5 Incredible Top-Ranked Tech Stocks On Sale

The highflying technology sector has been performing the best so far this year, dodging the ills of trade disputes. The rally fizzled out in the past couple of days following disappointing earnings results from the tech and Internet giants like Facebook (FB - Free Report), Twitter (TWTR  - Free Report) and Intel (INTC - Free Report).  

These major companies saw a free-fall in their stock prices immediately after the earnings releases and pushed many other stocks in the sector lower. As such, the S&P 500 technology index is down 3.6% since the peak reached on Jul 25.

The beaten down prices have provided investors with a solid entry point given the encouraging outlook for the sector. This is especially true as the rapid adoption of cutting-edge technology such as cloud computing, big data, Internet of Things, wearables, VR headsets, drones, virtual reality, and artificial intelligence as well as strong corporate earnings is acting as the key catalysts.

In particular, Q2 earnings from 65.5% of the sector’s total market capitalization reported so far are up 35.3% on 12% higher revenues, with 90% of the companies beating on earnings and 87.1% exceeding top-line estimates. Overall, earnings and revenues for Q2 are expected to grow 30.6% and 11.8%, respectively. The tech sector has been the fourth biggest contributor to the S&P 500 earnings growth.

Additionally, the twin tailwinds of Trump’s tax reform plan and a rising interest rate scenario are pushing the stocks higher. Most of the tech titans hoard huge cash overseas and are poised to benefit the most from reduced tax rates. They are also sitting on a huge cash pile and in a position to increase payouts to their shareholders. The cash reserves will ensure that these companies are not plagued by financial woes in a rising interest rate environment.

Adding to the strength is a pickup in the economy and better job prospects that are giving a solid boost to economically sensitive growth sectors like technology, which typically perform well in a maturing economic cycle.

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