Renewed U.S.-China trade war fears have hurt markets recently, with both the S&P 500 and the Dow down since the end of April. With that said, the S&P is still up roughly 12% in 2019, with large-cap tech giants like Apple AAPL and Amazon AMZN helping drive the comeback.
Despite the recent uncertainty brought about by the trade dispute between the world’s two largest economies, technology companies seem set to be long-term winners. Tech has been at the helm of our historic bull market, and in our increasingly interconnected digital world, it is likely that the industry remains a long-term growth driver.
Clearly, some of the volatility has made some investors more skeptical, with bearish traders quick to draw similarities between this latest tech rally and the infamous dot-com bubble of the late 90s and early 2000s. Yet, unlike the dot-com bubble, sustainable revenue and earnings expansion have fueled the current tech boom.
There are, of course, concerns about a global economic slowdown. This might mean that investors interested in tech search for companies that have proven their strength for years and look poised for solid expansion. With that said, let’s check out three blue-chip tech stocks to consider buying right now.
1. Microsoft MSFT
Microsoft has seen its stock price jump roughly 25% this year to outpace industry’s 18% average. MSFT shares opened Friday at $126.91, down just around 3% from their 52-week intraday trading high. The Windows and Office power is coming off better-than-projected Q3 fiscal 2019 financial results. Microsoft's legacy businesses have performed well and remain vital to individuals and businesses around the world. Yet, the Redmond, Washington-based firm’s growing cloud computing business is what has helped MSFT stock surge over the last few years. Microsoft’s Intelligent Cloud revenue climbed 22% last quarter, with its vital Azure division up 73%.
The firm’s expansion into cloud computing has seen it compete directly with industry leader Amazon and partner with behemoths such as Walmart WMT for cloud, artificial intelligence, and more. More recently, MSFT joined forces with video gaming rival Sony SNE for a cloud-gaming partnership. Our current Zacks Consensus Estimates call for the company’s adjusted full-year earnings to surge 18% on the back of 13% revenue growth. Looking further ahead, Microsoft’s fiscal 2020 EPS figure is projected to jump over 11% above our current year estimate, with revenue expected to climb 10.6% higher. Microsoft also currently pays an annualized dividend of $1.84 a share, which marks a 9.5% jump from the prior-year payout.
Microsoft’s positive earnings estimate revision activity, particularly for fiscal 2019 and 2020, helps it earn a Zacks Rank #2 (Buy) right now.
2. Facebook FB
Facebook has been under the microscope for well over a year now for its handling of user data and outsized impact over the flow of information. In spite of all the worries that users would run away from the social media powerhouse, shares of FB have soared nearly 40% in 2019 and its user growth has remained solid. The firm posted stronger-than-expected Q1 revenue results, with revenue up 26%. Plus, Mark Zuckerberg’s company grew both its daily and monthly active user totals by 8%. Company executives estimate that over 2.7 monthly billion people use at least one of its “family” of services—which includes Facebook, Instagram, WhatsApp, and Messenger—every month on average. This figure alone should help Facebook remain an advertising juggernaut, alongside Google GOOGL, for years to come.
On top of that, FB has invested in an e-commerce future, which includes its new Checkout on Instagram feature. Zuckerberg also recently detailed plans about how Facebook could start to focus on private encrypted messaging, payments, and other services. FB’s full-year 2019 revenues are expected to surge 24% to reach $69.22 billion, with adjusted fiscal year earnings projected to dip 7% as it spends to improve security and much more. With that said, the company’s adjusted 2020 earnings are projected to soar over 31% above our current-year estimate on 21% higher revenues.
Facebook is Zacks Rank #2 (Buy) at the moment and is trading at 21.2X forward 12-month Zacks Consensus EPS estimates, which represents a discount compared to its industry’s 26.5X average and its own three-year high of 37.3X and 27.6X median. This means that investors can say with some confidence that FB stock is relatively ‘cheap.’
3. Oracle ORCL
Oracle is a Zacks Rank #2 (Buy) right now that boasts a “B” grade for Value in our Style Scores system. Oracle stock has climbed above the broader Computer Software-Services Market industry over the last 12 months, up over 12% against the industry’s 1.9% average climb. ORCL’s positivity helps it rest near new 52-week and all-time highs. Plus, the firm is coming off a better-than-expected Q3 fiscal 2019. ORCL is also a dividend payer that recently paid out a $0.24 per share dividend, up roughly 25% from its previous $0.19 payout. ORCL’s annualized dividend rests at $0.96 per share, with a yield of 1.81% at the moment.
Furthermore, Oracle is currently trading at 15.7X forward 12-month Zacks Consensus EPS estimates. Like Facebook, this falls well below its industry’s 26.5X average and its own five-year high of 19.3X. Investors might also be pleased to note that the historic tech giant has tried to expand its cloud business in recent years. Looking ahead, Oracle's adjusted current-quarter earnings are projected to pop 8.1% to hit $1.07 per share. The tech giant’s fiscal 2019 EPS figure is expected to jump by 10.3%. And ORCL’s full-year 2020 earnings are projected to climb 10.1% above our current-year estimate.
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