3 tech stocks to buy now after disappointing jobs data
TThe US economy is well below employment expectations for April. Employers added just 266,000 new jobs, compared to projections of around 1 million. The dramatic slowdown in hiring could jeopardize an economy that seemed to be picking up speed, with first-quarter GDP up 6.4%.
Economists and analysts have provided multiple possibilities for the big hiccups and why companies have had a harder time hiring new employees despite seemingly strong conditions. Some of the reasons for the disappointing numbers likely stem from a combination of increased unemployment benefits, setbacks in child care amid school closures and lingering fears of coronavirus.
The new data, which accompanied a downward revision for March, will hopefully turn out to be a failure on the recovery radar with more than 40% of U.S. adults fully vaccinated and the daily toll of new cases of. Covid-19 on the decline. The positive trend on the coronavirus front has seen many states lift more and more restrictions.
Jobs news sent the Nasdaq up 0.88% on Friday, while the S&P 500 and the Dow both hit new highs as Wall Street ruled higher interest rates are now even higher. less likely. It’s clear that hires could rebound in May, but let’s dive into three tech stocks that aren’t banking on a rapid economic recovery following disappointing employment data …
Adobe’s subscription software, from Photoshop to InDesign, continues to drive revenue and bottom line growth and its business is hardly tied to broader business cycles. ADBE crushed our estimate for the first quarter of FY21 at the end of March and raised its forecast.
Going forward, Zacks estimates that Adobe’s annual revenue is expected to exceed 20% to $ 15.5 billion and then grow 15% in FY 22. These projections extend its streak of sales growth for Adobe. ‘about 15% or more in eight consecutive years, which is great for a company that went public in the mid-1980s.
At the bottom of the income statement, ADBE’s adjusted profit is expected to rise by 18% and 15% respectively. The company also has a strong history of quarterly profit beats and its improved earnings outlook allows it to earn a Zacks # 2 (Buy) rank at the moment, alongside its “B” rating for growth in our scoring system. of style.
Adobe’s many creative and design software are industry flagships and are used by everyone from large corporations to universities to individuals. ADBE has also introduced new creative software offerings for the digital media age where high quality content is paramount. Meanwhile, the company that created the PDF expanded its business-focused list to marketing and beyond, and in December it finalized its purchase of a leading work management platform for business people. marketers called Workfront.
Wall Street has shown its love for ADBE, with stock rising 420% in the past five years to surpass the computer software industry’s 300% and Amazon’s AMZN 390%. The stock has cooled significantly over the past year, up 33% from its industry and up 48% from the S&P 500. In fact, Adobe is down 2% in 2021 and around. $ 490 a share, the stock is around 8% of its mid-April record.
In terms of valuation, Adobe is trading 10% below its own one-year median when it comes to forward earnings. ADBE is also arriving below neutral RSI levels (50) to 43, which could give it a lot more room to function. And 13 of the 15 broker recommendations Zacks has for Adobe are “strong buy” with another “buy” and only one “wait.”
Therefore, people with long-term investment horizons might consider picking up Adobe for its ability to consistently grow into the larger SaaS market, with creative software offerings that are difficult to replicate.
Veeva Systems VEEV
Veeva Systems provides cloud solutions for the pharmaceutical and life sciences industries and has increased its revenue by 25% or more every year since its IPO in 2013. VEEV’s SaaS model provides specific tools for the business. industry for customer relationship management, content management, and many other business applications.
VEEV helps the critical business functions of its nearly 1,000 customers operate more seamlessly through cloud-based architectures and mobile applications for R&D, training services, regulatory processes and almost everything a business in these areas might need.
VEEV’s customers include companies like Merck and Eli Lilly, as well as small biotech companies, with a broader focus “to help companies of all sizes get their products to market faster and more efficiently, and maintain compliance. “. The California-based firm’s revenue growth chain includes a 33% jump last year (fiscal year 21 ended Jan. 31). Veeva has also exceeded our earnings estimates over the past four periods by an average of 14%.
Zacks estimates that Veeva’s revenue for fiscal 2022 is expected to climb more than 21% from $ 1.47 billion to $ 1.76 billion, with FY23 expected to grow 19% to $ 2.1 billion. dollars. Along with this expected revenue expansion, the company’s adjusted profit is expected to increase by 10% and 18%, respectively, during this period. VEEV’s positive EPS revisions help it take second place to Zacks (Buy), with the release of its first quarter fiscal 222 financial results on May 27.
Investors should note that VEEV stock recently fell below its 50-day and 200-day moving averages, a position it rarely stayed for long. The stock has struggled to return from oversold RSI (30) levels in early March to over 60. But its recent pullback has seen it trade 20% below its mid-February highs and below levels. from neutral RSI to 40.
Veeva’s pullback makes more sense when you consider that the stock has soared 855% in the past five years. In addition, 13 of the 18 brokerage recommendations Zacks has for Veeva are either “strong buy” or “buy”, along with four “hold”. And the company has a strong balance sheet.
Microsoft just released another brilliant quarterly report (Q3 FY21) on April 27 that saw it posting 19% sales growth and 40% adjusted EPS expansion. Analysts have once again raised their outlook for MSFT, with 2021 revenue expected to climb 16% to $ 166 billion, while FY22 sales are expected to rise a further 11.3% for extend its streak of 10% to 15% sales growth to five years. Meanwhile, its adjusted profits are expected to climb 35% and 6% respectively.
The constant growth of the company shows its expansion in cloud computing and its commitment to strategic acquisitions. Microsoft’s ability to grow its cloud business alongside Amazon and others over the past few years has transformed the outlook for the tech icon. The cloud now plays a role across the enterprise, from Office and Xbox to Azure, remote work products and beyond.
Ahead of its release, MSFT announced in mid-April its intention to acquire Nuance Communications Inc. NUAN for $ 16 billion, making it the second-largest transaction under the leadership of CEO Satya Nadella. Nuance is at the forefront of speech recognition and AI, with its technology ready to integrate into MSFT’s burgeoning cloud business for healthcare customers and beyond.
Microsoft stock shot up as its release neared, but the stock sold after its report as Wall Street took profits and decided not to send big tech higher given the possibility of short-term deceleration compared to periods that are difficult to compare. The title jumped on Friday to close regular hours around 4% below its recent highs.
Despite rising 14% in 2021 and 175% over the past three years to blow up 67% of its industry, Microsoft is still very close to neutral RSI levels at 51. MSFT is also trading at 30.5x 12-month forward earnings, which marks a haircut of its industry to 33.6X and its own one-year median.
Microsoft’s earnings revisions are helping it land a Zacks # 2 (Buy) rank at the moment and 20 of Zacks’ 21 brokerage recommendations are ‘strong buy’ with the other sitting on a ‘buy’. Additionally, MSFT closed the quarter with $ 125 billion in cash and cash equivalents.
The stock of cash is the way it has financed its acquisitions, as well as its redemptions. MSFT returned $ 10 billion to shareholders via buybacks and dividends last quarter, with a 0.89% return topping Apple’s AAPL by 0.68%.
Growth of + 1500%: one of the most interesting investment opportunities of 2021
In addition to the stocks you talked about above, would you like to see Zacks’ top picks for capitalizing on the Internet of Things (IoT)? It is one of the fastest growing technologies in history, with approximately 77 billion devices to be connected by 2025. That equates to 127 new devices per second.
Zacks has published a special report to help you capitalize on the exponential growth of the Internet of Things. It reveals 4 stocks under the radar that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Want the latest recommendations from Zacks Investment Research? Today you can download 7 best stocks for the next 30 days. Click to get this free report
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.