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Pick These 5 Mid-Cap Technology Stocks to Enrich Your Portfolio
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Wall Street witnessed an impressive 15-month-long rally, primarily led by growth stocks, especially, technology stocks, before April’s meltdown. The U.S. stock markets rebounded in early May after a disappointing April, with recently released economic data boosting market participants’ confidence in equities.
The tech rally was led by a massive thrust toward artificial intelligence (AI), especially generative AI. The rapid penetration of digital technologies and the Internet worldwide during the lockdown led to significant adoption of AI.
Some financial and technology experts believe that AI is much-hyped and may lead to a bubble. We believe the AI-space is yet to unfold in the United States and international markets. Once that happens, it will generate huge business opportunities for technology companies producing high-end products.
Near-Term Drivers
Wall Street’s meltdown in April was owing to market participants’ concern that the Fed would keep the interest rate higher for longer in light of the sticky inflation rate and a resilient labor market. A higher interest rate is detrimental to high-growth sectors like technology.
U.S. stock markets rebounded in May following a sharp decline in April job additions, a notable deterioration of the U.S. GDP growth rate in first-quarter 2024, the contraction of manufacturing and services PMI in April and less-than-hawkish statement by Fed Chairman Jerome Powell after the May FOMC meeting.
Following the release of April’s nonfarm payrolls, the CME FedWatch shows a 67.4% probability that the central bank will cut the benchmark lending rate by 25 basis points in the September FOMC meeting. The interest rate futures tool also shows a massive 91.5% probability that the Fed will cut the rate by 50 basis points.
Our Top Picks
The major gainers of the ongoing tech rally are technology giants. Some of these stocks have flourished 100-200% in the past year. Apart from technology behemoths, several mid-cap tech stocks are poised to benefit from the rally.
We have narrowed our search to five mid-cap technology stocks that have strong potential for the rest of 2024. These stocks have seen positive earnings estimate revisions in the past 60 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
Amkor Technology Inc. (AMKR - Free Report) is the world's largest independent provider of semiconductor packaging and test services. AMKR is one of the leading developers of advanced semiconductor packaging and test technology.
AMKR offers one of the industry's broadest integrated sets of packaging and test services, which are the final procedures necessary to prepare semiconductor devices for further use. AMKR serves integrated device manufacturers, fabless semiconductor companies, original equipment manufacturers, and contract foundries.
Zacks Rank #1 Amkor Technology has an expected revenue and earnings growth rate of 0.9% and 21.9%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.5% over the past seven days.
AppFolio Inc. (APPF - Free Report) provides cloud business management solutions for the real estate industry in the United States. APPF provides a cloud-based platform that enables users to automate and optimize common workflows, tools that assist in leasing, maintenance, and accounting, and other technology and services offered by third parties.
APPF also provides value-added services that are designed to enhance, automate, and streamline processes and workflows for property management businesses, such as electronic payment, tenant screening, and insurance services.
Zacks Rank #1 AppFolio has an expected revenue and earnings growth rate of 24.7% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.4% over the past 30 days.
Badger Meter Inc. (BMI - Free Report) has gained from robust customer demand for its differentiated smart water solutions and strong operational execution. Continued momentum in E-Series ultrasonic meters, cellular AMI solution, ORION Cellular endpoint sales and higher BEACON Software-as-a-Service sales is likely to drive BMI’s top-line expansion.
BMI’s efforts to broaden its global footprint are creating a tailwind. Margins are gaining from higher volumes and structural positive sales mix trends. BMI’s debt-free balance sheet and synergies from acquisitions are other positives.
Zacks Rank #1 Badger Meter has an expected revenue and earnings growth rate of 13.6% and 23.9%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 9.9% over the past 30 days.
Celestica Inc. (CLS - Free Report) is one of the largest electronics manufacturing services companies in the world, serving the computer, and communications sectors. CLS provides competitive manufacturing technology and service solutions for printed circuit assembly and system assembly, as well as post-manufacturing support to many of the world's leading original equipment manufacturers.
CLS’ extensive depth and breadth of offerings support a wide variety of customer requirements, from low-volume, high-complexity custom products to high-volume commodity products. CLS operates through two segments: Advanced Technology Solutions, and Connectivity & Cloud Solutions.
Zacks Rank #1 Celestica has an expected revenue and earnings growth rate of 14.6% and 36.6%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 14.1% over the past 30 days.
Guidewire Software Inc. (GWRE - Free Report) is a provider of software solutions for property and casualty insurers. The platform offered by GWRE combines core operations, digital engagement, analytics, machine learning, and artificial intelligence, which are delivered to its customers via self-managed software or cloud services.
GWRE’s core solutions include InsuranceSuite Cloud, InsuranceNow, and InsuranceSuite for self-managed installations. Guidewire InsuranceSuite Cloud comprises of PolicyCenter Cloud, BillingCenter Cloud, and ClaimCenter Cloud.
Zacks Rank #2 Guidewire Software has an expected revenue and earnings growth rate of 6.4% and more than 100%, respectively, for the current year (ending July 2024). The Zacks Consensus Estimate for current-year earnings has improved 14.3% over the past 60 days.
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Pick These 5 Mid-Cap Technology Stocks to Enrich Your Portfolio
Wall Street witnessed an impressive 15-month-long rally, primarily led by growth stocks, especially, technology stocks, before April’s meltdown. The U.S. stock markets rebounded in early May after a disappointing April, with recently released economic data boosting market participants’ confidence in equities.
The tech rally was led by a massive thrust toward artificial intelligence (AI), especially generative AI. The rapid penetration of digital technologies and the Internet worldwide during the lockdown led to significant adoption of AI.
Some financial and technology experts believe that AI is much-hyped and may lead to a bubble. We believe the AI-space is yet to unfold in the United States and international markets. Once that happens, it will generate huge business opportunities for technology companies producing high-end products.
Near-Term Drivers
Wall Street’s meltdown in April was owing to market participants’ concern that the Fed would keep the interest rate higher for longer in light of the sticky inflation rate and a resilient labor market. A higher interest rate is detrimental to high-growth sectors like technology.
U.S. stock markets rebounded in May following a sharp decline in April job additions, a notable deterioration of the U.S. GDP growth rate in first-quarter 2024, the contraction of manufacturing and services PMI in April and less-than-hawkish statement by Fed Chairman Jerome Powell after the May FOMC meeting.
Following the release of April’s nonfarm payrolls, the CME FedWatch shows a 67.4% probability that the central bank will cut the benchmark lending rate by 25 basis points in the September FOMC meeting. The interest rate futures tool also shows a massive 91.5% probability that the Fed will cut the rate by 50 basis points.
Our Top Picks
The major gainers of the ongoing tech rally are technology giants. Some of these stocks have flourished 100-200% in the past year. Apart from technology behemoths, several mid-cap tech stocks are poised to benefit from the rally.
We have narrowed our search to five mid-cap technology stocks that have strong potential for the rest of 2024. These stocks have seen positive earnings estimate revisions in the past 60 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
Amkor Technology Inc. (AMKR - Free Report) is the world's largest independent provider of semiconductor packaging and test services. AMKR is one of the leading developers of advanced semiconductor packaging and test technology.
AMKR offers one of the industry's broadest integrated sets of packaging and test services, which are the final procedures necessary to prepare semiconductor devices for further use. AMKR serves integrated device manufacturers, fabless semiconductor companies, original equipment manufacturers, and contract foundries.
Zacks Rank #1 Amkor Technology has an expected revenue and earnings growth rate of 0.9% and 21.9%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.5% over the past seven days.
AppFolio Inc. (APPF - Free Report) provides cloud business management solutions for the real estate industry in the United States. APPF provides a cloud-based platform that enables users to automate and optimize common workflows, tools that assist in leasing, maintenance, and accounting, and other technology and services offered by third parties.
APPF also provides value-added services that are designed to enhance, automate, and streamline processes and workflows for property management businesses, such as electronic payment, tenant screening, and insurance services.
Zacks Rank #1 AppFolio has an expected revenue and earnings growth rate of 24.7% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.4% over the past 30 days.
Badger Meter Inc. (BMI - Free Report) has gained from robust customer demand for its differentiated smart water solutions and strong operational execution. Continued momentum in E-Series ultrasonic meters, cellular AMI solution, ORION Cellular endpoint sales and higher BEACON Software-as-a-Service sales is likely to drive BMI’s top-line expansion.
BMI’s efforts to broaden its global footprint are creating a tailwind. Margins are gaining from higher volumes and structural positive sales mix trends. BMI’s debt-free balance sheet and synergies from acquisitions are other positives.
Zacks Rank #1 Badger Meter has an expected revenue and earnings growth rate of 13.6% and 23.9%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 9.9% over the past 30 days.
Celestica Inc. (CLS - Free Report) is one of the largest electronics manufacturing services companies in the world, serving the computer, and communications sectors. CLS provides competitive manufacturing technology and service solutions for printed circuit assembly and system assembly, as well as post-manufacturing support to many of the world's leading original equipment manufacturers.
CLS’ extensive depth and breadth of offerings support a wide variety of customer requirements, from low-volume, high-complexity custom products to high-volume commodity products. CLS operates through two segments: Advanced Technology Solutions, and Connectivity & Cloud Solutions.
Zacks Rank #1 Celestica has an expected revenue and earnings growth rate of 14.6% and 36.6%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 14.1% over the past 30 days.
Guidewire Software Inc. (GWRE - Free Report) is a provider of software solutions for property and casualty insurers. The platform offered by GWRE combines core operations, digital engagement, analytics, machine learning, and artificial intelligence, which are delivered to its customers via self-managed software or cloud services.
GWRE’s core solutions include InsuranceSuite Cloud, InsuranceNow, and InsuranceSuite for self-managed installations. Guidewire InsuranceSuite Cloud comprises of PolicyCenter Cloud, BillingCenter Cloud, and ClaimCenter Cloud.
Zacks Rank #2 Guidewire Software has an expected revenue and earnings growth rate of 6.4% and more than 100%, respectively, for the current year (ending July 2024). The Zacks Consensus Estimate for current-year earnings has improved 14.3% over the past 60 days.