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Look Beyond FAANGs: Here're 6 Tech Stocks Running the Show

Aniruddha Ganguly
·5-min read

The year 2020 has been a fabulous one for FAANG stocks so far. This group of stocks has shown remarkable resilience against the brutal coronavirus-led economic downturn that snapped the market’s 11-year-long bull run. The growing optimism surrounding swift economic recovery strengthens the prospects for FAANG stocks.

Amazon AMZN is currently the best-performing stock among FAANGs, trailed by Netflix. Returns from Apple, Facebook and Alphabet have also outperformed the S&P 500, which is down 0.8% on a year-to-date basis. (Read More: FAANG Rally Continues as Players Cash in on Coronavirus Crisis)

Apart from stock market performance, the FAANG group has been instrumental in fighting the spread of coronavirus. Apple and Google collaborated to develop a contract tracing tool, which was made available to the public in May.

Apple, also in collaboration with the White House Centre for Disease Control (CDS) and the Federal Emergency Management Agency, launched an app and a website that allow users to do a self-screening for COVID-19.

Amazon’s distribution strength helped it meet the rapid surge in online delivery as people were confined to their homes due to lockdowns, shelter-in-place guidelines and social-distancing measures. Amid searing job losses, the company hired more than 150,000 workers, 70% now expected to be on its permanent pay-roll.

Moreover, Amazon’s cloud arm, Amazon Web Services (“AWS”) along with Google’s cloud and Microsoft’s Azure has been instrumental in supporting the remote working and online learning wave.

Netflix’s solid content portfolio helped it to meet the surging demand for media consumption as more people were confined to their homes.

Facebook helped people keep in touch during the pandemic. Voice and video calling more than doubled on Messenger and WhatsApp. The company also expanded its Data for Good program that grants researchers access to data about user movement patterns in an effort to chart out areas affected by the virus.

Year-to-Date Performance



Tech Stocks Outperform FAANG

Although the FAANG’s performance has been impressive, there are few tech stocks that have outperformed the group on a year-to-date basis. Here we narrow down to six such stocks.

Much similar to FAANGs, these companies have shown resiliency during the pandemic. Further, the reopening of the economy and optimism surrounding V-shaped recovery bode well for these stocks.

Additionally, these tech stocks are expected to gain from the strong demand for remote-working tech, cloud services and cybersecurity solutions.

Year-to-Date Returns- Tech Stocks versus FAANG


 

Moreover, these stocks carry a favorable combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Per the Zacks’ proprietary methodology, stocks with this favorable combination offer good investment opportunities.

Our Picks

Zoom Video Communications ZM is riding on the coronavirus-induced work-from-home and online-learning trend.

Zoom Video currently flaunts a Zacks Rank of 1 and a Growth Score of B. The consensus mark for its fiscal 2021 earnings is pegged at $1.18 per share, having moved 174.4% north in the past 60 days.

Zscaler ZS benefits from steady rise in demand for cloud security as the work-from-anywhere trend gains impetus due to coronavirus-led workspace disruption. This Zacks #1 Ranked company’s focus on penetrating large enterprises along with a recurring revenue model are major growth drivers. It has a Growth Score of B.

The Zacks Consensus Estimate for its 2020 earnings is pegged at 17 cents per share, having been revised 13.3% upward in the past 60 days.

Dropbox DBX benefits from the evolving workspace demand for seamless enterprise communication tools. Solid demand for cloud storage has been acting as a tailwind for this Zacks Rank #1 company.

Dropbox has a Growth Score of B. The Zacks Consensus Estimate for its 2020 earnings is pegged at 74 cents per share, having been revised 5.7% upward in the past 60 days.

Fortinet FTNT is benefiting from rising cyber-attack risks that are propelling demand for its FortiMail platform. This Zacks Rank #2 company has a Growth Score of A.

The Zacks Consensus Estimate for Fortinet’s 2020 earnings stands at $2.78 per share, having been raised 6.1% over the past 60 days.

ServiceNow NOW is progressing on its dominance in the IT service market (ITSM). This Zacks #2 Ranked company continues to win market share by replacing legacy on-premise systems with cloud-based processes.

ServiceNow has a Growth Score of A. The consensus mark for its fiscal 2020 earnings is pegged at $4.24 per share, having been raised 7.1% in the past 60 days.

CrowdStrike Holdings CRWD is advancing on the rapid uptake of its Falcon solution. This Zacks #2 Ranked company had a total of 6,261 subscription customers as of Apr 30, 2020.

CrowdStrike has a Growth Score of A. The consensus mark for its fiscal 2021 loss is pegged at 6 cents per share, which has improved by 6 cents in the past 30 days. The company had reported a loss of 42 cents in the previous fiscal year.


Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
ServiceNow, Inc. (NOW) : Free Stock Analysis Report
 
Fortinet, Inc. (FTNT) : Free Stock Analysis Report
 
Dropbox, Inc. (DBX) : Free Stock Analysis Report
 
Zscaler, Inc. (ZS) : Free Stock Analysis Report
 
Zoom Video Communications, Inc. (ZM) : Free Stock Analysis Report
 
CrowdStrike Holdings Inc. (CRWD) : Free Stock Analysis Report
 
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Zacks Investment Research