The markets may have an upward bias, but it’s been tough to tell how well they will fare moving forward. But one thing is becoming clear.
Tech stocks have become the leaders.
Even if Washington can’t get anything done, consumer- and corporate- driven tech is reliable and demand is only expanding.
You don’t have to dig too deep to see the trend. The Nasdaq 100 has doubled the performance of the Dow Jones Industrial Average year-to-date.
And while industrials and financials are more closely linked with government policy, tech is generally independent of D.C.’s oversight.
Healthcare, financials, infrastructure and agriculture all wait on politicians on the Hill to find out where they can take advantage of the markets. While they wait, tech just keeps chugging along.
Below are seven tech stocks with miles of upside. Given their size and the sectors they are in, they have plenty of opportunity left, and for some, they’ll be great buyout targets for tech titans.
Tech Stocks With Miles of Upside: Advanced Energy (AEIS)
If the tech sector were a human body, Advanced Energy Industries Inc (NASDAQ:AEIS) would be the heart. And not in a sentimental way, in a literal way. AEIS manages the lifeblood of tech — electricity. It is a power management company that works in a wide variety of tech sectors, from flat screen displays to inverters for solar panels.
The one thing all our technology needs to function is reliable electricity and the specific levels each device demands. And for renewables, power needs to be converted from direct current (DC) to alternating current (AC), so it can be used in home or uploaded to the grid.
But all the power loads need to fit the device, so the power has to be managed both inside the device and before it gets to its source. And it has to be reliable — that’s what AEIS does.
It continues to grow organically and also by acquisitions. Most recently, it bought Irish firm Excelsys Holdings Limited. AEIS stock is up 38% year-to-date yet still trades at a price-earnings ratio of 22.
Tech Stocks With Miles of Upside: Cognex Corp. (CGNX)
Cognex Corporation (NASDAQ:CGNX) specializes in machine vision and industrial bar code scanning technologies. Basically, CGNX is in a very dynamic sector right now for online retailing as well as logistics services — automating production and fulfillment processes.
For example, on a production line for bottled water, you would want to have checks on the bottles before they get into production, once they’re filled, once they’re capped, once they’re labeled and then a couple more times once they’re packed.
Instead of having people man all those stations, CGNX cameras can now do all those jobs. CGNX devices can also help oversee robots on the production line. And then the scanners read the bar codes and send the boxes down the line to their proper destinations.
This sector is just in its infancy and CGNX is already sporting a nearly $8 billion market cap. Up 44% year-to-date, it’s off its highs. But not for long.
Tech Stocks With Miles of Upside: inTest Corp. (INTT)
InTest Corporation (NASDAQ:INTT) only has a $75 million market cap, but it has been around for 36 years and has operations in the U.S., Japan, Singapore and Germany. INTT stock has been publicly traded for two decades.
The reason for its success is? It sticks to its knitting. It provides products and services to semiconductor manufacturers to test their integrated circuits and wafer products. Its client list is very impressive. Think of a big-name chipmaker anywhere in the world, and they’re almost certainly a client. InTest even sells its test equipment to other major test equipment companies.
Keeping its focus has brought it great success. And as all our devices get “smarter,” the more in demand testing becomes.
What’s more, considering its size, inTest would be a great buy for a big chipmaker looking to bring its testing in house. But even on its own, INTT can succeed, as the past seven months have shown. In that time, INTT stock is up 67% and it’s still trading at a P/E of 15.
Tech Stocks With Miles of Upside: Kulicke and Soffa Industries (KLIC)
Kulicke and Soffa Industries Inc (NASDAQ:KLIC) established itself in 1951, long before the technology revolution was anything more than science fiction. But it has become a major player in one of those essential niches that few tech investors ever even think about — packaging and production products for the chipmakers.
Chips go everywhere nowadays, not just into computers. Embedded computing — putting chips in products that aren’t simply computers, like cars and washing machines — is the next growth stage of our tech world. And KLIC sells the materials needed to build chips and also products that get the chips and assemblies from the chipmakers to production facilities for assembly.
Remember, chips and wafers are pretty fragile cargo and it’s a commodity-based business, so chipmakers can’t afford to send replacements for broken boards or chips. A reliable partner like KLIC is essential.
Up 39% year to date and still trading at P/E of 18, KLIC is in the right place at the right time.
Tech Stocks With Miles of Upside: Nova Measuring Instruments (NVMI)
Nova Measuring Instruments Ltd (NASDAQ:NVMI) is an Israel-based company that specializes in metrology (measuring equipment) for the semiconductor industry. As smart devices and products continue to expand, one of the fastest growing sectors along that chain of supply and demand is checking to make sure the chips that are being built are consistently top quality.
NVMI produces the equipment that helps build and measure the production of today’s high-performance chips. Previously, chips were only being used in specific, computer-oriented machines. But now, these chips are everywhere, from our phones to our cars, to our thermostats.
NVMI is growing as fast as the industry sector is. NVMI stock is up 91% year-to-date, and while its P/E is a lofty 75, it’s an indication of the growth still left in this niche.
Tech Stocks With Miles of Upside: Pegasystems (PEGA)
Pegasystems Inc (NASDAQ:PEGA) was established in 1983 when founder and CEO Alan Trefler was a mere 27 years old. Today, PEGA stock sports a nearly $5 billion market cap and is one of the top customer resource management (CRM) companies in the market, especially in the highly regulated financial services and healthcare sectors.
Instead of just focusing on CRM, PEGA has looked to integrate various enterprise applications into its platform to build more value into its software. The goal is make CRM and other applications more dynamic and valuable for the company without making a mess out of the interactions.
And it seems to be working. PEGA stock is up 70% year to date and earnings and revenue keep beating, quarter after quarter. Its price-earnings ratio is in the triple digits, but there is near-term space in this sector for the kind of growth that will bring that down without hurting its stock price or earnings.
Tech Stocks With Miles of Upside: Axcelis (ACLS)
Axcelis Technologies Inc (NASDAQ:ACLS) is on the manufacturing end of the chipmaking process. Its most promising market niche is its new ion implantation system it calls Purion. ACLS systems are key to the chip manufacturing process.
There are several players in this sector, but given the changing nature of the sector in recent years, its proprietary Purion technology is finding significant demand without a great deal of competitors.
While many firms are competing for the new, complex chips, ACLS is getting large amounts of work in the less cutting edge space in DRAM and NAND memory chips.
ACLS also has a larger proportion of insider ownership than many of its competitors, which helps keep the company focused on success. Up 58% year-to-date, it’s P/E of 39 is high, but its prospects are higher.
— Louis Navellier
[ad#IPM-article]
Source: Investor Place