All three major U.S. indexes jumped on Tuesday, with the S&P 500 and the Nasdaq both ending a four-session losing streak. The tech-heavy index closed regular trading roughly 9% off its early September records, while the proxy index for the market rests about 7.4% below its highs.
The climb doesn’t mean that there won’t be more selling in the near-term, as volatility could remain as Wall Street continues to wait on progress on the next stimulus bill. Meanwhile, the uncertainty of the upcoming U.S. election makes things more difficult, as the coronavirus lingers and counties to prevent some sectors of the economy from starting to bounce back.
That said, the Fed has committed to keep its rate near zero through at least 2023, and overall S&P 500 earnings are projected to bounce back in 2021, as the Q3 outlook continues to improve. This could set up a bullish scenario for stocks despite all the worries, as Wall Street chases returns in a yield-starved bond market.
On top of that, many companies and industries have proven they can grow during the current economic conditions. This group includes retailers like Target TGT and Best Buy BBY, as well as the likes of Zoom Video ZM, Amazon AMZN, and countless others that are prepared for the futuristic economy.
With this in mind, let’s look at two “cheap” tech stocks that are trading for under $20 a share that provide exposure to growth industries for the coronavirus and beyond…
Box, Inc. BOX
Prior Close: $17.95 USD
Box is a cloud content management firm that beat our second quarter estimates at the end of August, with revenue up over 11%. The company’s various offerings help its customers integrate multiple applications, store files, and much more, as part of a larger set of offerings that support the modern work-from-anywhere world. “Over 100,000 customers now rely on Box to power secure collaboration and critical processes across their businesses,” CEO Aaron Levie said Box’s Q2 earnings call.
The company also boosted its cash flow and continues to try to bolster its balance sheet. Box shares are up around 7% in 2020 and 50% during the market’s comeback. But its shares have cooled off recently and are down 13% in the past three months. Investors should note that it is heading back up toward its 50-day moving average.
Zacks estimates call for Box’s FY21 revenue to jump 10.4%, with FY22 projected to come in 9.6% higher to reach $842.6 million. Meanwhile, its adjusted earnings are projected to soar from $0.03 in the year-ago period to $0.56 per share, with FY22 expected to hit $0.70 per share.
Box’s earnings revisions have climbed since its report to help it land a Zacks Rank #2 (Buy), alongside “B” grades for Growth and Momentum. And the stock stands to benefit from the continued adoption of remote work.
SolarWinds Corporation SWI
Prior Close: $19.77 USD
SolarWinds sells IT infrastructure management software to an array of clients, with its offerings currently serving over 275,000 customers worldwide. SWI helps firms “monitor and manage the performance of their IT environments” from on-premise to the cloud.
The Austin, Texas-based company topped our Q2 estimates in early August and its positive earnings revisions trends help it earn a Zacks Rank #2 (Buy) right now.
Zacks estimates call for SWI’s revenue to jump 9% to hit $1.01 billion in FY20, with FY21 projected to come in another 9% higher. Meanwhile, its adjusted EPS figures are expected to climb by 11% and 8%, respectively during this stretch. And companies big and small can likely ill afford to cut back on IT-focused software during the pandemic and beyond, in our nearly completely digitally-connected business world.
SWI shares have matched the tech sector during the market comeback, up 56%. This trend stretches over last 24 months, with SolarWinds up 30% compared to the Zacks Computer & Technology market’s 31%. SWI currently rests 12% off its early August highs and it trades at a discount compared to its industry in terms of forward sales.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>
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Target Corporation (TGT) : Free Stock Analysis Report
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
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SolarWinds Corp. (SWI) : Free Stock Analysis Report
Box, Inc. (BOX) : Free Stock Analysis Report
Zoom Video Communications, Inc. (ZM) : Free Stock Analysis Report
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