The tech sector is one of the strongest sectors in the market right now, and it looks like the same will hold true for 2018. Indeed, a recent Goldman Sachs report told investors that the best sectors to invest in right now are tech and financial.
Strategist David Kostin wrote “Put simply, growth will drive technology share prices higher.” Similarly Credit Suisse analyst Jonathan Golub says “Technology is our favorite sector despite elevated multiples. Fundamentals remain strong given the group’s exposure to secular growth themes in subgroups such as internet and software-as-a-service.”
So, bearing this in mind, we decided to look for some top tech growth ideas for 2018. We turned to the TipRanks’ powerful stock screener for a shot of investment inspiration. The screener allows investors to filter tickers according to a range of unique options, including “strong buy” analyst consensus rating. This option only selects stocks which have the seal of approval from the Street based on the latest analyst ratings. From the results I extracted the most compelling tech growth stocks with big upside potential.
Now let’s delve deeper into our five top stock picks for your 2018 portfolio.
Top Tech Growth Stocks: Micron (MU)
If I had to pick one key stock to bet on for 2018, Micron Technology, Inc. (NASDAQ:MU) could well be it. This booming semiconductor stock has already soared by nearly 140% in the last year. Now Micron has just announced that it is redeeming $2.25 billion of debt well ahead of time. And luckily for investors, analysts are predicting that MU still has a great run ahead.
In the last three months, MU has received 22 buy ratings and just two hold ratings from the Street. The average analyst price target stands at $50.39 — over 20% upside from the current share price.
Note that this is just the average price target from all analysts covering the stock. Several top analysts have published more bullish predictions. Take, for example, top Barclays analyst Blayne Curtis. He recently ramped up his MU price target from $40 to $60 (48% upside potential). Curtis is confident that memory trends for both DRAM and NAND will continue to stay strong well into 2018.
DRAM prices “continue to improve at a strong pace” while supply constraints for NAND should continue into the second half of next year. Curtis pins this on the “insatiable demand” for flash from data center customers.
If you are still feeling dubious, take into account Curtis’ track record on MU stock. TipRanks shows that across his 12 Micron ratings, Curtis has a very impressive 100% success rate and 85% average return.
Meanwhile the stock’s highest price target ($76) comes from Needham’s Rajvindra Gill — who also boasts a very strong track record. He says “We don’t believe we are at the peak of the cycle as end markets for DRAM are significantly more diverse than in years past; stabilizing the volatility of the pricing and perhaps lengthening the contracts. Moreover, memory is crucial for server deployment, AI advancement, autonomous driving as well as core demand for smartphone content growth.”
Top Tech Growth Stocks: Criteo SA (CRTO)
Criteo SA (ADR) (NASDAQ:CRTO) is one of the few bright lights in the ad tech space. Even if you haven’t heard of Criteo you have no doubt seen its work. Criteo is the name behind the online ads that relentlessly pop up to remind you of previously viewed products. This “Strong Buy” stock claims it has a 90% customer retention rate and has become a nearly two billion dollars revenue business.
Shares have seen some volatility recently following news that Apple Inc. (NASDAQ:AAPL) is planning to roll out a new feature that disables third-party tracking cookies. A subsequent Gotham City Research report accused the company’s workaround of involving “illegal and harmful” practices. However, Criteo has hit back, saying it “has been open with our clients about this solution, which provides full transparency and control to Safari users” and notes that it gives users two chances to remove the tracking.
Clearly, top BMO Capital analyst Daniel Salmon is unconcerned by the Gotham report. He reiterated his $70 price target on the stock on Oct. 16. The price target — Criteo’s highest — suggests the stock has 48% upside potential from the current share price. And it comes from a top analyst (ranked No. 314 out of 4,695 analysts on TipRanks).
Overall, Criteo has received eight buy ratings and two hold ratings in the last three months. One of these buy ratings is from KeyBanc analyst Andy Hargreaves. He is a big fan of the company’s new Commerce Marketing Platform. This innovative new tool aggregates online and offline data across partners to form a “Shopper Graph.” According to Hargreaves this new product can deepen Criteo’s “moat” and solidify its partnerships. He has a $62 price target on the stock. Hargreaves calls the Apple cookie issue transitory.
Top Tech Growth Stocks: Facebook (FB)
Social media giant Facebook, Inc. (NASDAQ:FB) is looking pretty unstoppable right now.
Top RBC capital analyst Mark Mahaney makes an interesting observation based on FB’s trading patterns. He notes that Facebook is currently trading 9% below its historical forward average. This is in stark contrast to stocks like Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) and Netflix, Inc. (NASDAQ:NFLX) that are actually trading above their historical forward averages. The conclusion: compared to many large-cap internet stocks, FB has space to grow over the next year.
Indeed, Mahaney writes: “Facebook continues to have a LONG revenue runway ahead of it.” A key catalyst for the stock is the very bullish outlook from marketers who advertise on FB. Mahaney says: “We view the overall high rate of spending on Facebook (91% of marketers allocate a portion of their Online budget to FB) as a strong positive; it shows us that Facebook continues to be a dominant force in not just Social Media, but also advertising as a whole.”
Plus note that a record 66% of respondents to RBC’s marketer survey are planning to “increase” their FB budget, with only 5% planning to “decrease,” and you can see why this is a top stock for 2018 and beyond. For example, Credit Suisse’s Stephen Ju has also just carried out his own positive advertiser checks. This five-star analyst was so encouraged by the results that he has now boosted his price target from $190 all the way to $235 (35% upside).
Overall, 31 analysts have published buy ratings on FB in the last three months versus just two hold ratings and one sell rating. If we combine the price targets from all these analysts, the average comes in at $198.68 (14% upside).
Top Tech Growth Stocks: Apple (AAPL)
I believe that Apple’s momentum is only set to increase as we roll into the next year. Case in point: the recent stock upgrade from five-star KeyBanc analyst Andy Hargreaves. This analyst is famously on the fence when it comes to Apple stock, so his upgrade speaks volumes. On Oct. 15, he upgraded AAPL from “hold” to “buy” with a shiny $187 price target (17% upside).
For Hargreaves, Apple’s “aggressive market segmentation” strategy is now so promising that it overshadows concerns about an iPhone sale slowdown. Hargreaves says he is still “pessimistic” about the iPhone’s multicycle unit growth but “Apple’s expanded market segmentation strategy seems likely to drive average gross profit per user above our previous expectations.”
This strategy involves Apple bumping up the price of its base-model high-end iPhones. At $999 (before sales tax) the iPhone X is the most expensive iPhone ever made. And this is just with basic storage of 64GB. Because Apple is now charging more ($150 up from $100) for increased storage possibilities, while sneakily removing the option to increase storage to 128GB. Now the next data storage upgrade is 256GB. And Apple is ensuring that most of this cost is passed on. Hargreaves says: “Our conversations with suppliers suggest Apple will bear little of the cost associated with current yield issues around the iPhone X … in contrast to our previous expectations.”
We can see from TipRanks that Apple has regained its “Strong Buy” rating. In the last three months, the stock has received 22 buy ratings and seven hold ratings. Based on these ratings, the average $175 price target on AAPL stock translates into upside of over 10% from the current share price.
Top Tech Growth Stocks: Box Inc (BOX)
Last but by no means least we have cloud enterprise software company Box Inc (NYSE:BOX). Box recently announced that its new products and partnerships puts it on track to make $1 billion of annual revenue in four years. Even better, it is expecting its first profitable quarter in pro forma fiscal year 2019 (calendar 2018). As a result, shares are now trading up at over $20. But don’t worry — this top stock still has plenty of upside potential left. In fact, according to analysts it can soar by at least 18% in the next 12 months.
Top Cowen & Co analyst Richard Davis says BOX boasts a compelling setup. He believes BOX can bring in gains of over 50% in the next two years. At the recent BoxWorks conference he gave the seal of approval to new Box technologies that simplify content driven business work flows, and bring intelligence to enterprise content with AI and machine learning. Davis has a $25 price target on BOX (21% upside).
Meanwhile Oppenheimer analyst Ittai Kidron took the conference as an opportunity for a quick customer survey. He likes what he found. “At BoxWorks we surveyed 25 customers, and the results suggest attendees: (1) have a strong positive spending bias for Box; and (2) are positive on its new product road map and platform” writes Kidron. “Many already view Box as a collaboration and content management platform, which bodes well for increased user penetration and spending on newer features.”
In total, this “strong buy” stock has received eight buy ratings and only one hold rating in the last three months.
Which stocks are the top 25 analysts recommending right now? Find out here.
TipRanks offers investors the latest insight into eight different sectors by tracking the activity of 4,500 analysts, 5,000 financial bloggers and even 37,000 corporate insiders. As of this writing, Harriet Lefton did not hold a position in any of the aforementioned securities.