Skip to main content

What are we looking for?

Top-performing technology stocks that could help fuel a broad market breakout to record highs.

From a technical-analysis point of view, the S&P 500 index is attempting to break above a classic bullish-trend continuation pattern; the index is less than 1 per cent away from record highs at the 3,028 level. A breakout could have strong bullish implications over the next 20 business days. Global markets are participating in the action and a broad global rally could be in development.

Looking back over the past 20 years, the S&P 500 has returned an average of 1.1 per cent in November 74 per cent of the time, making it the second-best performing month in that period, according to data from Bloomberg and StockCharts.com. (April returned 1.7 per cent, 75 per cent of the time over the same 20 years.) This identifies November as being historically bullish for stocks – great news for bulls looking for a breakout in U.S. indexes.

Story continues below advertisement

The SPDR S&P 500 ETF Trust (SPY) is based on the S&P 500, which is a capitalization-weighted index. As a result, SPY is driven mainly by its largest stocks, which are mostly technology giants in the information technology sector. If a breakout to record highs is to happen, we need to see bullish momentum in technology stocks.

The screen

We will be using Trading Central Strategy Builder to search for stocks in the outperforming IT sector that are showing positive revenue growth and bullish price momentum. We begin by setting a minimum market capitalization threshold of US$4-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 a minimum percentage return of 20 per cent over the past 52 weeks, and 5 per cent over the past four weeks to find the stocks showing upside momentum.

Finally, we will look for tech stocks that are indicating revenue growth of at least 5 per cent last quarter compared with the prior year.

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

More about Trading Central

Trading Central is a global leader in financial market research and investment analytics for retail online brokers and institutions. Trading Central’s product suite provides actionable trading ideas based on technical and fundamental research covering stocks, ETFs, indexes, forex, options and commodities. Our Strategy Builder is available through leading retail brokers in Canada and around the world.

What we found

Topping our list is Synnex Corp., a provider of wholesale IT integration, distribution and outsourcing services. The company has the best price performance at 22.5 per cent over the past four weeks, indicating strong upside momentum. Although we did not use any price-to-earnings requirement when screening for stocks, it’s worth noting Synnex has the lowest P/E on our list at 12.6 per cent. Revenue growth also tops our list at 28.6 per cent, year over year.

Story continues below advertisement

SAP SE, originally known for its leadership in enterprise resource planning (ERP) software, has evolved to become a market leader in several areas, including enterprise application software and intelligent technologies. A cloud company with 200 million users worldwide, SAP has the largest market cap on our list at US$156-billion. Year-to-date performance stands at an impressive 32.4 per cent, with an 11.1-per-cent gain in the past four weeks.

Trading Central Strategy Builder provides a backtesting 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 20.1 per cent annualized return over the past five years compared with 8.7 per cent for the S&P 500.

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 IT stocks

RankCompanySymbolMkt. Cap. (US$ Bil.) 1Y Price Perf. (%)4W Price Perf. (%)Rev. Grth. Last Qtr. vs. 1Y Ago (%)P/EYTD Price Perf. (%)Recent Price (US$)Div. Yld. (%)
1Synnex Corp.SNX-N5.843.122.528.612.645.1118.191.3
2ASE Technology HoldingASX-N10.029.49.67.418.534.15.073.3
3Jabil Inc.JBL-N5.449.711.412.919.347.636.290.9
4Microchip TechnologyMCHP-Q22.738.96.39.162.434.092.971.6
5SAP SESAP-N156.022.411.110.540.332.4131.661.5
6Ubiquiti Inc.UI-N8.439.811.66.326.428.3127.891.0

Source: Trading Central

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

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter
To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies