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4 Large-Cap Technology Stocks for Momentum Investors

Technology has been one of the most lucrative sectors for investors this year. The technology-heavy NASDAQ Composite is up almost 19.8% as compared with the S&P 500’s gain of roughly 11.7%. The Technology Select Sector SPDR ETF (NYSEARCA:XLK) has also gained 21.5% on a year-to-date basis.

4 Large-Cap Technology Stocks for Momentum Investors

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The sector is benefiting from increasing demand for cloud-based platforms as well as growing adoption of Artificial Intelligence (AI) solutions.

Huge demand for power-efficient as well as high performance chips, essential to run cloud-data centers and process massive data by using Big Data analytics, machine learning and deep learning tools has been a major driver for semiconductor stocks.

Moreover, rapidly increasing demand for sensors and software for autonomous vehicles, advanced driver assisted systems (ADAS), Augmented/Virtual reality devices (AR/VR) and Internet of Things (IoT) are noticeable catalysts to growth.

Further, rapid development of 5G platform and technology has evolved as the next catalyst for the technology stocks.

Momentum to Continue

We expect the current momentum to continue, primarily driven by higher spending on the emerging technologies like ADAS, IoT and AR/VR.

According to an April report from BlackRock, the ADAS market is likely to grow at least 20% each year through 2025, creating significant growth opportunity for manufacturers of camera lenses, sensors and other items.

Per market research firm IDC, global spending on IoT will grow 16.7% year over year to more than $800 billion. Again, per IDC’s August report , quoted by Business Insider, total spending on AR/VR is expected to soar from $11.4 billion in 2017 to nearly $215 billion in 2021, achieving a CAGR of 113.2%.

Moreover, public cloud spending remains firm. According to Gartner, global public cloud services market is projected to grow 18% to $246.8 billion in 2017. However, IDC’s projection is slightly different. The research firm expects global spending on public cloud services to grow 25.4% over 2016 to reach $128 billion in 2017.

In addition to these positive data, IT spending is expected to recover. Gartner now projects global IT spending for 2017 to rise 2.4%, up from 0.3% in 2016.

Our Picks

We believe that the bullish projections present significant growth opportunity for momentum investors, who look for high returns in a short span.

We use the Zacks Momentum Style Score to pick stocks. The style score indicates the best time to buy a stock and take advantage of its momentum with a highest probability of success.

Moreover, we prefer large caps due to their fundamental strength and stability amid increasing volatility in markets. Further, these stocks sport Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Back-tested results show that stocks with a Momentum Style Score of A or B when combined with a Zacks Rank #1 handily outperform other stocks. Guidewire Software Inc (NYSE:GWRE) – Foster City, CA-based Guidewire provides software solutions for property and casualty insurers. The company exited fiscal 2017 with 328 customers compared with 260 customers at the end of fiscal 2016. The company has a Momentum Style Score of A.

Guidewire’s stock has gained 57.4% year to date, substantially outperforming the 25.2% rally of the industry it belongs to.

Large-Cap Technology Stocks for Momentum Investors: MSCI Inc (MSCI)

MSCI Inc (NYSE:MSCI) – New York-based MSCI offers products and services to support the needs of institutional investors throughout their investment processes. The company’s clients include asset owners, asset management firms, private wealth managers, real estate investment trusts and financial intermediaries. The company carries a Momentum Style Score of B.

Shares of MSCI have gained 43.8% year to date, significantly outperforming the industry’s 25.2% rally.

Large-Cap Technology Stocks for Momentum Investors: Micron Technology, Inc. (MU)

Micron Technology, Inc. (NASDAQ:MU) – Idaho-based Micron manufactures and markets Dynamic Random Access Memory (DRAM), NAND flash memory, CMOS image sensors, other semiconductor components and memory modules used in leading-edge computing, consumer, networking and mobile products. A major portion of the revenues is derived from DRAM sales. The company carries a Momentum Style Score of A.

Micron has gained 57.4% year to date, substantially outperforming the 25.2% rally of the industry it belongs to.

Large-Cap Technology Stocks for Momentum Investors: Universal Display Corporation (OLED)

Universal Display Corporation (NASDAQ:OLED) – New Jersey-based Universal Display develops and commercializes organic light emitting diode (OLED) technologies and materials for use in display and solid-state lighting applications. The company flaunts a Momentum Style Score of B.

Shares of Universal Display have gained 134.6% year to date, significantly outperforming the industry’s 24.3% rally.

Conclusion

Momentum investing calls for a continuous appraisal of stocks, which ensures that an investor does not pick a beaten-down name and overlook a thriving one. The above-mentioned four large-cap stocks are in the limelight due to impressive year-to-date returns as well as strong growth projections. We believe that they are great picks for a winning portfolio in the short term.

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Article printed from InvestorPlace Media, https://investorplace.com/2017/09/4-large-cap-technology-stocks-momentum-investors-ggsyn/.

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