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Zacks Investment Ideas feature highlights: Arista Networks, Cadence Design, Shopify and Nvidia

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Chicago, IL – February 12, 2024 – Today, Zacks Investment Ideas feature highlights Arista Networks ANET, Cadence Design Systems CDNS, Shopify SHOP and Nvidia NVDA.

3 Top Tech Stocks to Buy Outside the Magnificent 7

Today’s episode of Full Court Finance at Zacks breaks down where the stock market stands as the S&P 500 hits the 5,000 level for the first time following a largely bullish earnings season thus far. Many of the Magnificent 7 tech stocks have posted strong results. There are also plenty of big tech names outside of this exclusive group for investors to consider buying this earnings season, including the three highly-ranked tech stocks we explore today: Arista Networks, Cadence Design Systems and Shopify.

The S&P 500 touched 5,000 for the first time on Thursday with quarterly results and guidance already out from six of the Magnificent 7 tech stocks. The market has remained mostly bullish as the overall Q4 earnings picture for the S&P 500 has improved significantly over the last month. Better yet, the outlook for 2024 has remained robust and hardly signals a recession is on the horizon.

There are still tons of earnings reports to come, including from Nvidia and the three big tech names we dive into today. But Wall Street is now likely more concerned about upcoming guidance from Walmart, Target, and other retailers, as well as January inflation data due out on February 13 since enough large-cap tech names have already provided their all-clear signal.

That said, stocks and indexes never go straight up and there will almost certainly be a pullback to key shorter-term and longer-term moving averages in the coming weeks since things are looking a bit frothy.

Investors with long-term outlooks should take advantage of any downturns and dips to scoop up their favorite stocks at slightly better prices, while also not being afraid to buy at near-term highs—because strong stocks keep breaking records over the long haul.

Arista Networks – Q4 Financial Results on Monday, February 12

Arista Networks is a networking infrastructure provider and a leader in data-driven, client-to-cloud networking for large data centers, campus and routing environments. ANET has accumulated over 8,000+ cloud customers worldwide, including Microsoft, Meta, and other giants.

ANET is projected to grow its sales by 34% in FY23 and 12% next year to climb from $4.4 billion in FY22 to $6.5 billion in FY24. This expected top-line growth follows 23% average revenue expansion over the past five years. Arista’s adjusted EPS are projected to soar 43% in FY23 and 10% higher in FY24. ANET’s upbeat revisions help it grab a Zacks Rank #1 (Strong Buy) right now and it has topped our estimates by an average of 12% in the last four quarters.

ANET stock has skyrocketed 1,900% during the last 10 years to blow away the Zacks Tech sector’s 275%. This outperformance includes a 100% surge over the past 12 months and it hit new highs on Thursday. Arista Networks might be a bit overheated right now. But Arista Networks has a sturdy balance sheet and Wall Street is high on the stock.

Cadence Design Systems – Q4 Financial Results on Monday, February 12

Cadence Design Systems is a titan of the electronic systems design space. The company’s modeling and computational software helps design semiconductors and other vital technologies, helping “turn design concepts into reality.” Cadence boasts Nvidia as a key customer because the GPU and AI chip powerhouse loves its simulation capabilities.

Cadence is one of two major players in this key industry that might grow in importance as chips get smaller. Investors can therefore view Cadence as both a chip and an AI investment. Cadence is projected to post 15% revenue growth in FY23 and 11% higher sales in FY24, following 15% averages sales growth in the past three years. CDNS is expected to post 20% adjusted earnings growth in FY23 and 14% higher in FY24, and its positive EPS revisions help it land a Zacks Rank #2 (Buy) heading into its Q4 release.

Candence stock is up nearly 2,000% in the last 10 years vs tech’s 275% and 500% in the last five years. CDNS is up 13% YTD and trading at new records. The stock is far from a value play, but its valuation levels are improving and Wall Street has been paying up for the stock for years.

Shopify – Q4 Financial Results on Tuesday, February 13

Shopify has been at the cutting edge of e-commerce for nearly two decades, helping companies, small businesses, entrepreneurs, and others with everything from site design and sales to marketing, payments, shipping, and more. Shopify makes money from recurring subscription fees and various add-ons.

Shopify’s days of 60% growth are over, but it started to make up for slowing expansion by raising its prices in 2023 for the first time in over a decade. Shopify’s sales climbed 21% in FY22 and its revenue is projected to jump 25% higher in FY23 and another 19% in 2024 to hit $8.32 billion vs. $5.60 billion in FY22.

Shopify, like all of the former growth at-all-cost tech firms, is now committed to profits. Its adjusted earnings are projected to climb from $0.04 a share last year to $0.70 in 2023 and then surge another 50% in FY24 to $1.04 a share. Shopify’s upward earnings revisions help it capture that Zacks Rank #1 (Strong Buy).

SHOP shares have skyrocketed 230% off their October 2022 lows, including a 75% run during the past year. Despite the comeback, Shopify still trades roughly 50% below its all-time highs and its 2022 stock split has it at around $88 per share. Plus, SHOP’s balance sheet is stellar.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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S&P/TSX composite up more than 100 points, U.S. stock markets mixed

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TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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S&P/TSX up more than 200 points, U.S. markets also higher

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TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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S&P/TSX composite little changed in late-morning trading, U.S. stock markets down

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TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.

The S&P/TSX composite index was up 0.05 of a point at 24,224.95.

In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.

The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.

The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.

The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.

This report by The Canadian Press was first published Oct. 10, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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