Best tech stocks to buy in July is our topic today. High growth tech shares continue to struggle amidst high inflation, tightening monetary policy, and a global semiconductor shortage. Technology led the charge as the economy recovered from the Covid-19 pandemic, but the tables seem to have turned in 2022.
S&P Global (NYSE:SPGI) highlights, “As tech, media and telecommunications equities reeled from a steady slide into bear market territory, initial public offering activity in the sector dropped off precipitously from 2021 peaks.” Lofty valuations in tech names coupled with uncertainty over how the interest rate hikes by the Fed may affect the U.S. economy has sent pushed these names into multi-year lows.
Investors continue to sour on the embattled industry as the tech-heavy NASDAQ 100 Index has fallen close to 30% year-to-date (YTD), and the Technology Select Sector SPDR Fund (NYSE:XLK) has dropped around 26%. Meanwhile, the S&P 500 Index has declined around 19% over the same period, highlighting the pressure on the technology sector.
But despite these recent headwinds, many analysts concur technology remains the predominant sector that will lead the rebound once the fears of recession subside. With that information, here are seven best tech stocks to buy in July.
| ADSK | Autodesk | $176.73 |
| CDNS | Cadence Design Systems | $156.04 |
| CTXS | Citrix Systems | $97.82 |
| FTNT | Fortinet | $59.87 |
| PAYC | Paycom Software | $312.74 |
| NOW | ServiceNow | $493.31 |
| SNPS | Synopsys | $309.63 |
Autodesk (ADSK)
52-week range: $163.20 – $344.39
Software giant Autodesk (NASDAQ:ADSK) is famous for its flagship AutoCAD product line, used primarily for architecture, engineering, and construction applications. Additionally, the company makes software for product design and manufacturing, media and entertainment, and workflow management.
In late May, Autodesk released first-quarter FY23 financials. Total revenue increased 18% year-over-year (YOY) to $1.17 million. Diluted earnings per share (EPS) was $1.43, compared to $1.03 the year before. Free cash flow (FCF) was $422 million.
Recently, the company invested in RADiCAL, a developer of artificial intelligence (AI) driven 3D motion capture technology. RADiCAL’s AI uses deep learning and human biomechanics to track and reproduce accurate movement. The resulting data can then be used to automate the animation of 3D characters.
So far in 2022, ADSK stock has tumbled almost 39%. Shares are trading at 27 times forward earnings and 8.4 times sales. Analysts’ 12-month median price forecast stands at $250.
Cadence Design Systems (CDNS)
52-week range: $132.31 – $192.70
Cadence Design Systems (NASDAQ:CDNS) is a leading electronic design automation (EDA) and intelligent system design provider. It delivers hardware, software, and IP for electronic design. Its tools are used to design custom integrated circuits, digital design and signoff, packaging, and system analysis.
In late April, Cadence provided Q1 earnings. Revenue increased 22.5% from $736 million to $902 million. Diluted EPS was $1.17, compared to 83 cents the prior year. Cash and equivalents totaled $1.13 billion.
The company recently announced that its Cerebrus AI-based solution delivered transformative results on next-generation customer designs. Mediatek, a semiconductor company, used Cerebrus to shrink die area and reduce power usage. Another chipmaker, Renesas Electronics (OTCMKTS:RNECF), achieved improved performance and lowered energy consumption.
CDNS stock has declined around 17% since the beginning of the year but has gained more than 10% over the past 12 months. Forward price-to-earnings (P/E) and price-to-sales (P/S) numbers are 39x and 13x, respectively. Wall Street’s 12-month median price forecast is at $186.
Citrix Systems (CTXS)
52-week range: $78.07 – $119.22
Citrix Systems (NASDAQ:CTXS) is a cloud computing and desktop virtualization company. The company’s products and services allow users to view and access computers remotely. In addition, its cloud computing platform enables organizations or individuals to share and sync files. Citrix has a long-standing partnership with Microsoft (NASDAQ:MSFT).
In April, Citrix reported Q1 metrics. Total net revenue was $825 million, increasing from $776 million the year before. Diluted EPS was 47 cents, compared to 71 cents the previous year. Cash and equivalents totaled $727 million.
With a market capitalization (cap) shy of $12.5 billion, the company is likely to grow significantly in the years ahead. Regular InvestorPlace.com readers may know that Citrix also gets significant attention as a potential takeover candidate.
CTXS stock is currently trading flat for the year but has fallen 17% over the past 12 months. Shares are trading at 17.83 times forward earnings and 3.75 times sales. The dividend yield is 1.52%. Analysts’ 12-month median price forecast stands at $104.
Fortinet (FTNT)
52-week range: $47.27 – $74.35
Fortinet (NASDAQ:FTNT) is an enterprise cybersecurity company specializing in antivirus software, intrusion detection and prevention, and custom security packages. Its services and products protect more than 580,000 customers.
In early May, Fortinet presented Q1 financial results. Total revenue was $954.8 million, up 34% YOY. Diluted EPS was 94 cents, increasing from 81 cents a year ago. FCF was $273.5 million.
The company recently launched FortiRecon, a complete digital risk protection service (DRPS). It combines machine learning, automation, and expertise from FortiGuard Labs to provide assessments of risk posture as well as steps to mitigate such risks. The main aim is to protect data and assets, at the reconnaissance phase — the first stage of a cyberattack. Wall Street will be keeping an eye on how this DRPS may contribute to the top line growth.
FTNT stock has declined roughly 14% YTD but has appreciated 20% over the past year. Forward P/E and P/S numbers are 58.8x and 13.7x, respectively. Wall Street’s 12-month median price forecast is at $70.6.
Paycom Software (PAYC)
52-week range: $255.82 – $558.97
Paycom Software (NYSE:PAYC) offers online payroll services and human resources (HR) software solutions. It services nearly 34,000 enterprise customers.
In early May, Paycom posted Q1 earnings. Revenue was $354 million, up 30% YOY. Diluted EPS was $1.90, compared to $1.47 the year before. Cash and equivalents totaled $360.6 million.
Recently, the company opened a new operations center in Grapevine, Texas. The 14-acre campus will house approximately 1,000 employees and is the largest Paycom facility outside its Oklahoma City headquarters.
PAYC stock has dropped 30% YTD. Shares are trading at 53.5 times forward earnings and 15.4 times sales. Analysts’ 12-month median price forecast stands at $360.
ServiceNow (NOW)
52-week range: $406.47 – $707.60
ServiceNow (NYSE:NOW) is a digital workflow management solutions provider. The company’s flagship product, the Now Platform, services IT, employee, customer, and creator workflows. It is designed to lower costs and save time through the automation of various tasks.
In late April, ServiceNow reported Q1 metrics. Total revenue was $1.72 billion, representing a 29% increase YOY in constant currency. Diluted EPS was $1.73, compared to $1.52 the year before. FCF was $770 million.
In partnership with Qualtrics (NASDAQ:XM), ServiceNow recently launched Qualtrics Embedded Insights in the ServiceNow Store. The new app gives IT and customer service agents a unified view of employee and customer experience and operational data. As a result, that could respond to employee and customer needs faster. Wall Street will be keen to see how it can contribute to the top line growth.
So far in 2022, NOW stock has fallen 24%. Forward P/E and P/S numbers are 68x and 16.1x, respectively. Wall Street’s 12-month median price forecast is at $613.
Synopsys (SNPS)
52-week range: $255.02 – $377.60
Synopsys (NASDAQ:SNPS) is an electronic design automation (EDA) company that focuses on technologies for chip design, software security, IP integration, and quality testing. Its well-known products include simulators that assist in developing and debugging semiconductor chips and computer systems.
In mid-May, Synopsys released Q2 FY22 results. Revenue was $1.28 billion, compared to $1.02 billion the prior year. Diluted EPS was $2.50, compared to $1.70 the year before. Cash and equivalents totaled $1.57 billion.
Recently, the company completed the acquisition of WhiteHat Security, a leading provider of application security Software-as-a-Service (SaaS). The addition of WhiteHat Security provides Synopsys with significant SaaS capabilities and dynamic application security testing (DAST) technology to strengthen its application security testing portfolio.
SNPS stock has lost 15% YTD but has appreciated more than 11% over the past 12 months. Shares are trading at 36.2 times forward earnings and 10.3 times sales. Analysts’ 12-month median price forecast stands at $380.
On the date of publication, Tezcan Gecgil,Ph.D., did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
