On Monday, the stock market posted gains, with the tech-heavy Nasdaq Composite advancing 1.9% to 14,532.55. Investors shook off concerns about an impending recession and bought tech shares. Furthermore…
the index has made a stellar recovery and is down only approximately 10% from its record.
Last month, the Federal Reserve finally raised interest rates for the first time since 2018. Wedbush analyst Dan Ives believes that this might pose an opportunity to invest in tech stocks and that large-cap tech will outperform its small-cap counterpart. The tech sector is oversold, which might be ideal for investors to start accumulating shares in high-quality areas. University of Florida finance professor Jay Ritter said, “I think some of the big tech companies are going to use the drop in valuations as a buying opportunity.”
Hence, we think this month might be the ideal time to invest in mega-cap tech stocks Microsoft Corporation (MSFT), Broadcom Inc. (AVGO), Oracle Corporation (ORCL), Accenture plc (ACN), and Intel Corporation (INTC).
Microsoft Corporation (MSFT)
MSFT is a Redmond, Wash.-based software behemoth that provides software services, solutions, and devices worldwide. The company sells its products through distributors, OEMs, resellers, or digital marketplaces. It has a $2.36 trillion market capitalization.
On March 16, MSFT and Rogers Communication, Inc. (RCI) announced a strategic alliance to enable enterprise and small- and medium-business customers to accelerate digitization and take full advantage of hybrid work and 5G-enabled solutions. This alliance might prove to be beneficial for MSFT.
On March 4, MSFT announced that it had completed the acquisition of Nuance Communications Inc. (NUAN), a company in the conversational AI and ambient intelligence field across industries that include healthcare, financial services, retail, and telecommunications. The acquisition might increase MSFT’s operational capability.
For its fiscal second quarter, ended Dec. 31, 2021, MSFT’s total revenue increased 20.1% year-over-year to $51.73 billion. Its operating income increased 24.3% from the prior-year quarter to $22.25 billion. Its net income and EPS stood at $18.77 billion and $2.48, respectively, registering increases of 21.4% and 22.2% year-over-year.
Analysts expect MSFT’s EPS to improve 8.8% year-over-year to $2.36 for its fiscal quarter ending June 30, 2022, while the Street’s $52.93 billion revenue estimate for the same period indicates a 14.7% rise from the prior-year period. In addition, MSFT has an impressive surprise earnings history, as it has topped consensus EPS estimates in each of the trailing four quarters.
MSFT’s stock has gained 30% in price over the past year and 8.7% over the past month to close yesterday’s trading session at $314.97.
MSFT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
MSFT has a Sentiment grade of A and a Stability and Quality grade of B. In the 160-stock Software – Application industry, it is ranked #21.
Click here to see the additional POWR Ratings for MSFT (Growth, Value, and Momentum).
Note that MSFT is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.
Broadcom Inc. (AVGO)
San Jose, Calif.-based AVGO operates as the designer, developer, and supplier of various semiconductor devices, focusing on complex digital, mixed-signal complementary metal oxide semiconductor-based devices and analog III-V-based products globally. The company has a $259.20 billion market capitalization.
On February 24, AVGO introduced its PCIe Gen 5.0 portfolio. The Broadcom PCIe Gen 5.0 SerDes, switches, and custom silicon products were made available to OEMs, ODMs, and cloud providers and were being tested and demonstrated for wide-scale interoperability. Earlier in February, AVGO declared the availability of its Gen 7 64G Fibre Channel switch platform—the Brocade G730 Switch, a 128-port core switching platform for the autonomous SAN and double density 64G Fibre Channel optical transceiver. This might add to the company’s revenue stream.
AVGO’s net revenue increased 15.8% year-over-year to $7.71 billion in its fiscal first quarter, ended Jan.30, 2022. Its non-GAAP net income rose 25.8% from the prior-year quarter to $3.74 billion. Its non-GAAP earnings per common share improved 26.9% from the same period the prior year to $8.39.
Analysts expect AVGO’s EPS to increase 26.5% year-over-year to $35.42 for its fiscal year 2022. The Street expects AVGO’s revenue for the same year to rise 16% from the prior year to $31.85 billion. In addition, AVGO has topped consensus EPS estimates in each of the trailing four quarters.
The stock has gained 33.4% in price over the past year and 6.5% over the past month to close yesterday’s trading session at $634.85.
It is no surprise that AVGO has an overall A rating, which translates to Strong Buy in our POWR Ratings system.
AVGO has an A grade for Quality and a B grade for Growth and Sentiment. It is ranked #6 of the 96 stocks in the Semiconductor & Wireless Chip industry. The industry is rated A.
To see the additional POWR Ratings for Value, Momentum, and Stability for AVGO, click here.
Note that AVGO is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.
Oracle Corporation (ORCL)
ORCL provides products and services that address enterprise information technology environments globally. The company offers the Oracle Cloud software as a service that includes various cloud software applications. It has a $224.51 billion market capitalization. ORCL is headquartered in Redwood City, Calif.
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