With less than a week left in 2020, it is a safe bet that the technology sector is going to be the year’s big winner. Using the broad measure of the S&P 500 index, the tech sector has added nearly 42% this year, despite (or, perhaps, because of) the COVID-19 pandemic.
The six technology stocks included in the Dow Jones industrial average were evenly split with three winners and three losers, and they have posted a gain for the year to date of around 21%. Still, it’s safe to say that tech carried the Dow, as well with three of the five top performers.
Apple Inc. (NASDAQ: AAPL) was the top Dow performer for 2020, adding nearly 80% to its share price. Analysts are expecting earnings per share (EPS) to rise by about 20% year over year in the company’s current (2021) fiscal year and by more than 9% in the 2022 fiscal year. For investors, Apple paid $14.1 billion in dividends in its 2020 fiscal year that ended in September and repurchased some $72.4 billion in common stock.
Based on a current share price of around $136 and a consensus price target of $127, the stock is overvalued. Shares trade at a multiple of around 29 times expected 2022 earnings of $4.34 a share. Apple pays an annual dividend of $0.82, for a yield of 0.62%. The stock’s 52-week range is $53.15 to $137.98.
Microsoft Corp. (NASDAQ: MSFT) has posted a share price gain of more than 41% so far in 2020. Analysts are expecting earnings per share (EPS) to rise by around 17% year over year in 2020 and add about 10% in the 2021 fiscal year. While the company’s newest Xbox Series X and S had sold about 1.9 million units since its November introduction, competitor Sony has sold nearly twice as many of its new PlayStation 5.
With a current share price of around $223, the stock’s implied upside is just over 8%, based on a consensus price target of about $241. The stock trades at just over 32 times expected 2021 EPS of $7.47. Microsoft’s 52-week trading range is $132.52 to $232.86.
Nike Inc. (NYSE: NKE) has posted a year-to-date price gain of just shy of 40%. Analysts are expecting EPS to rise by nearly 88% year over year in the current (2021) fiscal year and by another 28%. Nike was one of the companies that has seen its digital sales take off as a result of the pandemic. Direct sales rose by 12% to $3.7 billion in the most recent quarter to roughly 35% of Nike’s total revenue for the quarter.
Shares trade at around $142, implying a potential upside of more than 13% to the price target of $161. Nike stock trades at around 42 times expected fiscal 2022 earnings of $3.86. The stock’s 562-week range is $60.00 to $147.95.
Salesforce.com Inc. (NYSE: CRM) stock has added almost 39% for the year to date. For the current (2021) fiscal year, analysts expect EPS of $4.64, a jump of 55% from the year ended in September. The outlook for 2022 EPS drops, however, by nearly a quarter to $3.50. The projected drop may be related to the company’s $27.7 billion acquisition of Slack Technologies.
Shares traded recently at around $227, implying a potential upside of around 21% to a price target of $275. The stock trades at more than 78 times expected 2022 EPS and its 52-week range is $115.29 to $284.50.
Home Depot Inc. (NYSE: HD) has added 24% to its share price so far in 2020. EPS is forecast to rise by 15% year over year in the current fiscal year ending in January and by another 5.6% in the 2022 fiscal year. The company said in October that it will acquire HD Supply for a cash price of around $8 billion.
The stock trades at around $271, and a price target of $305 implies a potential upside of more than 12%. Home Depot stock trades at nearly 25 times expected 2022 earnings, and the company’s 52-week range is $140.63 to $292.95.
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