Tech stocks are driving the stock market higher. Even including the nasty recent correction, the tech sector still is the best performing sector so far this year, with about 17% gains versus just less than 9% for the overall S&P 500.
However, Wall Street’s analysts have gone cold on some of the hottest tech stocks thanks to lofty valuations and a pricing-in of all good news. So we’ve set out to find the most compelling investment opportunities in the tech sector right now that aren’t necessarily overbought to thte moon. To do this, we used TipRanks’ stock screener to hone in only on those tech stocks that boast a consensus “Strong Buy” rating from the analyst community.
From the results, we selected the most promising stocks with high upside potential for the next 12 months. At the same time, we focused on ratings from analysts that outperform the market with a high success rate and average return per recommendation.
Now let’s dig down and and look at five of Wall Street’s best-looking tech stocks:
“Strong Buy” Tech Stocks: Salesforce.com (CRM)
This CRM giant is a top analyst favorite. Salesforce.com, Inc (NYSE:CRM) has received 17 buy ratings versus just two hold ratings in the last three months. Meanwhile, the stock’s $99 average price target represents 12-month upside of just more than 12% from the current $88 share price.
Drexel Hamilton’s Brian White summed up the stock recently when he said: “We believe Salesforce represents the best equity vehicle for investors to play the cloud trend and should be a core tech holding.”
He concludes: “Salesforce is well positioned as companies are increasingly embracing the need to digitally transform their businesses.” Einstein CRM’s much-hyped AI platform will also be rolled out next year.
White reiterated his “Buy” rating on the stock last month with a $100 price target (15% upside potential).
“Strong Buy” Tech Stocks: Total System Services (TSS)
Total System Services Inc (NYSE:TSS), a credit card processing company, is one of many “fintech”-focused tech stocks poised for future growth. TSS has a “Strong Buy” analyst consensus rating based on the fact that 80% of the stock’s ratings in the last three months are buy ratings.
We can also see that the average analyst price target of $66 suggests 12% upside from current share prices just below $59.
Five-star Barclays analyst Darrin Peller predicts strong growth for the stock “from a combination of nearly 10% earnings upside (driven by capital return, CUP JV strength, margin outperformance on TransFirst synergies and operating leverage), and multiple expansion.”
He raised his price target on TSS stock on June 9 from $67 to a bullish $72, which is a huge 23% upside from the current share price.
“Strong Buy” Tech Stocks: Vantiv (VNTV)
Well, Vantiv provides Whole Foods’ payment tech, and it is now likely Amazon will scrap the existing deal and use Paymentech instead. Shares are now trading at $62.
However, this is not a reason to be nervous, say top-rated analysts. The reverse: KBW’s Steven Kwok upgraded the stock on June 22 to “Buy” with a $69 price target (11% upside). He says that serious upside still is in the cards for Vantiv, and even raised the possibility of a large acquisition. Robert W Baird’s David Koning, meanwhile, pointed out that Vantiv is a well-diversified business that is not overly reliant on a single client like Whole Foods.
Overall the stock has received seven buy and two hold ratings in the past three months, with an average analyst price target of $71 vs the current share price of $63, which translates into a sweet 12% upside.
“Strong Buy” Tech Stocks: LogMeIn (LOGM)
With five analyst buy ratings in a row, remote desktop SaaS company LogMeIn Inc (NASDAQ:LOGM) has now completed its $1.8 billion merger with Citrix Systems‘ (NASDAQ:CTXS) GoTo communications business. So far the company’s largest-ever-acquisition is going smoothly, and the first post-merger CRM product has just been launched called Bold360.
Top Piper Jaffray analyst Alex Zukin is now covering LogMeIn. He says “As the LOGM + GoTo merger continues to unlock significant free cash flow we see downside protected by a combination of share buybacks, dividends and a unique (in SaaS) capital return program.”
His bullish outlook on the stock translated into a “Buy” rating and $150 price target (43% upside from current share price) on June 23. This comes in significantly above the average analyst price target of $133, which still represents impressive upside of 27%.
“Strong Buy” Tech Stocks: Match Group (MTCH)
This online dating company is a “top mid cap pick,” according to Jefferies. Match Group Inc (NASDAQ:MTCH) has a Strong Buy analyst consensus rating and an average analyst price target of $21.60 versus the current share price of around $17.30, which means potential upside of 25%.
And now is the time to swoop, says five-star Jefferies analyst Brian Fitzgerald, as MTCH is slightly down on a one-month basis. Fitzgerald “super likes” the stock’s setup and believes Match is undervalued compared to other Internet companies.
He highlighted the stock’s double-digit revenue growth and strong margin profile, and reiterated his Match “Buy” rating on June 22 with a $23 price target (29% upside).
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