies are often in a sweet spot of innovation—they are mature enough to have proven business models but still small enough to generate rapid growth.
In this article, we highlight three top-ranked mid cap tech stocks—Robinhood Markets ((HOOD - Free Report) ), Aspen Technology ((AZPN - Free Report) ), and Vertiv ((VRT - Free Report) )—that are positioned to outperform the broader market. With strong fundamentals and favorable growth prospects, these tech stocks could become major drivers of portfolio appreciation.
Image Source: Zacks Investment Research
Aspen Technology: Steady Growth and Share Buybacks
Aspen Technology is a global leader in industrial software. The company specializes in providing advanced process optimization solutions to help manufacturers maximize efficiency, improve product quality, and reduce costs. Aspen Technology's software is widely used in industries such as chemicals, energy, engineering, and construction, enabling companies to make data-driven decisions and improve asset performance. The company is known for its expertise in combining artificial intelligence with industrial expertise to optimize processes across the asset lifecycle.
Aspen Technology has been the worst performing stock of the group and the only one that has underperformed the market year-to-date. However, it looks like that is about to change. In recent weeks, analysts have upgraded earnings estimates unanimously and across timeframes. FY24 earnings estimates have jumped 10.4% higher in the last month and are forecast to climb 12.75% YoY, while FY25 estimates have increased by 15% and are projected to grow 9.2% YoY. These upgrades give AZPN a Zacks Rank #1 (Strong Buy) rating.
Image Source: Zacks Investment Research
While sales are not expected to grow particularly rapidly in the coming years, 5.5% this year and 8.7% next year, AZPN’s share buyback history offers an additional bullish tailwind. Over the last 10 years, management has repurchased more than 30% of the shares outstanding and plans to buy back another $100 million in the coming year.
AZPN stock is trading at a one year forward earnings multiple of 36x, which is just above its 10-year median of 33.5x and below the industry average of 40.1x.
Image Source: Zacks Investment Research
Robinhood Markets: Breakout Company
Robinhood Markets is a financial services company known for its commission-free trading platform, making stock, ETF, options, and cryptocurrency investing accessible to retail investors. Its business model relies on revenue sources like payment for order flow (PFOF), Robinhood Gold subscription services, margin lending, and cash management services. Robinhood also provides other financial products like high yield savings accounts and educational tools to help users understand investing basics among others.
Robinhood Markets has truly exploded onto the retail brokerage scene, with its user-friendly interface rapidly making it the platform of choice for millennial and Gen Z investors. And earnings estimates are on the rise, giving HOOD a Zacks Rank #1 (Strong Buy) rating. In the table below, we can see that earnings estimates have been raised unanimously and across timeframes by as much as 58% in the last two months.
Another notable development is that Robinhood Markets is trading near its most attractive valuation since going public. With the inflection of earnings to net positive, HOOD is now trading at 29.4x forward earnings, a significant development for a newer company. And though this is well above the industry average of 11.4x, Robinhood is a breakout name in the industry.
Image Source: Zacks Investment Research
Vertiv: AI Infrastructure Stock
Vertiv is a company that is well-positioned to benefit from the surging demand in AI and cloud computing industries. Specializing in providing critical infrastructure for data centers, Vertiv is at the forefront of supporting the backbone of AI-driven businesses.
Vertiv's growth story is promising, with an estimated earnings per share (EPS) growth of 29.6% annually over the next three to five years. Vertiv also just jumped back on to the Zacks Rank, boasting a Zacks Rank #1 (Strong Buy) rating.
Trading at 37.6x forward earnings, Vertiv’s valuation, while elevated, reflects the company’s robust positioning in the data center market and its long-term growth prospects. Although this level puts VRT’s valuation well above the broad market and its five-year median of 22.4x, it is still below the industry average.
It is also worth noting that VRT stock is on the move. After breaking out from a bull flag this week, the price action looks ready to make another new all-time high after several months of choppy trading.
Image Source: TradingView
Should Investors Buy VRT, HOOD and AZPN shares?
While mid-cap tech stocks may carry some additional risk compared to larger-cap companies, the potential for significant returns can make them worthwhile investments. HOOD, AZPN, and VRT offer unique opportunities within the mid-cap tech space, with strong fundamentals, favorable growth prospects, and potential for outperformance.
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3 Mid Cap Tech Stocks Primed to Outperform (HOOD, AZPN, VRT)
In an environment where technology continues to reshape industries and drive growth, mid cap tech stocks offer a unique opportunity for investors. These companies are often in a sweet spot of innovation—they are mature enough to have proven business models but still small enough to generate rapid growth.
In this article, we highlight three top-ranked mid cap tech stocks—Robinhood Markets ((HOOD - Free Report) ), Aspen Technology ((AZPN - Free Report) ), and Vertiv ((VRT - Free Report) )—that are positioned to outperform the broader market. With strong fundamentals and favorable growth prospects, these tech stocks could become major drivers of portfolio appreciation.
Image Source: Zacks Investment Research
Aspen Technology: Steady Growth and Share Buybacks
Aspen Technology is a global leader in industrial software. The company specializes in providing advanced process optimization solutions to help manufacturers maximize efficiency, improve product quality, and reduce costs. Aspen Technology's software is widely used in industries such as chemicals, energy, engineering, and construction, enabling companies to make data-driven decisions and improve asset performance. The company is known for its expertise in combining artificial intelligence with industrial expertise to optimize processes across the asset lifecycle.
Aspen Technology has been the worst performing stock of the group and the only one that has underperformed the market year-to-date. However, it looks like that is about to change. In recent weeks, analysts have upgraded earnings estimates unanimously and across timeframes. FY24 earnings estimates have jumped 10.4% higher in the last month and are forecast to climb 12.75% YoY, while FY25 estimates have increased by 15% and are projected to grow 9.2% YoY. These upgrades give AZPN a Zacks Rank #1 (Strong Buy) rating.
Image Source: Zacks Investment Research
While sales are not expected to grow particularly rapidly in the coming years, 5.5% this year and 8.7% next year, AZPN’s share buyback history offers an additional bullish tailwind. Over the last 10 years, management has repurchased more than 30% of the shares outstanding and plans to buy back another $100 million in the coming year.
AZPN stock is trading at a one year forward earnings multiple of 36x, which is just above its 10-year median of 33.5x and below the industry average of 40.1x.
Image Source: Zacks Investment Research
Robinhood Markets: Breakout Company
Robinhood Markets is a financial services company known for its commission-free trading platform, making stock, ETF, options, and cryptocurrency investing accessible to retail investors. Its business model relies on revenue sources like payment for order flow (PFOF), Robinhood Gold subscription services, margin lending, and cash management services. Robinhood also provides other financial products like high yield savings accounts and educational tools to help users understand investing basics among others.
Robinhood Markets has truly exploded onto the retail brokerage scene, with its user-friendly interface rapidly making it the platform of choice for millennial and Gen Z investors. And earnings estimates are on the rise, giving HOOD a Zacks Rank #1 (Strong Buy) rating. In the table below, we can see that earnings estimates have been raised unanimously and across timeframes by as much as 58% in the last two months.
Another notable development is that Robinhood Markets is trading near its most attractive valuation since going public. With the inflection of earnings to net positive, HOOD is now trading at 29.4x forward earnings, a significant development for a newer company. And though this is well above the industry average of 11.4x, Robinhood is a breakout name in the industry.
Image Source: Zacks Investment Research
Vertiv: AI Infrastructure Stock
Vertiv is a company that is well-positioned to benefit from the surging demand in AI and cloud computing industries. Specializing in providing critical infrastructure for data centers, Vertiv is at the forefront of supporting the backbone of AI-driven businesses.
Vertiv's growth story is promising, with an estimated earnings per share (EPS) growth of 29.6% annually over the next three to five years. Vertiv also just jumped back on to the Zacks Rank, boasting a Zacks Rank #1 (Strong Buy) rating.
Trading at 37.6x forward earnings, Vertiv’s valuation, while elevated, reflects the company’s robust positioning in the data center market and its long-term growth prospects. Although this level puts VRT’s valuation well above the broad market and its five-year median of 22.4x, it is still below the industry average.
It is also worth noting that VRT stock is on the move. After breaking out from a bull flag this week, the price action looks ready to make another new all-time high after several months of choppy trading.
Image Source: TradingView
Should Investors Buy VRT, HOOD and AZPN shares?
While mid-cap tech stocks may carry some additional risk compared to larger-cap companies, the potential for significant returns can make them worthwhile investments. HOOD, AZPN, and VRT offer unique opportunities within the mid-cap tech space, with strong fundamentals, favorable growth prospects, and potential for outperformance.