Many of the highest performing stocks are in technology companies. These companies' innovations create services and products integral to daily life and are upending traditional industries and business models. Investors craving the explosive growth potential of these innovations can look no further than the best stocks to buy now.
Technology stocks come in all shapes and sizes, from well-known global enterprises such as Amazon (NASDAQ: AMZN), Facebook (NASDAQ: FB), and Alibaba (NYSE: BABA) to smaller startups just making their IPOs that could potentially offer massive returns to early investors. The key to seeing a big return on investment (ROI) is picking the right stocks at the right time.
Tech stocks have been blowing their latest earnings reports out of the water. Apple Inc. (NASDAQ: AAPL) and Amazon.com Inc. (NASDAQ: AMZN) are both up over 5% in just the last month after crushing earnings expectations.
But the best tech stocks have even more upside ahead.
As we head into May, the unofficial start of summer, there are two powerful trends that will dominate the technology sector. First is the infrastructure bill proposed by the president and currently being debated by Congress.
What does infrastructure have to do with technology?
Quite a lot this time around. President Bidens calls for a massive upgrade to our technology infrastructure, including 5G systems, rural broadband networks, and more tech infrastructure. There will be billions in cash flowing into companies at the heart of this tech.
The second big thing is going to be the semiconductor shortage.
The acceleration of technology adoption we saw develop during the pandemic has helped spark a supply shortage of semiconductor chips. Industries like electric vehicles and the Internet of Things (IoT) have also contributed to the demand surge.
Some industry observers say it could take as long as two years of the shortages to be resolved.
We are hearing stories of automobile and smartphone manufacturers having to slow or even stop production because they cannot get enough chips. This hasn't put a damper on tech stocks like Apple, but it could be explosive for the semiconductor companies.
To help you take advantage of these powerful trends, these are the best tech stocks to buy in May.
Bentley Systems Inc. (NASDAQ: BSY) sells software to the people that plan, design, and build infrastructure. These include engineers, architects, and construction firms. As money begins to flow into rebuilding infrastructure, there will be more demand for Bentley's software.
Its software can be used to design bridges, mines, dams, and factories. Architects can also use their products for site plans, rail network planning, and treatment plant analysis. Before the first shovel of dirt is turned in, the designers and builders can have the project all laid out using software from Bentley Systems.
Bentley's software creates digital workflow between architects, engineers, and construction companies both in the office and in the field to ensure projects run smoothly and according to plan.
A lot of new infrastructure projects will come online over the next few years, and that's going to create demand for the software sold by Bentley Systems.
As requested by the president, the infrastructure bill calls for billions of dollars to be sent in updating schools and expanding broadband access to everyone in the United States. That will create enormous demand for fiber optic products, and our next stock to own in May is going to be a huge beneficiary of that demand.
Clearfield Inc. (NASDAQ: CLFD) sells pretty much everything you need to deploy a fiber network, including frames and cabinets, optical components, cable and drop assemblies, terminals and cabinets, and wall boxes.
Clearfield's customers are broadband service providers, including the large national carriers, local companies, utilities, and municipalities.
There were already huge opportunities for Clearfield from the rollout of 5G and the continued adoption of cloud computing and data centers. Add in government-mandated expansion and updates to the nation's fiber-optic grid, and business is about to go from good to great.
The latest earnings report gives some idea of just how good the business is right now. Sales were up 45% year over year while the backlog of work rose by more than 100% compared to the first quarter of 2020. Gross profit margins climbed from 39% to 43.6%. As a result of the powerful sales increase combined with margin improvement, earnings exploded from just $0.05 last year to $0.27 this year.
That's year-over-year earnings growth of more than 400%.
Our final tech stock to buy for May is Micron Technology Inc. (NASDAQ: MU).
Micron is one of the largest players in the market for computer memory chips. There is enormous demand for its chips from the smartphone and PC markets. 5G and artificial intelligence will also drive demand for memory chips, which should drive additional revenue and earnings.
The demand for 5G phones will explode, and the higher-end phones require more memory than ever.
According to Micron, servers using AI require six times as many memory chips as traditional servers.
We should also see increased demand from the data center markets starting in the second half of the year. Memory usage in autonomous vehicles is going to be enormous as well.
Demand is growing for Micron semiconductor chips, and the company is scrambling to meet the demand.
The burgeoning demand situation has Micron management excited about its prospects for 2021. It expects sales to rise by more than 30%. The surge, along with improved margins, should lead to more than 90% year-over-year earnings growth.
That should send the stock price soaring for the rest of this year.
To help you find the best stocks to buy, Money Morning gives you insight into which stocks we see as good buys, which stocks should be avoided, and what news matters in the Dow Jones everyday.
The best tech stocks to buy now are often stocks with strong upward momentum. One big benefit of buying tech stocks is how much growth potential the sector offers. Some high growth stocks may not be profitable yet are difficult to evaluate using traditional metrics. That is why looking for tech stocks that have been moving higher can be a good indicator that more people want to buy them and that they're riding a trend. A good way to examine growth and momentum is by evaluating a key piece of technical analysis called the moving average.
• Moving Average – A stock's moving average (MA) is the average closing price over a certain time period, like 20 days, 50 days, or 200 days. It's used to get a baseline for where the stock is trading that removes any short-term fluctuations. When a stock is trading above its 20- or 50-day MA, it shows good upward momentum.
Fundamentals are, simply put, data that can potentially impact the price of a company’s stock. Factors included in a fundamental analysis of a company can include its management of capital, its cash flow, profit retention, funding for growth and research and development, and more.
The fundamentals of technology stocks are an important part of evaluating their potential. This is because well-established tech companies such as Google and Microsoft that boast solid fundamentals have also proven their ability to maintain leadership in their markets.
A valuable fundamental to consider is earnings per share:
• Earnings Per Share (EPS) Growth – Earnings per share refer to the company's profit divided by its outstanding shares. Strong growth in EPS means a bigger ROI. EPS growth of 25% or more over a 12-month period is a good sign.
A successful track record isn’t always an indicator that a company is offering one of the best tech stocks to buy now. In addition to looking at recent earnings, it’s important to consider the stock’s price-to-earnings ratio (P/E).
P/E compares the price of a share in a company to its earnings per share. A high P/E means that a stock’s price is expensive compared to its earnings and is potentially overvalued.
A low P/E means that a stock is cheap compared to its earnings and could be undervalued. Buying undervalued stocks is an important part of value investing. Each sector has its own "normal" P/E ratio. Tech stocks typically have high P/Es because there's high future growth anticipated.
Tech stocks can be purchased just like any other stocks. You can buy stocks in individual companies which you have studied and believe will give you a solid ROI.
Having a hard time dividing which stock is right for you? Maybe you can choose to invest in an ETF or mutual fund. By doing so, you get exposure to multiple stocks that are picked by the fund manager. Funds can be focused on IPOs, companies that give dividends, high-growth companies, specific sectors in the tech sphere, and more.
Although ETFs give you broader exposure to the tech market as a whole, owning the best technology stocks individually offers savvy investors a better chance at making more money than by simply looking into ETFs.
Investing in tech companies is popular because it is an exciting way to profit on some of the fastest growing businesses in the world. Early investors in some of the biggest tech companies have seen massive returns. For example, Amazon stock, which is now worth thousands of dollars, had an IPO of $18.
While not every stock is going to skyrocket the way Amazon has, there is still plenty of room for growth in the tech world and the opportunity for smart investors to pick stocks with a bright future.
Roku stock is down 33% in the last 3 months.
Sure, this might look like a buying opportunity in so many ways.
First, the company dominated the stay-at-home stock trend, pushing the stock from $80 to $460, or 475%, within a year.
Now, with Roku stock on a hefty dip, you may feel invited to swoop right in for another quadruple return.
But don't be fooled.
Roku stock is down 33% in the last 3 months.
Sure, this might look like a buying opportunity in so many ways.
First, the company dominated the stay-at-home stock trend, pushing the stock from $80 to $460, or 475%, within a year.
Now, with Roku stock on a hefty dip, you may feel invited to swoop right in for another quadruple return.
But don't be fooled.
The UiPath IPO was one of the largest in history.
23.9 million shares of UiPath stock sold for $1.34 billion in total, or $56 per share.
The April 21 IPO was the third-largest U.S.
software IPO ever behind the Qualtrics (NASDAQ: XM) IPO at $1.5 billion and the Snowflake (NASDAQ: SNOW) IPO of $3.4 billion.
Knowing the time after IPOs can be volatile, investors have wondered when the time to buy UiPath would come.
Before we show you when to buy UiPath stock, here's what you should know about the company.
Palantir stock has been one of the hottest stocks on the market over the last year, but you wouldn't know if by looking at its chart over the last two months.
Shares of data mining and artificial intelligence leader Palantir Technologies (NYSE: PLTR) are down nearly 50% since hitting highs in February.
That's Wall Street's special form of analytical nonsense on full display.
In 2018 alone, there were around 30 million attacks launched against U.S.
and allied interests - that number has only gone up in the meantime.
And when it comes to cyber-defense, authorities can often rely on support and cooperation from the private tech sector.
And Michael's got a tech stock for you today that will certainly benefit from the enormous $304 billion cybersecurity sector....
MicroVision stock has been on a very profitable roller coaster this year.
It's up over 1,000% since this time last year and up 182% in 2021 alone.
It's also seen three plunges over 40% since February.
It's down 44% from its all-time high right now, and that has investors wondering if MVIS is a buy right now.
If it follows the same trend, a leap higher could be next.
Before you open a position, here's what you need to know about this tech stock...
Twitter stock is one of the few social media and tech stocks that is struggling recently.
You notice this more easily when comparing Twitter to other social media companies like Facebook having a monster year.
However, remember that Mr.
Market like to exaggerate these kinds of differences.
Here is why Twitter stock is really lagging behind Big Tech, and what to expect from the stock later in the year.
The chance for a Discord IPO just went higher after the company walked away from its potential Microsoft deal.
And if Discord stock was this highly coveted by tech giants, you can bet retail investors are all over this one.
Grab stock is going public through a blockbuster, $40 billion SPAC deal.
Grab is Southeast Asia’s first “superapp,” a one-stop shop for services ranging from food delivery, ride hailing, and even financial planning.
Our technology research expert digs deeper into the company to see if the stock is a buy after the SPAC merger.
Making an early move on a stock is key in tech investing if you want to maximize your profits.
And a critical part of this strategy is knowing when to run toward a stock Wall Street's running away from.
In fact, Michael pointed out a beaten-down telemedicine firm last August that's given us gains north of 69%.
If you missed out on any of those profits, don't worry: Wall Street's making the same expensive mistake again, giving us another chance to jump in....
Airbnb stock should be one of the biggest success stories of the travel recovery, but the stock has been flat for months.
That's no surprise, according to our experts.
Here's why the stock isn't moving higher right now and when the best time to buy it will be...
Technological change is happening at breakneck speed.
That also means our data is more sensitive, and vulnerable, than ever.
CrowdStrike is solving that problem.
This is a growth stock that could be like buying Amazon in 2001.
Here's why CrowdStrike stock is a buy right now...
It's unusual for an investor day to make much news.
But Nvidia's was a different thing altogether.
Nvidia stock is soaring now, and the biggest gains are still in the future.
Here's what has Wall Street so excited and why it's a buy now...
As the ongoing recovery from COVID-19 chugs along, some pandemic trends won't live to see 2022...
But according to pro investor Chris Johnson, remote business won't be going anywhere.
It's just too efficient to quit, and this telecom developer is right at the center of the new "work from anywhere" economy.
And if that's reason enough for a breakout, today's big tech stock catalyst is sure to send shares, and today's Fast Profits trade, through the roof.
Twitter is about to make some serious improvements to its product and that could make the stock a breakout candidate.
For years it seemed like the only update that Twitter made was giving you the ability to send out 280 characters.
But Twitter has turned the pandemic into opportunity and is launching a slew of initiatives that could send it soaring.
Here's what Twitter is up to and why it's a buy right now...
One of the best NFT stocks to buy is about to get several big catalysts at once.
NFTs, or non-fungible tokens, made a splash last month as the next big crypto investment.
Today's best NFT stock benefits from timing.
It's not limited to NFTs, but it is considering NFT products at the perfect time.
