What are we looking for?
U.S. technology stocks with robust earnings and revenue growth.
The screen
We utilized Trading Central’s Strategy Builder to scan for U.S.-listed technology stocks demonstrating strong earnings growth, upward price momentum and impressive TC Quantamental factor ratings, specifically aiming for high scores in both Growth and Momentum factors.
We began by establishing a minimum market capitalization threshold of US$5-billion to concentrate on mid- to large-cap stocks within the sector, aiming to steer clear of smaller, potentially more volatile stocks.
Next, we screened for tech stocks indicating upside earnings momentum with both EPS and revenue growth above 10 per cent last quarter versus the same quarter a year ago.
Finally, we filtered for the top-rated stocks using Trading Central’s Quantamental Factor rating method, which rates stocks on a scale of 0 to 100 with 100 being the most bullish and 0 being the most bearish. We set a minimum requirement of 50 out of 100 for both Momentum and Growth factors.
More about Trading Central
Trading Central is a global leader in financial market research and investment analytics for retail online brokers and institutions. Its product suite provides actionable trading ideas based on technical and fundamental research covering stocks, exchange-traded funds, indexes, forex, options and commodities. Strategy Builder, our stock screener is available through leading retail brokers in Canada and worldwide.
What we found
Stocks are ranked based on the average of all screening criteria selected.
Topping our list is leading graphics chip maker Nvidia Corp., a company that frequently ranks high in our tech screens. The stock has the second-highest market cap on our list at US$2.333-trillion. It has the highest TC Growth Factor rating on our list at 97 out of 100. Revenue growth, which increased an impressive 265.28 per cent last quarter compared with the same period a year ago, was also the highest on our list. Looking at the daily price chart, the stock price is approaching key resistance near US$980. A break above would be a new record high.
Celestica Inc., a Toronto-based specialist in producing complex electronic components and systems, such as printed circuit board assemblies, microelectronics and precision-machined components, has been one of the hottest Canadian stocks of the year, up an impressive 84.2 per cent year to date, and ranks the second-highest on our list for one-year price performance at 362.8 per cent. The stock price continues to trend higher.
Microsoft has the largest market cap on our list at US$3.1-trillion. Revenue and EPS growth increased 17 and 20 per cent, respectively, last quarter compared with the same quarter a year ago. The stock price is back up from its April slump, trading within 1.5 per cent of its March record high.
Trading Central Strategy Builder provides a back-testing capability to evaluate how well an investing strategy would have worked in the past. Using a five-year historical period with quarterly rebalancing, the screen described had an impressive 34-per-cent annualized total return compared with 14 per cent for the S&P 500 index and 16 per cent for the Nasdaq Composite Index.
The investment ideas presented here are for information only. They do not constitute advice or a recommendation by Trading Central in respect of the investment in financial instruments. Investors should conduct further research before investing.
Gary Christie is head of North American research at Trading Central in Ottawa.
Editor’s note: The table in an earlier version contained an incorrect market cap figure for Nvidia.
Gary Christie