The U.S. stock market gained on Jul 2 as investor optimism about market recovery from the COVID-19 crisis got a boost after the U.S. Labor Department reported an unexpected drop in unemployment rate. According to the latest data released by the U.S. Bureau of Labor Statistics, the unemployment rate fell to 11.1% in June from 13.3% in May.
The U.S. economy added 4.8 million jobs in June, marking the second consecutive month of gains following more than 20 million of job losses recorded in April due to the pandemic. In May, the economy created 2.7 million jobs, bringing down the unemployment rate to 13.3% from the post-World War II high of 14.7% in April.
Notably, the stock market is in a recovery mode since April after bottoming out in late-March due to the pessimism surrounding the coronavirus crisis. Optimism over a potential vaccine for COVID-19 and an uptick in economic activities, with lockdown measures starting to ease, are mainly driving the U.S. stock market.
The latest data released by the Labor Department has further boosted investor confidence about the economy’s fast recovery from the coronavirus crisis.
Tech Sector Playing Crucial Role in Market Rebound
The technology sector has played a crucial role in the quicker-than-expected recovery of the stock market. Since April to date, the Technology Select Sector SPDR XLK, which tracks an index of the S&P 500 technology stocks, has rallied 31%.
Moreover, the ETF has a positive year-to-date return of 14.8%, outperforming the gains of all three major U.S. indices. While the Tech-laden Nasdaq index has gained 13.8% year to date, the Dow Jones and the S&P 500 indices fell 9.5% and 3.1%, respectively.
The pandemic has, surprisingly, opened up newer avenues of growth for tech companies. The coronavirus-led global lockdown is fueling demand for PCs, notebooks and peripheral accessories, as more and more workers and students are now working and learning from home.
The work-and-learn-from-home necessity is also stoking demand for cloud storage. Furthermore, the lockdown has bolstered the usage of online and e-commerce services globally. Therefore, data-center operators are enhancing their capacities to accommodate the demand spike for cloud services.
In addition, the long-term growth prospects of tech companies look promising owing to the continuous digital transformations. The rapid adoption of cloud computing, along with the ongoing integration of AI and machine learning, has been a major growth driver.
The accelerated deployment of 5G technology — the next-generation wireless revolution — is likely to spur further growth. Moreover, blockchain, IoT, autonomous vehicles, AR/VR and wearables offer significant growth opportunities.
Considering the healthy growth prospects of tech companies, it makes sense to invest in this space for long-term gains.
Strategy to Pick Stocks
It is difficult to pick the right stocks from a wide range of available investment opportunities.
This is where the Zacks Stock Screener comes in handy. With the help of this screener, we have filtered five stocks that are incredible for investment right now. These stocks carry a Zacks Rank #1 (Strong Buy) or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Also, the stocks have a Growth Score of A or B. Per Zacks’ proprietary methodology, stocks with such favorable combinations offer solid investment opportunities.
Zoom Video Communications ZM continues to add record number of subscribers and expand its enterprise customer base amid the COVID-19-induced remote-working and online-learning wave. Easy to deploy, use, manage and scalability make Zoom Video’s software popular. Moreover, this nearly $74 billion worth company’s efforts to eliminate the security and privacy loopholes are expected to enable it maintain the existing enterprise user base and attract more customers.
Zoom Communications currently sports a Zacks Rank of 1 and has a Growth Score of A. The Zacks Consensus Estimate for fiscal 2021 earnings has been revised upward by 78.8% in the past 30 days to $1.18 per share.
Zoom Video Communications, Inc. Price and Consensus
Zoom Video Communications, Inc. price-consensus-chart | Zoom Video Communications, Inc. Quote
Synaptics SYNA is well poised to capitalize on its market-leading position for both touchpads and secure fingerprint sensors amid upbeat trends in PC shipments. New design wins across all OEM leaders, including Dell, HP and Lenovo, deserve a special mention.
Further, incremental adoption of this Zacks #1 Ranked company’s edge SoCs, integrated with AI and embedded neural network capabilities for smart video and audio devices, is anticipated to be conducive to its financial performance.
The stock has a Growth Score of A and the consensus mark of $4.37 per share for its fiscal 2021 earnings has been revised 2.1% upward over the last 30 days.
Synaptics Incorporated Price and Consensus
Synaptics Incorporated price-consensus-chart | Synaptics Incorporated Quote
Fortinet FTNT is positioned well to capitalize on the rising demand for security and networking products amid the coronavirus crisis, which has compelled a huge workforce globally to work remotely. It is also benefiting from robust growth in Fortinet Security Fabric, cloud and SD-WAN offerings. Moreover, continued deal wins, especially those of high value, are key growth drivers for this company.
Fortinet currently flaunts a Zacks Rank #1 and has a Growth Score of A. The Zacks Consensus Estimate for current-year earnings has been revised upward by 1.4% to $2.81 per share in the past 30 days.
Fortinet, Inc. Price and EPS Surprise
Fortinet, Inc. price-eps-surprise | Fortinet, Inc. Quote
FormFactor FORM is benefiting from solid demand for both Foundry & Logic probe cards. Growing probe-card demand, customer node transitions and new design releases are major positives for this Zacks Rank #2 company. Furthermore, its increasing focus on Mobile SoC and Mobile DRAM probe-card segments is another key growth driver.
The stock has a Growth Score of A. The Zacks Consensus Estimate for ongoing-year earnings has moved 9% north in the past 30 days to $1.09 per share.
FormFactor, Inc. Price and EPS Surprise
FormFactor, Inc. price-eps-surprise | FormFactor, Inc. Quote
Ciena CIEN is well poised to benefit from the accelerated deployment of 5G technology. The company has augmented its Packet Networking portfolio with new Adaptive IP capabilities, coherent optics and purpose-built hardware platforms to enable service providers to capitalize on 5G. Notably, 5G needs to connect to fiber-optic networks in order to support emerging automotive, robotics and medical applications, which bodes well for Ciena.
Ciena currently carries a Zacks Rank #2 and has a Growth Score of A. The Zacks Consensus Estimate for its fiscal 2020 earnings has moved 13.2% north to $2.92 per share over the past 30 days.
Ciena Corporation Price and Consensus
Ciena Corporation price-consensus-chart | Ciena Corporation Quote
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