Technology stocks are among the most volatile in the market. The allure of big gains comes with the risk of sharp downturns. When the market is trending upwards, these stocks have a tendency to lead the way. Conversely, when the market is selling off, tech stocks post some of the largest losses. And in the coronavirus crash tech stocks took their usual beating.
But an interesting dynamic is happening. As stocks are trying to stage a comeback, many tech stocks are being left behind. Many of the leading tech stocks trade on the NASDAQ exchange. However, as the Dow Jones Industrial Average (DJIA) and S&P 500 posted gains on March 25, the NASDAQ stayed down.
And that’s an opportunity for investors who know where to look. We’ve put together this presentation to give you ten technology stocks that look to be solid bets no matter which way the market moves. Some of the stocks you’ll see are companies that have a business model that is perfectly suited for today’s social distancing environment.
Quick Links
- Zoom Video Communications
- RingCentral
- Amazon
- Shopify
- Etsy
- Apple
- Twitter
- Oracle
- Nvidia
- DocuSign
#1 - Zoom Video Communications (NASDAQ:ZM)
Zoom Video Communications When workers are given the “all clear” to return to work, some workers are going to realize that they don’t want to return to business as usual. And with Zoom (NASDAQ:ZM), they may not have to.
Zoom has been around since 2011. Since that time, many businesses have discovered that Zoom’s video conferencing and work collaboration tools are a good way to lower travel budgets. But the coronavirus may be the catalyst that makes working from home a viable alternative for some workers. Demand has been strong for the company’s platform.
The company just went public last year. And although the stock has more than doubled since its initial public offering (IPO) nearly all of that growth has happened since the beginning of 2020. Plus, the stock is up over 30% in the last month. The stock has come down a bit from its all-time high, but demand for the company’s software is only likely to increase.
About Zoom Video Communications
Zoom Video Communications, Inc provides unified communications platform in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. The company offers Zoom Meetings that offers HD video, voice, chat, and content sharing through mobile devices, desktops, laptops, telephones, and conference room systems; Zoom Phone, an enterprise cloud phone system; and Zoom Chat enables users to share messages, images, audio files, and content in desktop, laptop, tablet, and mobile devices.
Read More - Current Price
- $78.86
- Consensus Rating
- Hold
- Ratings Breakdown
- 6 Buy Ratings, 12 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $76.61 (2.9% Downside)
#2 - RingCentral (NYSE:RNG)
Another company that looks to emerge strong from the work-at-home movement is cloud communications provider RingCentral (NYSE:RNG). If you think of Zoom as more peer-to-peer communication, then RingCentral is more outward facing. The simple premise is that RingCentral allows employees to stay in touch with their customers wherever their customers are and however they want to be reached.
This is a competitive area and RingCentral faces challenges from larger enterprise players like Cisco (CSCO) and Microsoft (MSFT) on the one hand. And at the other end of the spectrum there are “freemium” providers such as Zoom. Therefore, one of the keys to surviving in this space will be through partnerships. RingCentral recently entered into a partnership with Avaya (AVYA). This will mean that eventually RingCentral’s cloud services will be supported by every Avaya endpoint. The company is expecting this partnership to contribute to its financials by the end of the year.
Shares of RNG have dropped about 18% in the recent sell-off, but have staged a rally of nearly 40% in the last two weeks.
About RingCentral
RingCentral, Inc, together with its subsidiaries, provides cloud communications, video meetings, collaboration, and contact center software-as-a-service solutions worldwide. The company's products include RingCentral Message Video Phone that provides a unified experience for communication and collaboration across multiple modes, including HD voice, video, SMS, messaging and collaboration, conferencing, online meetings, and fax; RingCentral Contact Center, a collaborative contact center solution that delivers AI-powered omnichannel and workforce engagement solutions with integrated RingCentral MVP; and RingCX, an AI-powered contact center that a native delivers omnichannel experience.
Read More - Current Price
- $35.02
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 7 Buy Ratings, 8 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $40.73 (16.3% Upside)
#3 - Amazon (NASDAQ:AMZN)
Amazon (NASDAQ:AMZN) is working hard to break away from its identity as “just” an e-commerce company. But for right now being an e-commerce company is exactly what this economy needs. As more and more Americans are doing their part to follow shelter in place directives, there’s never been a better time for Amazon. And that’s saying something.
But Amazon is not only providing a service by keeping the pipeline of commerce open; it’s also hiring workers. Amazon will hire up to 100,000 full-time and part-time employees in the United States for warehouse and delivery jobs.
The company also announced it is increasing wages and adopting a more lenient sick policy to keep workers engaged. Although many of these jobs may only be temporary, they are necessary to holding together an economy that has been ripped apart.
Since the market peaked on February 19, shares of Amazon are down 11%. But the S&P 500 has dropped nearly 30%. And the other FAANG stocks are all down at least 20%.
About Amazon.com
Amazon.com, Inc engages in the retail sale of consumer products, advertising, and subscriptions service through online and physical stores in North America and internationally. The company operates through three segments: North America, International, and Amazon Web Services (AWS). It also manufactures and sells electronic devices, including Kindle, Fire tablets, Fire TVs, Echo, Ring, Blink, and eero; and develops and produces media content.
Read More - Current Price
- $202.88
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 41 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $235.77 (16.2% Upside)
#4 - Shopify (NYSE:SHOP)
Shopify (NYSE:SHOP) is the rogue alternative to Amazon. And while the coronavirus is taking its toll on brick-and-mortar stores, it is creating an opportunity for SHOP. Many businesses want their products listed on Amazon, but they lose control over their products. That’s not the case with Shopify.
Shopify helps large and small businesses come up with e-commerce solutions that allow them to stay in control. The stock is not cheap by traditional metrics. But when it comes to disruptive companies like Shopify some of the old rules don’t apply.
The stock is up over 10% for the year. And many short sellers were caught by surprise at the strength of the company’s last earnings report. The coronavirus will not be the end of brick and mortar, but it will force many small businesses to re-evaluate their business model. That puts Shopify in a good position to keep disrupting the e-commerce space.
About Shopify
Shopify Inc, a commerce company, provides a commerce platform and services in Canada, the United States, Europe, the Middle East, Africa, the Asia Pacific, Australia, China, and Latin America. The company's platform enables merchants to displays, manages, markets, and sells its products through various sales channels, including web and mobile storefronts, physical retail locations, pop-up shops, social media storefronts, native mobile apps, buy buttons, and marketplaces; and enables to manage products and inventory, process orders and payments, fulfill and ship orders, new buyers and build customer relationships, source products, leverage analytics and reporting, manage cash, payments and transactions, and access financing.
Read More - Current Price
- $103.97
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 24 Buy Ratings, 16 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $94.95 (8.7% Downside)
#5 - Etsy (NASDAQ:ETSY)
If you’re looking for a short-term play on the social distancing period, Etsy (NASDAQ:ETSY) is a good place to start. Every now and then, you get the right stock for the right time. Companies like Hobby Lobby and Michael’s are geared to the crafting community. So is Etsy. But whereas these other stores have a brick-and-mortar presence, Etsy is totally e-commerce. It’s made for a time like this.
The stock is on a tear. Since closing at around $31 per share on March 20, the stock has rallied nearly 40% to virtually wipe out any year-to-date losses. As the nation and the world stays indoors over the next few weeks or longer, Etsy will have a window in which to generate revenue.
However, I don’t see Etsy as a long-term play. When consumers are free to move out and about, I expect a stock like ETSY will decline on lower revenue. After all, the one thing people won’t want to do is more craft projects. And since reaching its all-time high at just over $70 per share in March of 2019, the stock is down over 40%. No amount of revenue is going to close that gap.
About Etsy
Etsy, Inc, together with its subsidiaries, operates two-sided online marketplaces that connect buyers and sellers in the United States, the United Kingdom, Germany, Canada, Australia, and France. Its primary marketplace is Etsy.com that connects artisans and entrepreneurs with various consumers. The company also offers Reverb, a musical instrument marketplace; Depop, a fashion resale marketplace; and Elo7, a Brazil-based marketplace for handmade and unique items.
Read More - Current Price
- $50.86
- Consensus Rating
- Hold
- Ratings Breakdown
- 8 Buy Ratings, 12 Hold Ratings, 4 Sell Ratings.
- Consensus Price Target
- $64.87 (27.5% Upside)
#6 - Apple (NASDAQ:AAPL)
Perhaps no tech company was the face of the coronavirus as much as Apple (NASDAQ:AAPL). The company had to shut down operations in Wuhan, China the epicenter of the outbreak. And even though that production is coming back on line, the company is closing stores in the United States in response to social distancing.
And many consumers are considering cutting back on purchases which is causing many to believe that the company will see declining iPhone sales in 2020. The company was previously thinking that 2020 sales would be strong as the company introduced its first 5G iPhones.
But it’s hard to see the current crisis as being an existential threat to Apple’s business. As CEO Tim Cook reminded employees, the company has about $200 billion in cash and cash equivalents. They are well prepared to weather this storm.
As far as demand? We’ve been down that road before too. But when the coronavirus recedes, the American economy will ignite, as will consumer’s appetite. Remember the company sold an unexpectedly high number of iPhone 11’s that had as its main feature … a better camera.
2020 may not be a banner year for Apple, but the opportunity to buy shares at a 25% discount to the company’s 52-week high is a rare opportunity.
About Apple
Apple Inc designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide. The company offers iPhone, a line of smartphones; Mac, a line of personal computers; iPad, a line of multi-purpose tablets; and wearables, home, and accessories comprising AirPods, Apple TV, Apple Watch, Beats products, and HomePod.
Read More - Current Price
- $229.00
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 23 Buy Ratings, 11 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $235.25 (2.7% Upside)
#7 - Twitter (NYSE:TWTR)
Social media is becoming an increasingly important way that consumers consume news. Twitter (NYSE:TWTR) has one advantage in this regard. For better or worse, it tends to be the medium that professional journalists use to break stories. Users look for that all-important blue checkmark and news becomes viral. Twitter has also taken steps to fight the posting of misleading information about the coronavirus.
The coronavirus outbreak is making consumers hungry for news. While I advocate a quality over quantity strategy, you don’t fight human behavior. This positions the company well to confront a trend in which advertisers are becoming increasingly leery of paying premium ad space. That’s a combination that should entice advertisers to at least continue advertising on the platform.
TWTR stock is down about 20% for the year, but has been rallying of late. As other social media companies such as Facebook (FB) are drawing the attention and ire of politicians and regulators, Twitter is flying under the radar which may be a great place for the company to be.
About Twitter
Twitter, Inc operates as a platform for public self-expression and conversation in real-time. The company's primary product is Twitter, a platform that allows users to consume, create, distribute, and discover content. It also provides promoted products that enable advertisers to promote brands, products, and services, as well as enable advertisers to target an audience based on various factors, including who an account follows and actions taken on its platform, such as Tweets created and engagement with Tweets.
Read More - Current Price
- $53.70
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#8 - Oracle (NYSE:ORCL)
The race is on to find a workable vaccine and treatments for the coronavirus. The sooner the world has effective treatments, the sooner the economy can return to normal. Oracle (NYSE:ORCL) is at the forefront of this race.
The company is creating, and donating, a website and mobile apps that will allow the government to collect data on the treatment of the coronavirus using antimalarial drugs. The government will maintain oversight of the project.
The use of data will be key to convincing healthcare officials that antimalarial drugs have more than circumstantial evidence of effectiveness.
"Many of the things that you hear out there are what I had called anecdotal reports," White House Coronavirus Task Force member Anthony Fauci said on the antimalarial drugs on Saturday, as per the Post.
"They may be true, but they're anecdotal. So the only thing that I was saying is that if you really want definitively to know if something works, that you've got to do the kind of trial that you get, the good information."
About Oracle
Oracle Corporation offers products and services that address enterprise information technology environments worldwide. Its Oracle cloud software as a service offering include various cloud software applications, including Oracle Fusion cloud enterprise resource planning (ERP), Oracle Fusion cloud enterprise performance management, Oracle Fusion cloud supply chain and manufacturing management, Oracle Fusion cloud human capital management, Oracle Cerner healthcare, Oracle Advertising, and NetSuite applications suite, as well as Oracle Fusion Sales, Service, and Marketing.
Read More - Current Price
- $190.76
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 18 Buy Ratings, 11 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $169.52 (11.1% Downside)
#9 - Nvidia (NASDAQ:NVDA)
It might seem crazy to include a semiconductor stock in a list of tech companies to thrive in these conditions. But Nvidia (NASDAQ:NVDA) has been waiting for this moment. 2020 is bringing new gaming consoles to the market.
Remember that Nvidia is going to benefit from expected demand. And that demand is likely to increase as more consumers stay at home. Like Etsy, this may be a short-term opportunity. The semiconductor space is notoriously cyclical. Still, investors that are willing to jump on short-term opportunities could see a nice reward.
For example, Bank of America analyst Vivek Arya just reiterated his buy rating for NVDA stock and gave it a price target of $300.That would be an increase of more than 15% from current levels.
Plus, Nvidia is seeing a fair amount of sales coming from its data center business. As companies like Amazon and Domino’s (DPZ) continue to have an insatiable demand for capturing consumer data to make decisions.
About NVIDIA
NVIDIA Corporation provides graphics and compute and networking solutions in the United States, Taiwan, China, Hong Kong, and internationally. The Graphics segment offers GeForce GPUs for gaming and PCs, the GeForce NOW game streaming service and related infrastructure, and solutions for gaming platforms; Quadro/NVIDIA RTX GPUs for enterprise workstation graphics; virtual GPU or vGPU software for cloud-based visual and virtual computing; automotive platforms for infotainment systems; and Omniverse software for building and operating metaverse and 3D internet applications.
Read More - Current Price
- $145.89
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 40 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $154.63 (6.0% Upside)
#10 - DocuSign (NASDAQ:DOCU)
DocuSign (NASDAQ:DOCU), like Zoom finds itself with a perfect opportunity to expand its user base. The company is coming off a strong 2020 fiscal year that ended on January 31, 2020. At that time, the company forecast forward guidance of a 31% revenue gain for fiscal 2021. In fact, DocuSign is on pace to log $1 billion in revenue, putting it in elite company among software-as-a-service (SaaS) companies.
However, that was before workers were ordered to work from home. DocuSign should see usage increase during this period of social distancing. And as more businesses try the technology, it’s likely to continue to generate revenue well into the future.
The market seems to agree. Despite the market sell-off, DOCU stock has been on a surge and is now up over 10% in 2020. Another catalyst for the stock is their proposed acquisition of Seal Software. Seal provides artificial intelligence (AI) powered contract discovery and contract management software solutions.
About DocuSign
DocuSign, Inc provides electronic signature solution in the United States and internationally. The company provides e-signature solution that enables sending and signing of agreements on various devices; Contract Lifecycle Management (CLM), which automates workflows across the entire agreement process; Document Generation streamlines the process of generating new, custom agreements; and Gen for Salesforce, which allows sales representatives to automatically generate agreements with a few clicks from within Salesforce.
Read More - Current Price
- $78.81
- Consensus Rating
- Hold
- Ratings Breakdown
- 2 Buy Ratings, 7 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $63.40 (19.6% Downside)
As you consider buying tech stocks at this time, remember that while our economy will come back, it may not come back in exactly the same way we expect. Anytime our country has gone through a crisis of this sort, there are changes. We will move forward, but we won’t be exactly the same.
And savvy investors know how to find the companies that are poised to capitalize on those changes.
This current downturn in the market is not like the dot-com bubble of 2000. It’s also not like the tech wreck of late 2018. The fundamentals for many technology stocks are as strong know as they were before the words social distancing forever entered our vocabulary.
That means investors could be on the verge of a historic buying opportunity. And these 10 stocks represent some of the companies that every investor should consider as they make a plan to have their portfolio recover from the effects of this recent sell-off.
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