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What are we looking for?

The Nasdaq-100 Index, heavily weighted in the technology sector, has had an impressive performance in 2020, gaining about 27 per cent year to date. We search for mid to large cap U.S. technology stocks that are indicating a continuation of this uptrend.

The screen

We will use Trading Central Strategy Builder to search for names that are showing both positive revenue growth and price performance.

  • We begin by setting a minimum market capitalization threshold of US$4-billion. We wish to focus on mid- or large-cap companies in the market, which offer greater stability and safety.
  • Next, we filter for stocks that have had a minimum return of 20 per cent over the past 52 weeks, and 5 per cent over the past four weeks, to find the real top performers.
  • Finally, we look for tech stocks that are indicating revenue growth of at least 10 per cent in the most recent quarter compared with the same period a year ago.

We have included each stock’s price-to-earnings ratio and one-year price performance for your reference.

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

Our screener ranks the list based on all performance and revenue criteria.

Topping our list is financial services merchant and payment company Square Inc., which provides a popular payment service most commonly used by millennials. The pandemic has boosted the use of mobile-payment platforms and e-commerce in general. Square has made it easy for individuals to accept unemployment benefits and other funds related to economic stimulus in its cash app, a peer-to-peer payment service. Square’s stock price has surged more than 500 per cent since March lows and has now pulled back 10 per cent from its high this month.

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 a 37.6-per-cent annualized return compared with 20.7 per cent for the Nasdaq-100 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.

Select U.S.-listed tech stocks 

RankCompanySymbolMarket Cap. (US$ Bil.) Rev. Grth., Last Qtr. vs. Prior Yr. (%)1Y Price Perf. (%)4W Price Perf. (%)YTD Price Perf. (%)Recent Price (US$)
1Square Inc.SQ-N78.963.8200.818.9184181.4
2Datadog Inc.DDOG-Q31.068.2256.812.2166.7102.3
3Shopify Inc.SHOP-N125.097.3235.011.21521,019.2
4Nvidia Corp.NVDA-Q33.049.9177.311.6127543.5
5Zscaler Inc.ZS-Q19.546.2260.08.3215.7149.6
6Avalara Inc.AVLR-N12.927.6132.823.6104.86154.0
7ServiceNow Inc.NOW-N97.928.4118.910.877.81511.9
8Taiwan Semicond.TSM-N409.028.974.812.552.288.6
9MongoDB Inc.MDB-Q14.639.2111.913.686.23251.5
10Five9 Inc.FIVN-Q9.228.9170.614.2115.8143.8
11Adv. Micro DevicesAMD-Q93.026.2150.36.073.0380.5
12Teradyne Inc.TER-Q15.348.752.222.132.0390.8
13RingCentral Inc.RNG-N26.029.285.511.669.42292.3 Inc.CRM-N231.028.974.37.753.26252.9
15Inphi Corp.IPHI-Q6.1103.298.410.760.15118.0

Source: Trading Central

Dividend yields are non-existent or negligible. 

Gary Christie is head of North American research at Trading Central in Ottawa.

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