As 2015 heads towards the final month of trading, it has been a seesaw year for investors. The Federal Reserve also seems as though they are looking to start raising interest rates in December. It will be important to stay with technology companies that hold an edge in their respective silos. In a new research report from RBC, the technical team is focused on companies that can remain leaders next year when the markets face headwinds that could slow some companies down.
The RBC technical analysts make the case that the long-term uptrend for the S&P 500 should remain intact. However, they are quick to note that the bears would argue 2015 is a cycle peak, and with the big sell-off in August and September breaking the 5 year uptrend, some downside in 2016 is possible. They highlight four companies that could continue strong performance next year, and note that any weakness early in the year, may offer solid entry points.
Adobe Systems
This is a high profile old-school software company that makes sense for growth accounts. Adobe Systems Incorporated, Inc. (NASDAQ: ADBE) operates in three segments: Digital Media, Digital Marketing, and Print and Publishing. The Digital Media segment provides tools and solutions that enable individuals, small and medium businesses, and enterprises to create, publish, promote, and monetize their digital content.
The Digital Marketing segment offers solutions for how digital advertising and marketing are created, managed, executed, measured, and optimized. This segment provides analytics, social marketing, targeting, media optimization, digital experience management, and cross-channel campaign management solutions, as well as video delivery and monetization to digital marketers, advertisers, publishers, merchandisers, Web analysts, chief marketing officers, chief information officers, and chief revenue officers.
The Print and Publishing segment offers products and services, such as eLearning solutions, technical document publishing, Web application development, and high-end printing, as well as publishing needs of technical and business, and original equipment manufacturers (OEMs) printing businesses.
Adobe is also reasonably safe route for investors looking to own a company with Marketing Automation product, which has become huge. The Thomson/First Call consensus price target for the stock is set at $92.52. Shares closed on Friday at $91.81.
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Amphenol
This industry giant is gaining business from Cisco, and others could be added soon. Amphenol Corporation (NYSE: APH) is one of the top picks this year at RBC, and the analysts see the company benefitting from the Cisco strength as about 4% of total sales are to Cisco.
Amphenol is one of the world’s largest designers, manufacturers and marketers of electrical, electronic and fiber optic connectors, interconnect systems, antennas, sensors and sensor-based products and coaxial and high-speed specialty cable. Amphenol designs, manufactures and assembles its products at facilities in the Americas, Europe, Asia, Australia and Africa and sells its products through its own global sales force, independent representatives and a global network of electronics distributors.
While the RBC team sees the Cisco improvement as net-neutral for the company they do not that Amphenol’s IT and data communication revenue increased in the June quarter, but was somewhat offset by networking and storage. They do model the IT and data communications business to grow as a result of the Cisco guidance
Amphenol Investors are paid a small 1% dividend. RBC has a $64 target on the stock. The consensus estimate is at $58.80. Shares closed trading on Friday at $54.73.
The huge social media leader posted gigantic third quarter numbers which truly blew most of Wall Street away. Facebook Inc. (NASDAQ: FB) has Instagram, which some analysts have projected revenues tripling in 2017 as opposed to 2016, Premium video and Graph Search capabilities to strengthen the social media giant’s earnings flow. Some analysts feel that the company can drive revenue growth even without a huge increase in advertising placement.
The Jefferies team notes that Facebook and Instagram account for 5% of users total media time, but the company doesn’t come close to capturing 5% of total advertising budgets. Most Wall Street analysts point to the fact that Facebook remains the top beneficiary of the adoption of mobile internet trends with total U.S. internet time spent on Facebook and Messenger. Other metrics continue to explode, and the key is there is no viable challengers anywhere in sight. They cite positive monthly data use, easier growth comparisons and positive data on ad revenue drivers as the top catalysts.
Many on Wall Street view Facebook’s longer term opportunities as almost unmatched by their mega-cap consumer internet peers. Facebook also announced earlier this summer a willingness to share ad revenue to acquire premium content, a totally new avenue for the company. They hope to draw content away from Google’s YouTube.
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Facebook will offer contributors 55 percent of the revenue from ads that appear alongside videos, the same split as YouTube. Daily video views have gone from one billion to 8 billion between September of last year and now. The consensus price target for the stock is set at $123.69 The shares closed Friday at $107.32.
Visa
While not a company normally associated with technology, this top credit card issuer is a leader in digital pay. Visa Inc. (NYSE: V) is a global payments technology company that connects consumers, businesses, financial institutions, and governments in more than 200 countries and territories to fast, secure and reliable electronic payments.
The company operates one of the world’s most advanced processing networks -VisaNet – that is capable of handling more than 56,000 transaction messages a second, with fraud protection for consumers and assured payment for merchants. Visa is not a bank and does not issue cards, extend credit or set rates and fees for consumers. Visa’s innovations enable financial institution customers to offer consumers more choices: pay now with debit, pay ahead of time with prepaid or pay later with credit products.
At the end of the third quarter, a total of 102 of the hedge funds tracked by Insider Monkey, a company that closely tracks insider transactions on Wall Street, were bullish on the company, a rise of four from one quarter earlier. They point out that while hedge fund positions are constantly changing depending on company performance, they maintain that there is an “upper tier” of notable hedge fund managers who were increasing their holdings in the stock significantly.
Visa shareholders are paid a small 0.7% dividend. The consensus price target for the stock is posted at $85.53. The shares closed on Friday at $80.19.
The RBC technical team monitors stocks that not only have maintained solid chart performance, but have delivered on fundamentals. While these stocks are more suited for aggressive growth portfolios, they hold a lower risk profile than many momentum leaders.
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