The technology sector is comprised of businesses that sell goods and services in electronics, software, computers, artificial intelligence, and other industries related to information technology (IT). The sector includes companies with the largest market capitalizations in the world such as Apple Inc. (AAPL), Microsoft Corp. (MSFT), and Amazon.com Inc. (AMZN).
Tech stocks, as represented by the Technology Select Sector SPDR ETF (XLK), have dramatically outperformed the broader market. XLK has provided a total return of 39.7% over the past 12 months, well above the Russell 1000’s total return of 18.2%, as of November 20, 2020. All statistics in the tables below are as of November 23.
Here are the top 3 tech stocks with the best value, the fastest earnings growth, and the most momentum.
Best Value Tech Stocks
These are the tech stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
- NortonLifeLock Inc.: NortonLifeLock is in the consumer cyber safety business, offering solutions that enable consumers to protect their electronic devices, online privacy, identity, and home networks. In its fiscal Q2 2021 ended October 2, NortonLifeLock reported a 4.9% year-over-year (YOY) increase in net revenue. Net income fell by 91.8% YOY primarily due to a major income loss related to discontinued operations in the prior year.
- Xerox Holdings Corp.: Xerox offers digital print technology and related solutions. The company’s capabilities include imaging and printing, data analytics, as well as the development of secure and automated solutions to improve productivity.
- NCR Corp.: NCR develops and manufactures financial transaction machines and related products. It produces automated teller machines (ATMs), self-checkout and self-service kiosks, and point-of-sale workstations and scanners. The company also manufactures printer consumable products, and manages networks and servers for ATMs and kiosks. For Q3 2020, NCR reported a 10.9% YOY decline in total revenue and a 70.5% YOY decline in net income from continuing operations. The company attributed the drop in income to the negative effects of the COVID-19 pandemic.
Fastest Growing Tech Stocks
These are the tech stocks with the highest YOY earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
- Salesforce.com Inc.: Salesforce.com designs and develops cloud-based enterprise software for customer relationship management. The company provides a technology platform for customers and developers to build and run business applications.
- Coherent Inc.: Coherent makes and sells laser-based photonic products used in manufacturing and instrumentation applications. The company serves customers in the telecommunication and semiconductor industries, among others. In its fiscal Q4 2020 ended October 3, Coherent reported a 5.6% YOY decline in net sales and a nearly 13-fold increase in net income to $7.7 million from the same quarter a year ago. The company said that the increase in net income was due to strong performance in the Scientific and OEM instrumentation markets as university and research facilities began to reopen following closures early in the COVID-19 pandemic.
- Qualcomm Inc.: Qualcomm is a global semiconductor and telecommunications company that designs and markets wireless communications products and services.
Tech Stocks with the Most Momentum
These are the tech stocks that had the highest total return over the last 12 months.
- Enphase Energy Inc.: Enphase Energy provides solar energy cells and monitoring equipment for distributors, large installers, original equipment manufacturers, strategic partners, and homeowners. In November, the company announced a partnership with MSpectrum, a Philippines-based solar energy provider, to deliver Enphase products to the residential and commercial markets of the Philippines. Enphase also announced a partnership with DMEGC Solar Energy, a manufacturer of solar photovoltaic products headquartered in China, to supply the residential market of Europe.
- Cloudflare Inc.: Cloudflare is a designer and developer of application software used for traffic load balancing, video streaming, security, domain registration, and analysis.
- Fastly Inc.: Fastly is a provider of cloud-computing services for websites and apps. The company also offers image optimization, security, edge computer technology, streaming solutions, and more. The company reported 42% YOY top-line growth in Q3 as it marked the second-highest quarter of new customer additions since going public.