Despite ongoing debates about a potential market correction, the S&P 500 continues to set new records. The index has gained more than 22% year-to-date (YTD) and nearly 41% over the past year. The Nasdaq 100 is also up nearly 23% YTD and 43% over the past 12 months. Of course, these sizeable gains wouldn’t be possible without the recent surge in tech stocks. In fact, if we had to point to one sector that flourished the most during the pandemic, it would be the tech sector.
Due to data-center expansions, increased chip usage, the 5G rollout, the metaverse and growing electronic content across industrial and automotive applications, tech stocks remain in the limelight. Therefore, today this article will discuss seven tech stocks to buy for November and the fourth-quarter earnings season.
According to Forrester Research, the U.S. tech industry has a bright outlook. Tech budgets are expected “to grow by 6% in 2021 and 6.8% in 2022.” In addition, software spending is expected to be “especially strong,” with growth increasing to about 10% this year and 11% in 2022.
As they expand into their growing addressable markets, the high-growth tech stocks on our list will enjoy solid momentum that could help them outpace the overall market in the coming months. So, with that in mind, here are seven tech stocks for growth investors to buy this November:
- Adobe (NASDAQ:ADBE)
- ASML (NASDAQ:ASML)
- Meta Platforms (NASDAQ:FB)
- General Electric (NYSE:GE)
- Global X FinTech ETF (NASDAQ:FINX)
- Medtronic (NYSE:MDT)
- The Trade Desk (NASDAQ:TTD)
Tech Stocks to Buy: Adobe (ADBE)
52-week range: $420.78 – $673.88
First up on this list of tech stocks, Adobe offers content creation, document management and digital design software for creative professionals, students and more. Some of its products include Photoshop, Acrobat, Dreamweaver, Illustrator and InDesign.
This software giant issued Q3 results back in mid-September. Adobe’s revenue surged 22% year-over-year (YOY) to a record $3.94 billion. Further, non-GAAP net income came in at $1.5 billion, or $3.11 per diluted share, compared to $1.25 billion ($2.57 per diluted share) a year ago. Lastly, cash and equivalents ended the period at $4.6 billion.
Sales growth in the third quarter was primarily fueled by the company’s Creative Cloud, Experience Cloud and Document Cloud solutions. On the results, CEO Shantanu Narayen noted, “Adobe had another outstanding quarter as Creative Cloud, Document Cloud and Experience Cloud continue to transform storytelling, learning and conducting business in a digital-first world.”
Over the past year, this company has grown significantly — both organically and through acquisitions. The Street expects Adobe to see solid demand for its products and services in the coming years as well.
ADBE stock currently hovers around $641 and is up 28% YTD. The shares are trading at 52 times forward earnings and 20.6 times trailing sales. Interested investors could find better value around the $620 mark.
ASML (ASML)
52-week range: $361.72 – $895.93
Dividend yield: 0.52%
Based in the Netherlands, ASML is a leading manufacturer of photolithography systems used in the production of semiconductors. Basically, photolithography is a specialized form of lithography, “a technique used to transfer copies of a master pattern onto the surface of a solid material such as a silicon wafer.”
ASML announced Q3 results on Oct. 20. Revenue came in at 5.2 billion euros ($6.02 billion) with a gross margin of 51.7%. Now, management forecasts Q4 net revenue to come in between 4.9 billion euros and 5.2 billion euros. Further, the group increased long-term revenue outlook to between 24 billion euros to 30 billion euros ($28 billion to $35 billion) for 2025. On the results, CEO Peter Wennink cited:
“The demand continues to be high. The ongoing digital transformation and current chip shortage fuel the need to increase our capacity to meet the current and expected future demand for Memory and for all Logic nodes.”
ASML’s extreme ultraviolet (EUV) technology is a key competitive advantage that enables the production of the smallest chips worldwide. The company is a dominant player in this niche space with prominent customers such as Taiwan Semiconductor Manufacturing (NYSE:TSM) and Intel (NASDAQ:INTC).
ASML stock has a hefty price tag, hovering slightly above $800. It is up 65% YTD. Further, the forward price-to-earnings (P/E) and current price-to-sales (P/S) ratios stand at 51.7 times and 16.12 times, respectively. A potential decline toward the $780 level would improve the margin of safety for this pick of the tech stocks.
Tech Stocks to Buy: Meta Platforms (FB)
52-week range: $244.61 – $384.33
On Oct. 28, Facebook announced that the company was changing its official name to Meta Platforms. On the development, CEO Mark Zuckerberg said the following:
“[A]ll of our products, including our apps, now share a new vision: to help bring the metaverse to life […] From now on, we will be metaverse-first, not Facebook-first.”
Retail investors seemed excited with the news, so much so that they even hit the buy button on Meta Materials (NASDAQ:META), a completely different company. Shares of META rose after the change was announced.
It’s too early to say how this name change might affect the FB stock price in the coming weeks, however. For now, Facebook remains the largest social media group worldwide, allowing well over 2 billion monthly active users to engage with each other through its numerous apps.
FB announced Q3 results on Oct. 25. For the period, revenue increased 35% YOY to $29 billion. Further, net income came in at $9.2 billion, or $3.22 per diluted share, up from $7.9 billion ($2.71 per diluted share) in the prior-year period. Finally, cash and equivalents ended the period at $58 billion. On the metrics, Zuckerberg remarked:
“We made good progress this quarter and our community continues to grow […] I’m excited about our roadmap, especially around creators, commerce, and helping to build the metaverse.”
Of course, there is still some controversy surrounding this company. Whistleblower Frances Haugen’s recently testified against the company, accusing it of acting in the interest of profits rather than users. This could potentially mean further regulatory oversight in the near term. In 2020, FB had also seen numerous companies suspend ad purchases for at least a month in an organized boycott. Analysts are now debating whether another similar move could be in the works.
That said, Facebook’s digital advertising business continues to see robust growth, thanks in part to soaring demand from small businesses, retailers and leisure names like restaurants. In addition, the Street has pointed out that the metaverse — a market that is “expected to reach $280 billion by 2025” — represents explosive upside potential long-term.
FB stock currently trades in the $330 territory. It is up 21% YTD. However, recent headwinds pushed the stock down in the past month. Shares now look cheap at 23.13 times forward earnings and 8.17 times trailing sales. The recent dip may provide growth investors a golden opportunity to buy one of the top tech stocks at a reasonable price.
General Electric (GE)
52-week range: $58.64 – $115.36
Dividend yield: 0.31%
Next up on this list of tech stocks is industrial conglomerate General Electric. This company is highly regarded for its different segments, including its Power, Renewable Energy, Aviation and Healthcare businesses.
General Electric issued Q3 results on Oct. 26. For the period, total orders were up 42% to $22.1 billion. Furthermore, while revenue was down 1% YOY to $18.4 billion, GAAP earnings per share (EPS) came in at 54 cents. That’s compared to a net loss of $1.04 per share in the prior-year period. Additionally, adjusted EPS grew 50% to 57 cents. Meanwhile, industrial non-GAAP free cash flow (FCF) stood at $1.73 billion. Following the announcement, CEO Larry Culp remarked:
“Orders grew, margins expanded, our overall cash performance was significantly better, and Aviation is building momentum and showing continued signs of recovery.”
Wall Street regards GE stock as a bet on continued global economic recovery. Orders in the aviation and renewable energy segments surged 69% and 65% YOY in Q3, respectively. The recovery in the aviation market and the company’s operational improvements should continue to drive significant bottom-line growth.
Growing margins and cash flow expectations are helping build investor confidence in this name’s near-term outlook. GE raised its 2021 full-year guidance for instance, expecting to deliver $1.80 to $2.10 in adjusted EPS. The stock currently hovers around $105 per share, up nearly 23% YTD. Shares are trading at 52 times forward earnings and 1.46 time current sales.
Tech Stocks to Buy: Global X FinTech ETF (FINX)
52-week range: $36.20 – $53.07
Expense ratio: 0.68%
Our next discussion on this list of tech stocks actually centers around an exchange-traded fund (ETF). The Global X FinTech ETF provides exposure to financial technology (fintech) firms, which provide solutions in digital payments, investing, insurance, third-party lending and fundraising.
FINX — which began trading in September 2016 — currently has 54 holdings. In terms of sectoral breakdown, Information Technology (78.3%) leads the holdings, followed by Communication Services (11.8%) and Financials (6.3%). With respect to company headquarters, the U.S. also heads the list with 65.7%, followed by the Netherlands (7.1%), Australia (5.6%) and Brazil (4.1%).
This ETF’s top ten holdings comprise around 55% of total net assets of $1.43 billion. The leading stocks in the roster include point-of-sale (PoS) payment solutions provider Adyen (OTCMKTS:ADYEY), financial management software developer Intuit (NASDAQ:INTU), payments ecosystem heavyweight Square (NYSE:SQ) and crypto exchange Coinbase Global (NASDAQ:COIN), among others.
FINX is up a little over 10% YTD and has gained 42% over the past 52 weeks. The ETF also hit an all-time high in recent days. Interested long-term investors could consider waiting for a dip to buy this name.
Medtronic (MDT)
52-week range: $101.15 – $135.89
Dividend yield: 2.10%
Headquartered in Ireland, Medtronic is one of the largest medical device companies out there and the next entry on this list of tech stocks. This company focuses on cardiovascular, neuroscience, surgical and diabetes-related equipment. Among its products are insulin pumps, defibrillators, pacemakers, surgical tools and much more.
Medtronic released Q1 fiscal 2022 results back in late August. For the period, revenue went up by 23% YOY to $7.99 billion. Further, non-GAAP net income surged 128% to $1.91 billion, or $1.41 per diluted share. Finally, free cash flow stood at $914 million while cash and equivalents ended the period at $3 billion. On the metrics, CEO Geoff Martha commented the following:
“Fiscal 2022 is off to a strong start with our first quarter results coming in ahead of our expectations, reflecting solid execution and continued procedure volume recovery, with most of our businesses at or above pre-COVID levels.”
Medtronic continues to innovate in its industry, offering a pipeline of new products. For example, the robotic-assisted surgery market is expected to become a key growth driver for Medtronic. To that end, the company has developed its Hugo platform — which recently gained regulatory approval in Europe — to compete with Intuitive Surgical’s (NASDAQ:ISRG) Da Vinci surgical system.
MDT stock currently hovers slightly above $120 per share, up about 3% YTD. The stock trades at 21 times forward earnings and 5.10 times sales. Interested readers could consider investing around these levels.
Tech Stocks to Buy: The Trade Desk (TTD)
52-week range: $46.71 – $97.28
The final pick on this list of tech stocks is Ventura, California-based The Trade Desk. Essentially, ad buyers use this company’s platform to create and manage digital advertising campaigns across channels and ad formats, including video, audio, in-app and social. Trade Desk serves numerous clients and sports a customer retention rate of about 95% for the past 18 quarters.
Trade Desk released recent results back in early August. For the quarter, revenue surged 101% YOY to $280 million. Further, net income came in at $47.7 million, or 10 cents per diluted share. That’s compared to $25.1 million (or 5 cents per diluted share) in the prior-year quarter. Lastly, cash and equivalents ended the period at $477 million. On the results, CEO Jeff Green remarked:
“Our growth speaks to The Trade Desk’s position as the default DSP for the open internet. Nowhere is this more apparent than in Connected TV, as more premium streaming inventory becomes available to meet growing marketer demand for data-driven TV advertising.”
In addition to continued growth in North America, management anticipates “robust” growth potential in international markets. Non-North American revenue currently accounts for about 15% of total revenue.
TTD stock is currently trading around $76 per share, down about 5% YTD. The shares are trading at 103 times forward earnings and 34 times trailing sales. In other words, the valuation is frothy. Potential investors could regard a drop toward $65 as a better entry point here.
On the date of publication, Tezcan Gecgil 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.
Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.