Last week saw some massive selling of momentum stocks that have been red-hot over the past year. Everything from the electric vehicles and solar-related stocks to SPAC conversions were absolutely hammered, not to mention the new-age companies that have big prospects but lose money consistently. While many hedge funds and mutual fund portfolio managers have moved to reopening theme stocks, in addition to energy and banks, one surprising shift is many are buying old-school legacy technology companies that have been around for years.
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We decided to screen our 24/7 Wall St. research database for some of the top technology stocks being bought and found five that make sense for investors looking to move out of the momentum plays. While all are rated Buy at major Wall Street firms, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Adobe Systems
Shares of this high-profile legacy software company have really backed up some in price and are offering investors a solid entry point. Adobe Systems Inc. (NASDAQ: ADBE | ADBE Price Prediction) 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.
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Top Wall Street analysts see the company benefiting from artificial intelligence, predictive analytics, automation bots, speech recognition and natural language processing and image recognition. Flagship products include Creative Suite, Photoshop, Acrobat, Premiere, Dreamweaver, Illustrator, InDesign and LiveCycle. PDF and flash technologies from the company have become industry standards and act as a platform for other Adobe products.
The Goldman Sachs price target for the shares is $580, while the Wall Street consensus target is $563.30. The final Adobe Systems stock trade on Friday came in at $440.83 a share.
Dell Technologies
Returning from private equity land has been good for this computer pioneer. Dell Technologies Inc. (NYSE: DELL) designs, develops, manufactures, markets, sells and supports information technology (IT) hardware, software and services solutions worldwide. It operates through three segments.
Infrastructure Solutions Group provides traditional and next-generation storage solutions, and rack, blade, tower and hyperscale servers. It also offers networking products and services that help its business customers to transform and modernize their infrastructure, mobilize and enrich end-user experiences and accelerate business applications and processes. It also offers attached software and peripherals, as well as support and deployment, configuration and extended warranty services.
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Dell’s The Client Solutions Group offers desktops, notebooks and workstations; displays and projectors; attached and third-party software and peripherals; as well as support and deployment, configuration and extended warranty services.
The VMware segment supports and addresses various IT priorities of customers, including accelerating their cloud journey, modernizing their applications, empowering digital workspaces, transforming networking and embracing intrinsic security. The company also provides information security and cybersecurity solutions; cloud software and infrastructure-as-a-service solutions that enable customers to migrate, run and manage mission-critical applications in cloud-based IT environments; cloud-based integration services; and financial services.
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The Client Services Group posted record shipments in the most recent quarter, as the company continued to fire on all cylinders. Management has been laser-focused on reacquiring an investment-grade rating for the company, and the strong cash flow and operating margins being generated should help.
Raymond James has an Outperform rating and just raised its price target from $85 a share to $92. The $87.12 consensus target is still above the $85.35 closing price on Friday, even though Dell Technologies stock rose almost 3% for the day.
HP
This company is the printer and personal computer businesses of the old Hewlett-Packard. HP Inc. (NYSE: HPQ) provides products, technologies, software, solutions and services to individual consumers and small- and medium-sized businesses, as well as to the government, health care and education sectors worldwide.
The company’s Personal Systems segment offers commercial personal computers (PCs), consumer PCs, workstations, thin client PCs, tablets, retail point-of-sale systems, calculators and other related accessories, software, support and services for the commercial and consumer markets.
The Printing segment provides consumer and commercial printer hardware, supplies, media, scanning devices, and software and services, as well as LaserJet and enterprise, inkjet and printing, graphics and software and web services.
Shareholders receive a 2.70% dividend. JPMorgan upgraded HP stock to Overweight with a $35 price target last week. The $30.33 consensus compares with Friday’s close at $29.75, after a gain of almost 6% for the day.
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Intel
This legacy leader in semiconductors has continued working hard to focus more on Internet of Things and data center cloud spending. Intel Corp. (NASDAQ: INTC) designs, manufactures and sells integrated digital technology platforms worldwide.
Intel’s platforms are used in various computing applications, comprising notebooks, two-in-one systems, desktops, servers, tablets, smartphones, wireless and wired connectivity products, wearables, retail devices and manufacturing devices, as well as for retail, transportation, industrial, buildings, home use and other market segments.
The shares have returned more than 20% so far this year, while computer and technology companies overall have returned an average of about 3%. Intel is performing better than its sector in the calendar year and could be one of the reasons there has been renewed interest among managers of the venerable Silicon Valley chip giant.
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Investors receive a 2.29% dividend. The $72 Morgan Stanley price objective accompanies an Overweight rating. The consensus target price is $62.41. Intel stock closed most recently at $60.74 per share, which was up over 4% on Friday.
Oracle
This top software stock has bounced nicely off its 2020 low but still offers a very good entry point. Oracle Corp. (NYSE: ORCL) develops, manufactures, markets, sells, hosts and supports database and middleware software, application software, cloud infrastructure, hardware systems and related services worldwide.
The company licenses its Oracle Database software to customers, which is designed to enable reliable and secure storage, retrieval and manipulation of various forms of data. Its Oracle Fusion Middleware software aims to build, deploy, secure, access and integrate business applications, as well as automate their business processes.
The company’s solid turnaround is based in part on two main corporate strategies. First, it pivoted its on-site database and enterprise software toward cloud-based services. Second, it has aggressively acquired other cloud-based companies over the years, such as NetSuite in 2016, to expand its ecosystem of enterprise cloud services.
Investors receive a 1.37% dividend. Credit Suisse’s Outperform rating comes with a $75 price target. The $66.78 consensus target is less than the most recent close at $69.97. Shares gained almost 7% on Friday.
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These five top stocks saw nowhere near the volatility the momentum darlings saw past week. While the growth rate at some of these legacy tech giants may not be as impressive as some of the high-flyers, the companies have been around for years, surviving multiple market cycles, and will still be standing when many others are long gone.
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