According to Mark Hulbert, investor sentiment has quickly swung from overall skepticism to complacency and hope, which means the markets could be poised for a “June swoon.” Whenever this happens, there’s a good chance that a selloff is in the offing — and probably sooner than later.
If so, it could mean another drop in tech stocks. True, these companies have bounced recently — but only mildly. All in all, it looks like tech stocks are still vulnerable — and this could be exaggerated if the overall markets start to trail off.
Yet this could be an opportunity for investors. For those looking for long-term growth plays, the next few months could be a good time to look at picking up some attractive tech stocks.
So which tech stocks are worth buying? Well, here’s a look a three:
Tech Stocks Pick #1: Splunk (SPLK)
Since reaching its 52-week high in February, Splunk (SPLK) is off a grueling 61%. But the company keeps cranking out growth. Then again, SPLK is one of the top players in the Big Data space, which allows companies to engage in deep analytics.
In the latest quarter, SPLK posted revenues of $85.9 million, up 50% over the past year. Keep in mind that more than 70% of license bookings (upgrades, expansions, etc.) came from existing customers. In other words, it is very clear that SPLK is providing tremendous value. But of course, SPLK continues to snag new customers, which came to more than 400 in the latest quarter. The company now has more than 7,400 total customers.
SPLK stock isn’t cheap, which maybe isn’t a surprise in the wake of those successes. SPLK trades at about 10 times forward sales. But of course, if there is another move to the downside, it could be an attractive entry point for investors who want to get exposure to the Big Data market.
Tech Stocks Pick #2: FireEye (FEYE)
FireEye (FEYE) has become the poster child of the selloff in tech stocks.
The company went public back September, and on the first day of trading, FEYE stock soared 80%. It it would quickly reach a high of $97.35. Since then, however, FEYE has cratered down to about $31. CEO David DeWalt even apologized to investors on CNBC.
But there was no need to apologize for the business. It’s doing just fine. FireEye is still one of the top operators in the fast-growing security market. The core technology is built on a platform that allow for real-time threat protection, which has been effective against next-generation cyber attacks.
In the first quarter, FEYE’s revenues soared by 161% to $74 million. And yes, the growth is likely to continue as billings in the quarter were robust, at $99.2 million. Deferred revenues also hit $212.7 million.
It certainly helps that DeWalt has been aggressive with acquisitions, such as companies like Mandiant and nPulse. For the most part, he has been diversifying the business into high-growth categories like forensics.
More importantly, security remains a top priority for CEOs. After all, didn’t Target’s (TGT) boss lose his job because of a massive security breach? High-profile breaches will continue to boost FireEye and other security tech stocks.
Tech Stocks Pick #3: Marketo (MKTO)
Marketo (MKTO) hasn’t gotten much attention, lately, getting drowned out in the news of larger tech stocks. But that didn’t prevent MKTO from experiencing its own sudden rise and fall.
Despite this, MKTO stock is still worth considering. The company operates a cloud platform for relationship marketing, whether for small businesses or large enterprises. Some of the customers include Capgemini, General Electric (GE), Hyundai and Sony (SNE).
In terms of growth, MKTO definitely has lots of momentum. In Q1, revenues spiked 64% to $32.3 million.
And as for the long-haul, the prospects look bright for MKTO. The fact is that marketing has gotten much more complicated, especially with the proliferation of platforms like Facebook (FB), Twitter (TWTR), LinkedIn (LNKD), Pinterest and Google’s (GOOG) YouTube. And marketing on mobile devices comes with its own set of challenges.
All this should drive demand for MKTO. Consider that — according to Gartner — Chief Marketing Officers will outspend Chief Information Officer on IT by 2017.
For more on my take, click here.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.