Since the March low in the stock market, tech stocks have been the clear leaders. For a couple of weeks, it looked like there could be a rotation from small-caps to tech. However, in the past few days, tech stocks have been outperforming with many names breaking out to new, all-time highs.
So far this week, the Powershares Nasdaq 100 ETF (QQQ) is up 3%, while the iShares Russell 2000 ETF (IWM) is down 1%. This is despite Congress warning that Big Tech needs to be broken up with a 450-page report from the House Judiciary Committee which blistered their business practices and criticized their monopoly-like behavior. However, the market is more focused on these companies’ strong sales and earnings growth, and Congress’ inability to reach an agreement on fiscal stimulus.
So, investors should keep their focus on technology. Given the rich valuations in the sector, they may want to consider Infosys Limited (INFY), SunPower Corporation (SPWR), and Avaya Holdings Corporation (AVYA). Each of these stocks is attractively priced with a unique business model and is strategically positioned for more growth.
Infosys Limited (INFY)
Based in India, INFY provides consulting, technology, outsourcing, and next-generation digital services in North America, Europe, and other countries. Besides, INFY is prominently involved in disruptive technologies like Blockchain, Internet of Things, Artificial Intelligence, and Data Analytics.
Yesterday, INFY completed the acquisition of Kaleidoscope Innovation with a focus on driving innovation and digital expertise across the healthcare segment. The tech giant now wants to revolutionize patient care, treatment, diagnostics, and consumer health through this collaboration. The healthcare industry in the United States is growing exponentially, and acquiring Kaleidoscope is an apt move by INFY.
In the first quarter ended June 2020, INFY saw a 0.3% year-over-year decline in revenue to $3.12 billion. However, in constant currency terms, the revenue climbed 1.5% on the back of large deal acquisitions, rapid expansion in digital services, and strong demand for disruptive technologies.
INFY’s EPS for the first quarter stood at $0.13, which is 3.8% higher than that of the previous period. Street estimates the EPS for the second quarter to be $0.14, which indicates a year-over-year increase of 7.7%. Meanwhile, the revenue is expected to rise by 0.90% to $3.24 billion, on the back of digital revenue growth.
The stock has gained 50.7% year-to-date to close yesterday’s session at $15.55. INFY saw a sudden jump in its price in mid-September after it announced the acquisition of GuideVision, a Czech Republic-based management consultancy firm. This collaboration would be a catalyst for INFY to strengthen its Infosys Cobalt cloud services. The stock has gained nearly 83% in the last six months.
How does INFY stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Peer Grade
B for Industry Rank
A for Overall POWR Rating
You can’t ask for better. The stock is also ranked #1 out of 14 stocks in the Outsourcing – Tech Services industry.
SunPower Corporation (SPWR)
SPWR is a leading company in the solar energy space. It has been designing, manufacturing, and delivering solar power systems to commercial, residential, utility customers as well as the government for the past three decades. Its crystalline silicon photovoltaic cells and solar panels, invented at Stanford University, are known to have the highest efficiency and reliability. SPWR operates globally and delivers solar panels to customers across North America, Europe, Australia, Africa, and Asia.
In September, SPWR announced that it has attained financing commitments from Hannon Armstrong Sustainable Infrastructure Capital, Inc. and other capital providers for its residential solar lease program. The funding will also be available for its new solar plus storage program, SunPower Equinox® system with SunVault™ storage. SPWR expects rising customer demand through mid-2021 and considers this new arrangement crucial in financing its operations. The company believes that this innovative financing provision would also result in lower financing costs.
In the second quarter, SPWR’s revenue came in at…
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