3 Tech Stocks for Growth Investors to Buy During Q3 Earnings Season
Big banks such as JPMorgan Chase JPM and tech titans like Netflix NFLX helped unofficially start quarterly earnings season this week. Meanwhile, Wall Street seems happy enough with the recent “phase one” U.S.-China trade deal, and the U.S. Federal Reserve might cut its benchmark interest rate for the third time in as many months.
Earnings season is often a catalyst for stocks as it helps Wall Street and investors understand what is going on and what to expect. Meanwhile, with interest rates low, investors are likely to continue to look for returns outside of the bond markets despite global economic worries.
Aside from looking for some solid dividend payers, investors should try to search for a few growth-focused tech stocks.
Today, we paired our proven Zacks Rank with our Style Scores system that includes a “Growth” category. Investors should note that our Growth category values earnings and sales growth, as well as improvements to a company’s financial statements, including strong cash flows and solid return on equity.
Now let’s dive into three tech stocks that we found using our Zacks Stock Screener that growth investors might want to consider buying during third-quarter earnings season…
Match Group, Inc. MTCH
Match Group is a dating app powerhouse that offers a variety of apps around the globe, including its namesake offering, Tinder, PlentyOfFish, OkCupid, Hinge, and more. Online dating has become far more commonplace and Match boasted that “64% of relationships started on a dating site/app began” on one of its products. The firm averaged 9.1 million subscribers across its apps at the end of last quarter and Tinder is the world’s largest dating app.
Looking ahead, our Zacks Consensus Estimates call for the dating company’s adjusted Q3 earnings to jump 20.5% on 21.5% higher sales. The firm’s full-year fiscal 2019 EPS figure is projected to soar 30% on over 19% stronger revenue. MTCH’s 2020 EPS are then expected to climb 16.4% above our current-year estimate on 17% higher revenue that would see it hit $2.41 billion.
These sales estimates come on top of 2018’s 30% growth and compare favorably to 2017’s 19%. Match’s positive longer-term earnings estimate revisions help it earn a Zacks Rank #2 (Buy). MTCH also sports an “A” grade for Growth and has topped our quarterly earnings estimates by an average of 19% over the trailing four quarters.
Investors should note that MTCH shares have slipped roughly 9% in the last month and 5% over the past three. Some of the downturn can be blamed on the fact that tech holding company IAC IAC announced on October 11 that it plans to spin off all of its Match shares, after it said in August that is was considering a separation. Nothing is official yet and Match stock is still up nearly 70% in 2019 and 375% since going public in late 2015. The company is set to report its FY19 financial results on November 5.
Pure Storage, Inc. PSTG
Pure Storage is an enterprise data storage and solutions firm that aims to allow software-as-a-service companies, cloud providers, and everyone in between to deliver real-time, secure data to power their “mission-critical production, DevOps, and modern analytics environments in a multi-cloud environment.” The Mountain View, California-based firm saw its revenues climb 28% last quarter. And Pure Storage within the last several weeks has received some key upgrades and new prices, from the likes of Raymond James and Goldman Sachs GS.
PSTG shares are up 7% over the last week and 13% in the past three months. Yet, Pure Storage stocks rests 24% off its 52-week highs at roughly $18 per share at the moment. The firm’s upcoming Q3 fiscal 2020 sales are projected to jump 18.2%, with full-year revenue projected to pop 23.3% to hit $1.68 billion.
Pure Storage’s fiscal 2021 revenues are then expected to climb 21.5% higher to $2.04 billion. At the bottom end of the income statement, PSTG’s adjusted fiscal 2020 earnings are projected to climb nearly 5% to $0.22 per share, with 2021 set to soar 93% above our current-year estimate to reach $0.43 a share.
Pure Storage blew by our quarterly earnings estimate last quarter and its recent earnings revisions help PSTG sport a Zacks Rank #1 (Strong Buy). PSTG also claims an “A” grade for Growth and rest in the top 12% of our 255 Zacks industries at the moment. Pure Storage is projected to release its third-quarter results on November 18, based on our Zacks Earnings Calendar.
Square stock helped jump-start the fintech age a decade ago when it rolled out its small, smartphone and tablet-connected credit card readers for small and micro-size businesses. Today, CEO Jack Dorsey’s—who also runs Twitter TWTR—company has a portfolio that includes everything from business loans to peer to peer payment options and debit cards. Square’s Cash App competes directly against PayPal’s PYPL Venmo and looks likely to play a key role down the road.
Meanwhile, larger businesses have adopted Square’s core payment hardware and backend software offerings. For instance, sellers with gross payment volumes of $500K or more made up 26% of total volume last quarter, up from 22% in the year-ago period. Square also announced that it is set to sell its food-delivery platform Caviar to Uber Eats UBER competitor DoorDash for $410 million in order to focus on its core offerings and address profitably concerns.
Square stock has been somewhat volatile over the last year, down 18%, with some major climbs included. Despite the recent downturn, SQ stock is up 88% in the last 24 months and 435% in the last three years. SQ stock rest 27% off its 52-week highs and recently dipped below its 50-day moving average, where it doesn’t often stay for long. This means the company’s upcoming Q3 release, due out on November 6, will likely be the next catalyst, in either direction.
Square’s Q3 revenue is projected to surge nearly 31% to lift adjusted earnings by 54%. Meanwhile, full-year fiscal 2019 revenue is expected to climb 36%, with EPS projected to jump 64%. Square is a Zack Ranks #2 (Buy) at the moment, with an “A” grade for Growth that has easily top our quarterly earnings estimate in the trailing four periods.
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Pure Storage, Inc. (PSTG): Free Stock Analysis Report
JPMorgan Chase & Co. (JPM): Free Stock Analysis Report
Netflix, Inc. (NFLX): Free Stock Analysis Report
IAC/InterActiveCorp (IAC): Free Stock Analysis Report
Match Group, Inc. (MTCH): Free Stock Analysis Report
Square, Inc. (SQ): Free Stock Analysis Report
PayPal Holdings, Inc. (PYPL): Free Stock Analysis Report
Twitter, Inc. (TWTR): Free Stock Analysis Report
The Goldman Sachs Group, Inc. (GS): Free Stock Analysis Report
Uber Technologies, Inc. (UBER): Free Stock Analysis Report
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