Amid the coronavirus pandemic, technology has been one of the few shining stars that has not only been able to recover from the March sell-offs but to also outperform as the Nasdaq continues to reach higher heights. Furthermore, analysts see now signs of tech stopping just yet.
Per a Wall Street Journal report, “Brian Belski, chief investment strategist at BMO Capital Markets, sees no reason tech stocks won’t continue to outperform over the next 12 to 18 months. For starters, tech stocks remain a bulwark against some of the economic damage brought on by the pandemic, he said, adding that software is particularly attractive, including Adobe Inc., Microsoft Corp., and Salesforce.com Inc.”
“Adding to the backdrop, earnings growth has shown signs of recovering faster than most other sectors, a key driver of stock prices. Tech’s blended earnings growth, which takes into account profits over the past 12 months and the next 12, stands at 5.8%, second only to the S&P 500’s health-care sector, Mr. Belski said,” per the report.
Technology ETF Trades
Traders looking to play the bullish side of tech can use the Direxion Daily Technology Bull 3X ETF (NYSEArca: TECL). TECL seeks daily investment results of 300% of the daily performance of the Technology Select Sector Index, which includes domestic companies from the technology sector.
For broad market exposure without leverage, investors wanting a piece large cap tech action can look to the Fidelity MSCI Information Technology Index ETF (FTEC). FTEC tries to reflect the performance of the Nasdaq-100 Technology Sector Index, which consists of companies in the Nasdaq-100 Index classified as technology according to the Industry Classification Benchmark.
Other ways to get broad tech exposure include the Technology Select Sector SPDR ETF (NYSEArca: XLK). XLK tries to reflect the performance of the Technology Select Sector Index, which is comprised of technology and telecom sector of the S&P 500.
“We believe tech stocks could still go another 20% to 30% higher,” Wedbush analyst Daniel Ives wrote in a Thursday research note, per a Wall Street Journal article. “While fears of a second wave and a soft macro will cause volatility over the coming months, especially with earnings season around the corner, we remain firmly bullish on tech for the rest of the year.”
“We have been trimming our holdings as the stocks appreciate to ever bigger portions of our portfolios,” said Nancy Tengler, Chief Investment Officer of Laffer Tengler Investments.
“We don’t expect this trade to end anytime soon,” she added.
For more market trends, visit ETF Trends.