Topping headlines across the board last week were the post-earning surges in mega-cap tech stocks Microsoft (MSFT), Amazon (AMZN) and Alphabet (GOOG, GOOGL).
MSFT beat estimates on strength from its cloud and enterprise units, GOOGL cited strong ad-click growth to beat top- and bottom-line estimates.
And AMZN posted its second consecutive surprise quarterly profit — its third straight revenue surprise and fourth straight earnings per share beat — as its cloud services business continues to impress.
As a result, MSFT, AMZN and GOOGL all gapped higher with shares gaining 12%, 8% and 7%, respectively, since Friday and are now probably too far along for new money to chase. Would-be bulls will need to wait for a pullback now.
But there are other opportunities in the tech sector that look ready to surge; and the optimistic can nibble on them now or set up some attractive call option plays as well.
Tech Stocks Booting Up: Apple (AAPL)
Apple (AAPL) is the biggie, set to report results Tuesday after the close will all eyes on iPhones sales and demand from China after a disappointing report in July.
Analysts are looking for earnings of $1.88 per share on revenues of $51.11 billion, while Piper Jaffrey and FBR Capital Markets both agree on 49 million iPhone units as the expectation for this quarter. Forward guidance will be closely watched as well, with the firm looking for around 75 million iPhones for the December quarter.
As of Friday’s close, Edge Pro subscribers were enjoying a 72% gain in their November AAPL calls.
Tech Stocks Booting Up: Twitter (TWTR)
From management changes to layoffs and questions about its user experience, Twitter (TWTR) has received its fair share of attention from investors lately.
The company will report results Tuesday after the close, with the consensus looking for earnings of five cents per share on revenues of $559.4 million.
User engagement metrics will be closely watched. I have recommended November calls in TWTR to my Edge Pro subscribers in anticipation of a breakout above its month-long trading range.
Tech Stocks Booting Up: Yahoo! (YHOO)
Yahoo (YHOO) has rebounded from a post-earnings hit last week after reporting a top- and bottom-line miss, as investors give the company credit for respectable (if slowed) growth numbers and cost control.
Its mobile revenue increased 22% over last year while its overall search revenue increased 15% over last year. Its new search agreement with Alphabet was a source of praise as well.
Potential positive catalysts include the resolution of its Alibaba (BABA) stake spinoff later this year as well as the ramp up of its new Gemini ad platform.
Tech Stocks Booting Up: AMD (AMD)
Shares of beleaguered chip designer AMD (AMD) shrugged off weak third-quarter results earlier this month to push to levels not seen since early August, as losses were smaller than expected.
Analysts at Topeka Capital note that while losses should continue near term, Suji Desilva, the analyst covering AMD stock, is encouraged by management’s efforts to improve AMD’s product and market position through a focus on graphics processing.
Desilva also cites progress on restructuring efforts and the announcement of a joint venture with Nantong Fujitsu that strengthens the balance sheet.
Shares are up 11.3% for Edge subscribers since recommended on Oct. 16.
Tech Stocks Booting Up: HP (HPQ)
Hewlett-Packard (HPQ) has been drifting higher ahead of the company’s Nov. 1 spin off of its enterprise-focused assets into Hewlett-Packard Enterprise.
A valuation analysis by RBC Capital Markets earlier this month suggests there is value in the pre-split shares despite depressed free cash flows. They believe pre-split fair value is near $33 a share.
I have recommended November HPQ calls to Edge Pro subscribers.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to Investorplace readers.
