If any sector has dominated the market over the long bull run, and even in the “melt-up” rally off the March lows, it’s the technology, media and telecom (TMT) sector. This industry grouping includes most companies focused on new technologies. There is a substantial overlap between TMT and the 1990s idea of the new economy.
Given the huge run in the sector, which is trading at a premium to the rest of the market, it makes sense for investors to look past the FANG constituents for other ideas that hold the potential for sizable gains. In a series of new reports, the TMT analysts at SunTrust are very positive on four top stocks that they feel offer compelling value and strong upside potential. While all four stocks are rated Buy, remember that no single analyst report should be used as a sole basis for any buying or selling decision.
This continues to be among the most bought tech stocks on Wall Street, as well as one of the most valuable brands in the world. Alibaba Group Holding Ltd. (NYSE: BABA) runs the largest retail marketplaces (Taobao, TMall) and leading B2B sites (Alibaba.com, 1688.com) in China and Lazada in Southeast Asia. It collects revenues mainly from commissions, marketing services, subscription fees, cloud computing and software, as well as other value-added services.
Alibaba has gone beyond e-commerce and developed into a sophisticated new type of conglomerate in the cyber-era with e-commerce as the base for the rest of the four businesses: logistics, finance, data-computing and cross-border infrastructure. Top analysts expect a whopping 24% compounded annual growth rate between now and 2020 for e-commerce in China.
The situation in China is improving and the analysts said this in the research report:
China’s latest NBS data shows that year over year online sales growth of physical goods is accelerating through April, approaching growth levels seen pre-COVID19, which we view as positive for the company. The negative trends management spoke to last earnings seem to have reversed somewhat, as the shift to online is accelerating, and China is slowly normalizing. While macro conditions remain a concern short-term, we view AliBaba as a winner long-term given its dominance of the Chinese economy and market, the insatiable appetite of China’s rising middle class, leadership in Cloud, its strong balance sheet and portfolio of strategic investments.
The SunTrust price target for the stock is $250, and the Wall Street consensus target is $222.54. Alibaba stock closed Wednesday’s trading at $216.79 a share.
Shares of this cybersecurity giant have rallied sharply off the March lows but still offer some tremendous value. CrowdStrike Holdings Inc. (NASDAQ: CRWD) is a leader in the endpoint protection platform (EPP) market. EPP solutions help protect enterprises’ internet-connected devices from cyberattacks, and there is a market shift from signature-based on-premises solutions to cloud-based platforms that use machine learning.
CrowdStrike’s platform is one of the few 100% cloud-based architectures and is uniquely positioned to displace incumbents with its platform breadth, including advanced detection and remediation capabilities.
The SunTrust analysts remain very positive on the company and said this:
We believe that CrowdStrike has emerged as a key beneficiary of the remote working paradigm that has accelerated during the COVID-19 Crisis. Our conversations with customers over the last few weeks lead us to believe that they are benefiting from both new customer growth and upsell within their existing customer base. Our analysis leads us to believe that current ARR expectations are overly conservative and that the Company has a long runway in a favorable competitive environment.
SunTrust raised its $80 price target to $95. The consensus target is $73.32, but CrowdStrike stock rose 3% on Wednesday to close at $80.97.