6 RBC Top Tech Stocks to Buy Ahead of Earnings

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With the first quarter earnings season right around the corner, many of the top firms on Wall Street that we cover are starting to handicap how they feel the numbers will turn out. With a variety of headwinds over the past 90 days, some companies may come in light to current expectations. RBC Capital Markets has issued a new research report identifying the top information technology (IT) hardware companies it thinks investors should buy ahead of earnings.

So far 2015 has been very volatile for IT hardware, with only a handful of RBC’s stocks outperforming the broader markets. Despite the currency headwinds, the slowing personal computer (PC) market and more, the analysts see other areas where growth remains robust. We focused on the RBC stocks rated Outperform, which are Apple Inc. (NASDAQ: AAPL), CDW Corp. (NASDAQ: CDW), EMC Corp. (NYSE: EMC), QLogic Corp. (NASDAQ: QLGC), Seagate Technology PLC (NASDAQ: STX) and Western Digital Corp. (NASDAQ: WDC).

Apple

Apple is hardly a stranger to the tech hierarchy, and the company passed another milestone when it was added to the Dow Jones Industrial Average last month, replacing the venerable AT&T. Apple absolutely crushed earnings estimates when it reported back in January, hitting on all cylinders. With huge sales of both iPhone 6 models, the iconic Silicon Valley firm has traded in spectacular fashion since.

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The RBC team says investors need to stay long the stock into first-quarter earnings, and through the second quarter. They see strong continued iPhone 6 and 6 Plus sales, as well as numerous catalysts on the horizon. While they do not see upside to the first quarter, they do see the second quarter being better than usual.

Apple investors are paid a 1.5% dividend. The RBC price target for the stock is at $142. The Thomson/First Call consensus price target is $139.59. The stock closed Tuesday at $126.01 a share.

CDW

CDW had a very large secondary stock offering last fall that added to the free float. CDW came back from private equity land with a highly anticipated IPO and has gone straight up in price for almost two years. CDW provides IT products and services to business, government, education and health care customers in the United States and Canada. It offers discrete hardware and software products to integrated IT solutions, such as mobility, security, data center optimization, cloud computing, virtualization and collaboration.

The RBC team sees the stock as a defensive play for investors. They are forecasting high single-digit sales growth and double-digit earnings-per-share growth for the stock. They cite numerous reasons for the earnings and sales growth, the top one being a rebound in PC and server sales.

CDW investors are paid a small 0.75% dividend. The RBC target price is $39, and the consensus target is at $40. The stock closed most recently at $37.18.

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