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What are we looking for?

The U.S. earnings season has passed the halfway mark with 63 out of 100 companies in the Nasdaq-100 Index reporting quarterly earnings. The Nasdaq-100 contains the largest and most actively traded U.S companies listed on the Nasdaq Stock Market. The average earnings beat, based on all companies that have reported, has been 21 per cent above estimates – quite remarkable amid a global coronavirus pandemic.

This week, we will be using Trading Central’s Strategy Builder to search for stocks inside the Nasdaq-100 that are showing positive revenue growth and upside price momentum.

We begin by setting a minimum market capitalization threshold of US$10-billion. We wish to focus on large-cap names in the market because of the greater stability and safety they offer.

Next, we will filter for stocks that have had at least a 20-per-cent price return over the past 52 weeks, and 5 per cent over the past four weeks, to identify stocks that are showing bullish price momentum.

Finally, we want tech stocks that are indicating positive revenue growth of at least 20 per cent in the most recent quarter compared with the same quarter one year ago.

For informational purposes, we have also included year-to-date price returns, the price-to-earnings ratio, recent stock price and, where applicable, dividend yield.

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. The top 15 ranked stocks are shown in the accompanying table.

Topping our list is Zoom Video Communications Inc., a popular video conference platform amid the pandemic. The company has the highest revenue growth on our list at 366.5 per cent in the past quarter when compared with the same quarter in the prior year. It’s no surprise the stock has the best one-year price performance on our list at 394 per cent. The stock price pulled back 44 per cent from its high back in October and has started to rebound this month. The company is expected to report fourth-quarter earnings on March 1 after the market close.

Nvidia Corp., a designer of graphics processors, just posted a new record high this week after being in a trading range since September. The recent break above the trading range may be a signal of a continuation of the uptrend that started back on May 11 when the stock broke to a similar new record high. Nvidia Corp. has the second-best one-year performance on our list at 126.5 per cent. The company is slated to report fourth-quarter earnings on Feb. 24 after the market close.

We must mention Microsoft Corp., which has been in the news regarding its possible interest in the social networking site Pinterest. The company reported record high earnings last quarter and is only up 9.5 per cent year-to-date, compared with the average year-to-date return on our list of 21 per cent. Similar to Nvidia, Microsoft has also broken above a trading range to a new record high this week, suggesting a continuation of the prior uptrend.

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 29.4 per cent annualized total return, which was above its own benchmark, the Nasdaq-100, which returned 27.6 per cent on the same basis. The total return for the broader S&P 500 index was 15.8 per cent over the same period.

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 Nasdaq-listed big caps showing revenue growth, upside price momentum 

RankCompanySymbolMkt. Cap. (US$ Bil.)1Y Price Perf. (%)4W Price Perf. (%)Rev. Grth. (Last Qtr. vs. Prior Yr. %)YTD Price Perf. (%)P/ERecent Price (US$)Div. Yld. (%)
1Zoom Video Comm.ZM-Q128.0394.018.2366.530.2300.9437.30n/a
2NetEase Inc.NTES-Q91.689.022.427.539.440.4132.980.6
3PayPal Holdings Inc.PYPL-Q348.3150.315.623.327.0120.6297.50n/a
4Skyworks SolutionsSWKS-Q30.756.517.468.522.227.4186.371.1
5eBay IncEBAY-Q42.471.111.928.324.118.262.371.2
6Nvidia Corp.NVDA-Q375.0126.59.156.816.185.6605.650.1
7Okta Inc.OKTA-Q37.3110.111.742.013.3n/a287.69n/a
8ASML Holding NVASML-Q199.469.510.332.520.056.0476.500.6
9JD.com Inc.JD-Q154.9143.19.229.212.9167.599.16n/a
10Alphabet Inc.GOOGL-Q1,410.037.319.423.518.542.12,070.20n/a
11Activision Blizzard ATVI-Q79.869.014.552.411.335.2103.410.5
12Applied MaterialsAMAT-Q97.271.68.024.928.727.6110.950.8
13Microsoft Corp.MSFT-Q1,830.031.912.216.79.536.1242.930.9
14Synopsys IncSNPS-Q285.643.717.941.019.710.263.92n/a
15Workday IncWDAY-Q275.666.120.573.67.715.0n/an/a

Source: Trading Central 

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

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