With the S&P 500 down more than 3% since the start of the year, and volatility creeping much higher than last year, the question for growth stock investors may not be what to buy but when to buy. With so-so fourth-quarter earnings, oil continuing to be a worry and currencies jumpy, solid tech stocks make good sense for 2015, as most of them have very low debt levels. A new report from Stifel presents the firm’s Analyst Select List picks for 2015, and here we focus on the technology stocks.
Stifel has done an outstanding job of looking for stocks that not only have considerable upside for investors, but ones that are not overbought and overheld on Wall Street. This is the kind of research that is good when volatility spikes some, and momentum stocks need to be avoided. We scanned the Stifel list for the stocks with the biggest upside to the Stifel target price.
Arista Networks Inc. (NYSE: ANET) went public last June and was one of the hot tech IPO stories of the last year. The company 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 it has 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. The Stifel team thinks that Arista is continuing to see strong momentum with cloud providers, who could sharply ratchet up their capital expenditure spending.
The Stifel analysts set their price target at $95. The Thomson/First Call consensus price target is at $86.16. Shares closed Wednesday at $64.28.
FireEye Inc. (NASDAQ: FEYE) is a cybersecurity stock that makes the list at Stifel, and it is becoming a widely held name around Wall Street for 2015. The company has invented a purpose-built, virtual machine-based security platform that provides real-time threat protection to enterprises and governments worldwide against the next generation of cyberattacks. These highly sophisticated cyberattacks easily circumvent traditional signature-based defenses, such as next-generation firewalls, IPS, antivirus and gateways. For tech investors, cybersecurity is a must have subsector for a portfolio.
The Stifel price target for the stock is $45. The consensus price objective is set at $38.05. The stock closed on Wednesday at $34.22. FireEye traded to almost $100 a share last year.
Ingram Micro Inc. (NYSE: IM) is the world’s largest wholesale technology distributor and a global leader in IT supply-chain, mobile device life-cycle services and logistics solutions. It announced in the fall of 2014 a multiyear agreement with SquareTrade, the number-one-rated mobile device protection plan, trusted by millions of customers. Ingram Micro Mobility will provide all mobile device life-cycle services and back-end supply chain operations for SquareTrade, creating unrivaled reliability and consistency across its operations. The Stifel team thinks investors can look forward to solid margin expansion driven by cost cutting, and a shift to higher-margin businesses like cloud, logistics and data-center-related opportunities.
The Stifel price target is $35, and the consensus target is posted at $34.10. Shares closed trading on Wednesday at $25.49.
Salesforce.com Inc. (NYSE: CRM) has been the momentum stock trader’s dream over the past few years. The Stifel team and many other analysts on Wall Street feel that while the stock trades in line with its fast organic SaaS peer group, which is seen as having the largest growth rate in 2015, the company should trade at a premium to the group. Analysts cite Salesforce’s dominant positioning in the powerful cloud, mobile and social computing waves, larger revenue run-rate compared to the group average, stronger cash generation and its TAM, which is substantially larger than the peer group average.
The Stifel price target is posted at $70, and the consensus price target is $70.52. Shares closed on Wednesday at $57.71.
Stratasys Ltd. (NASDAQ: SSYS) is a top company in the 3D printing area that has been red hot and very volatile over the past two years. In an effort to build up awareness of its Makerbot, the company teamed up with eBay last year to utilize e-commerce to sell 3D printing services. The Wall Street consensus is that 3D printing and services, although maturing fast, remain at an early phase of growth, and many are emphasizing sales-based metrics over other valuation metrics. Stratasys very likely will remain a significant player, even when the bigger competition is in the game.
The Stifel price target is $110. The consensus price objective is higher at $127.57. The stock closed Wednesday at $75.19.
Synaptics Inc. (NASDAQ: SYNA) is considered one of the pioneers and leader of the human interface revolution, which provides innovative and intuitive user experiences to intelligent devices. Synaptics’ broad portfolio of touch, display and biometrics products is built on the company’s industry leading research and development and supply chain capabilities. Its ClearPad family supports touchscreen solutions for devices ranging from entry-level mobile phones to flagship premium smartphones, tablets and notebook PCs.
Stifel’s price target is $87, the consensus target is $87.64, and the stock closed Wednesday at $63.78.
The Stifel analysts are doing clients right by focusing on next-generation applications and technologies. Mega-cap tech has rebounded strongly over the past three years and may be running out of steam. These top picks may have much more potential upside for aggressive investors.