Credit: Shutterstock photoDespite the recent pullback in the Nasdaq Composite Index to close out the first six months of the year, the index is still up 13.5% year to date, besting the respective gains of 8.69% and 8.49% in the Dow Jones Industrial Average (DJI) and the S&P 500 Index (SPX).
With such strong gains on the table, finding value and knowing where to place your hard-earned cash in the second half of the year won’t come easy, especially with analyst predicting a market correction with each noticeable dip. But it would be a mistake to part with your moneymakers, particularly in the tech sector, where — thanks to combination of rising revenues, profits and cash flows — valuations remain attractive.
Here are three first half tech winners -- not in any particular order -- that should be stashed in your portfolio for the rest of the year.
Facebook (FB) - up 29% in 2017 - Year-End target $170
Facebook began 2017 at $118.01 and has since gained as much as 32.6% when factoring its 52-week high of $156.50 reached on June 26. While the company’s main headlines — as it entered 2017 — was dominated by fake news, there’s been nothing fake about the company’s growth. The Menlo Park, Calif.-based tech giant recently announced that it had crossed the 2 billion user milestone, which means it has doubled its active user base in just the past five years.
Calling that level of growth impressive would be an understatement. The company’s dominant advertising prowess, which has left both Twitter (TWTR) and Snap (SNAP) in the dust, is matched only by Alphabet's (GOOGL) strong search business. And with FB stock down more than 5% over the past week, FB offers a good entry point for investors who are willing to hold for the second half of the year. Given Facebook’s predictable revenue and earnings growth it has established, FB stock — currently at $148 — should reach $165 by year’s end, delivering some 15% returns.
Tesla (TSLA) - up 65% in 2017 - Year-End target $400
Shares of Tesla have been hot all year, racing past both General Motors (GM) and Ford (F) in terms of market cap. On Monday, however, the stock reversed course, falling 2.5% after the company announced it delivered about 47,100 electric sedans and SUVs in the first half of 2017, which was at the lower end of its forecasts. The production shortfall, which Tesla said was due to a "severe shortfall" of new battery packs that constrained vehicle manufacturing, spooked investors.
The stock’s decline come even though CEO Elon Musk also announced that the company would begin production of its mass-market Model 3 vehicle starting this Friday and build to 20,000 per month in December. As of Monday’s closing price, TSLA stock is down about 9% from its 52-week high of $386.99.
And now could prove to be a good opportunity to buy. This appears to be a “sell the news” type of event, coinciding with the overall market rotation out of tech. Once this selling cycle expires, I expect TSLA stock to regain its upward movement and end the year at $400 per share, driven by the excitement of the Model 3.
Amazon (AMZN) - up 27.18% in 2017 - Year-End target $1,100
As with Facebook and Tesla, Amazon shares have lost some steam, falling about 6% in over the past month. But the e-commerce behemoth, lead by billionaire CEO Jeff Bezos, still has tons of growth levers in the pull in the second half of the year to make investors even more money. Fresh off its $13.7 billion blockbuster deal for Whole Foods Market (WFM), Amazon has an endless hunger for growth and continues to push the envelop on what is possible at the intersection of retail and tech.
Plus, the dominance of its cloud computing arm Amazon Web Services, which continued to rake in the big bucks, is forcing competitors like Microsoft (MSFT) to rethink their cloud strategies. And with rumors of the company considering the pharmacy space and potentially targeting the likes of Rite Aid (RAD) or Express Scripts (ESRX), it’s clear that as Bezos — who's as built his wealth by taking risks to enter all facets of retail — continue lead Amazon, he will continue to make investors tons of money too. As such, AMZN stock has a clear shot to reach $1,100 by year’s end and should be bought on any dip.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
