With many equity strategists saying that the market is either fully valued or close at current trading levels, it really makes sense for aggressive growth investors to look to companies that not only beat earnings expectations for the third quarter, but raised guidance above what was anticipated. A new research note from Stifel highlights three technology companies that had not only a tremendous quarter, but raised estimates for the upcoming quarter. That kind of beat-and-raise presentation is exactly the kind of cushion investors need as we head into 2016. The market will need some solid economic growth to push stocks much higher next year.

All three stocks are rated Buy at Stifel. It’s important to note that these are very aggressive companies, and their stocks are only suitable for accounts that can sustain big moves in capital.

Arista Networks

This company went public in the summer of 2014 and has continued to be one of the hot tech IPO stories of the past year. Arista Networks Inc. (NYSE: ANET) delivers software-driven cloud networking solutions for large data center and computing environments. In addition, the company’s 10/40/100 gigabit Ethernet switches offer scalability and performance, and they have over 2,700 customers and more than 2 million cloud networking ports deployed worldwide. At the core of Arista’s platform is EOS, an advanced network operating system.

Many on Wall Street think the company could benefit from dual supplier requirements at the Web 2.0 and cloud portals, and that Arista could see upside to the lofty 30% compound annual growth rates currently forecast. Some also see the stock benefiting as networking vendor that is leveraged to data center deployments. The patent lawsuit filed by Cisco and an expected preliminary determination should be coming in January.

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While the upside in the earnings and forward guidance are very strong, they could be tempered by ongoing legal issues, but investors stand to make huge gains if judgements are in their favor. The analysts also think that the issues have not stopped Arista customers from buying product, and most of the headline risk is already priced into the stock at current levels.

The Stifel price target for the stock is $95. The Thomson/First Call consensus target is $88.17. Shares closed most recently at $68.90.
Microsemi

This company could benefit from continued industrial demand. Microsemi Corp. (NASDAQ: MSCC) offers a comprehensive portfolio of semiconductor and system solutions for communications, defense and security, aerospace and industrial markets. Products include high-performance and radiation-hardened analog mixed-signal integrated circuits, power management products; timing and synchronization devices and precise time solutions, setting the world’s standard for time; voice processing devices; RF solutions; discrete components; security technologies and scalable anti-tamper products; Ethernet solutions; power-over-Ethernet ICs and midspans.

The company was added to the Semiconductor SOX index last month and delivered outstanding end of the fiscal year numbers last week. Microsemi reported record revenue of $328.8 million, which was up almost 4% quarter over quarter. For the fiscal first quarter of 2016, Microsemi also guided above prior estimates. Stifel was very encouraged by the company’s reiteration of its accretion targets and operating model. The firm also feels that beyond calendar 2016, there remains the potential for further improvements to the combined model. The stock remains attractive at current levels, trading at 10.9 times estimated 2016 numbers.

The Stifel price target is raised to $46, and the consensus target is $42.73. Shares closed Monday at $37.94.

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Tableau Software

This had been a red-hot stock but has taken a huge hit since July and is offering aggressive accounts a great entry point. Tableau Software Inc. (NASDAQ: DATA) provides business analytics software products in the United States and internationally. It offers Tableau Desktop, a self-service analytics environment that empowers people to access and analyze data independently, and Tableau Server and Tableau Public, a free cloud-based platform for analyzing and sharing public data. Tableau’s business intelligence platform with data management and scalability has the security to foster the sharing of data.

Tableau reported a large third-quarter earnings beat and issued guidance for the fourth quarter that was solidly above Wall Street estimates. Stifel noted that current channel checks point to a strong pipeline of ever-increasing deal sizes and a robust broader environment for visualization and self-discovery. The firm also believes the sentiment favoring conservatism is the angle investors should stay with. It raised its 2016 estimates, but note that current Wall Street numbers are higher and most likely will have to come down some.

In addition, the company announced earlier this year the launch of its Shanghai operations — Tableau (China) — as the company expands in China to better serve customers and partners locally. With 1.3 billion people, a quickly expanding urban economy and exponential rates of Internet and smartphone penetration, China generates an immense amount of data annually. Tableau can help bring that data to life for corporations seeking to assimilate the huge data input.

The Stifel price target is a huge $145, and the consensus target is $117.89. The shares closed Monday at $100.05.

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With technology looking as a solid sector to own for 2016, these are top companies that aggressive accounts should consider. They all rallied on the outstanding reports, and investors may want to look for a backup to scale in some capital.

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