The market continues to make its way through the first heavy week of earnings reports with mixed results.
With a quarter of the Nasdaq 100 Index providing their quarterly results, the field is full of trade potential for those looking for opportunities.
Investors tend to gravitate to the larger names within the technology indices — names like Apple Inc. (AAPL), Facebook Inc (FB), Microsoft Corporation (MSFT) and others — as if they are the big opportunity. But most of the time, the real opportunities lie within the names just under these well-known, heavily watched and traded names.
The second half of this week and early next week offer a number of great trade opportunities among these “under the radar” technology winners.
Here are a few:
Under-The-Radar Tech Stocks: Amazon.com, Inc. (AMZN)
We’ve already laid out our case for Amazon.com, Inc. (AMZN) as a must-have for any technology portfolio. The company continues to grow its retail business, but the real draw for Amazon stock is where the company is headed over the next ten years and its “next best things.”
The recent pullback in the market shaved more than 15% off of the share price, making it a relative value against other peer companies, despite the extremely high price-to-earnings ratios.
Technically, Amazon stock should see support and buying kick in as it moves back above the $605 level which is where the 200-day moving average for the stock resides. Support below current prices sits at $540. A move back to this price would pose a buying opportunity for even those that think the shares are overvalued.
The Street views Amazon stock in a relatively bullish light, as 84% of the analysts with an opinion have the stock ranked as a buy. Typically, we try to maintain some distance from overloved stocks, as selling pressure can build quickly as the crowd tries to exit, but in this case the bullish sentiment makes sense given the fundamental and technical strength of the stock.
For now, we remain buyers of Amazon stock with a price target of $700 during 2016.
Under-The-Radar Tech Stocks: Fiserv Inc (FISV)
One of the lesser-known stocks in the Nasdaq 100, Fiserv Inc (FISV) serves as a giant in the electronic transaction world. Offering everything from bill payment to banking and peer-to-peer payment solutions, Fiserv has a hold on the online transaction world.
Its growth has resulted in earnings numbers that have bested analyst expectations 88% of the time over the last two years and revenue that has shown consistent growth.
Earnings are set to be announced on Feb. 2, after the market closes, and we like the stock heading into that event. Current expectations are for $1 per share earnings on $1.4 billion in revenue, both slightly higher than last quarter’s expectations.
Interestingly, there is no real “whisper number” for Fiserv Stock’s upcoming earnings, which can be a positive.
Our Behavioral Valuation models score Fiserv shares a “buy” ahead of earnings as the stock is moving back above its 200-day moving average. For comparison, 75% of the S&P 500 and Nasdaq 100 stocks are trading below their respective 200-day trendlines.
Fiserv stock remains one of the stronger stocks in the market.
Finally, our models love the fact that only 25% Wall Street analysts tracking the stock have it ranked a buy while the rest are holds. This suggests that the stock has additional upside potential on upgrades, which would likely come in the wake of another positive earnings report next week.
Under-The-Radar Tech Stocks: Electronic Arts Inc. (EA)
The video game industry is coming out of its seasonally strong period, with holiday season sales factoring into the numbers to be delivered by Electronic Arts Inc. (EA) on Thursday after the close. This is one of the sweet spots for the Nasdaq 100, as the stock has posted a 12-month gain of about 28% on strong fundamental growth in the industry.
The charts for Electronic Arts stock are setting up for another post-earnings rally as support is kicking in from a confluence of trendline support and little-to-no overhead resistance for the stock — something that can’t be said for the majority of technology companies right now.
Sentiment is set up for a rally as well. Recent short interest activity sees the short interest ratio at nearly nine times the average daily volume (8.9), signaling a high likelihood that we will see a short covering rally on any good news in the report on Thursday.
Analyst recommendations on the stock are a little more bullish, with 75% of those covering the stock on Wall Street rating it a buy. This leaves some room for upgrades which will also help move EA back to its highs.
The company has beat analyst earnings expectations 100% of the time over the last two years and revenue is showing signs of improvement after dipping into negative growth territory in 2015.
All eyes will be on the revenue number, which if improved will spark another rally for Electronic Arts stock.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.