Technology

4 Red-Hot Tech Stocks to Buy Before Earnings Come Out

Lee Jackson

Published: January 27, 2017 10:35 am

Last Updated: January 12, 2020 3:26 pm

Despite the Dow Jones Industrial Average hitting the 20,000 level, it’s becoming pretty clear that companies are going to have to meet or exceed estimates if they want to continue to plow higher. Despite the potential positives down the road, all of that and more has been priced in, so now is the time to apply capital carefully and look for companies that are dominating in their respective areas.

In a series of new reports, the analysts at Wedbush are very positive on upcoming earnings reports from four of the technology stocks they cover. While two are mega capitalization leaders the other two may offer nimble investors solid gains as well. All are rated Outperform at Wedbush.

Amazon

This absolute leader in online retail and a dominant player in cloud storage business remains a top pick across Wall Street. Amazon.com Inc. (NASDAQ: AMZN) serves consumers through retail websites that primarily include merchandise and content purchased for resale from vendors and those offered by third-party sellers.

Amazon Web Services (AWS) is also the undisputed leader in the cloud now, and many top analysts see the company expanding and moving up the enterprise information value chain and targeting a larger total addressable market. The company serves developers and enterprises through AWS, which provides compute, storage, database, analytics, applications and deployment services that enable virtually various businesses.

Amazon reported a mixed quarter in October, and top Wall Street analysts noted that revenues were in line and margins were soft. Guidance was below expectations as the company continues to invest, but the sales midpoint was also below expectations. Wedbush feels that despite huge investment spending, the company should report strong earnings growth when it reports on February 2.

Wedbush has a $900 price target, and the Wall Street consensus target is $929.10. The shares closed Thursday at $839.15.

Facebook

The huge social media leader posted gigantic numbers last year that have truly blown most of Wall Street away. Facebook Inc. (NASDAQ: FB) operates as a mobile application and website that enables people to connect, share, discover and communicate each other on mobile devices and personal computers worldwide.

Its solutions also include Instagram, a mobile application that enables people to take photos or videos, customize them with filter effects, and share them with friends and followers in a photo feed or send them directly to friends; Messenger, a messaging application for mobile and web on various platforms and devices, which enable people to reach others instantly, as well as enable businesses to engage with customers; and WhatsApp Messenger, a mobile messaging application.

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. Facebook also develops Oculus VR technology and content platform, which allows people to enter an immersive and interactive environment to play games, consume content and connect with others.

Top Wall Street analysts feel that Facebook’s long-term forecasts are more easily attainable, especially as the company continues to grow and employ new platforms for online advertising. Wedbush expects it to meet or exceed expectations for the quarter. The report is due February 1.

The towering $162 Wedbush price target compares with the consensus target of $153.72. The shares closed Thursday at $132.78.

Electronic Arts

This leading video game developer should benefit from not only the continuing rise in new console sales, but also the rising trend of mobile gaming. Electronic Arts Inc. (NASDAQ: EA) produces top-selling games and related content and services under the EA brand in various categories, including action-adventure, role-playing, racing and first-person shooter games.

The company, which is very well known for its EA sports games like Madden Football, has made the move into mobile play by adapting many of the top franchise titles, which have been popular for years, into the mobile arena.

Wedbush feels that the Battlefield 1 game, which has had incredible positive feedback, should drive fiscal third-quarter earnings upside. The firm also sees the momentum continuing into fiscal 2018. EA reports next week.

The Wedbush price objective is $95. The consensus target is $92.79. Shares closed at $81.70 on Thursday.

Ultimate Software

This stock is owned by 41.2% of the top funds on Wall Street in a recent survey. Ultimate Software Group Inc. (NASDAQ: ULTI) is a leading provider of cloud-based human capital management (HCM) solutions, with more than 20 million people records in the cloud. Ultimate’s award-winning UltiPro delivers HR, payroll, talent and time and labor management solutions that connect people with the information they need to work more effectively.

The demand for predictive analytics in the area of HCM is rapidly increasing, as businesses are seeing the value of big data and data modeling across many areas of the business, such as expense management and inventory management. Wedbush feel that the setup for the fourth quarter looks very positive. The company is expected to report on February 7.

Wedbush has a $248 price target, higher than the consensus target of $240. Shares closed Thursday at $196.23.

It always can be risky to buy shares in front of earnings reports, especially with an expensive market. Investors may want to buy small positions and keep some dry powder for the actual earnings releases.