With the first half of what has proven to be a remarkable 2020 ending, many of the firms we cover across Wall Street are already looking to the second half of the year and at what should be an improving economy as we emerge from the pandemic lockdown. One thing’s for sure: The rally everybody was looking to arrive in the second half of the year already may have come.

The S&P 500 has made a stunning reversal off the March 23 lows, recouping almost all the losses, while the Nasdaq composite index actually printed an all-time high on the strength of the mega-cap tech giants, closing Wednesday above the 10,000 level.

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Jefferies analysts recently were tasked with providing their 50 top high-conviction ideas for the second half of 2020 and beyond. The research report that covered them all noted this:

We present the US Research team’s current top ideas, spanning all sectors under coverage. With representation from nearly every publishing analyst, we highlight 50 stocks we find particularly attractive. These are our highest conviction ideas, regardless of theme or macro backdrop, and include our Franchise Picks.

We screened the information technology picks, as the sector has solid momentum heading into the second half of 2020, and found four solid ideas for more aggressive long-term growth investors.

Apple

This technology giant has been on an incredible roll since the sell-off. Apple Inc. (NASDAQ: AAPL) designs, manufactures and markets consumer electronics and computers, and has developed its own proprietary iOS and Mac OS X operating systems and related software platform/ecosystem.

Revenues are derived principally from the iPhone line of smartphones, hardware sales of the Macintosh family of notebook and desktop computers, iPad tablets and iPod portable digital music players. The company also realizes revenue from software, peripherals, digital media and services.

It’s no surprise that this technology giant is a huge institutional holding, as almost 80% of portfolio managers own the stock. One of those managers is the legendary Warren Buffett. Comprising almost 25% of the Berkshire Hathaway portfolio, Apple represents Buffett’s largest holding, with a reported 252 million shares in the tech giant.

Jefferies loves the company:

Apple is positioned to benefit from the 5G product cycle later this year, which remains the biggest catalyst in our view. We still think Street iPhone unit assumptions for Fiscal year 2021 are too low and underestimate Apple’s position for 5G.

Shareholders receive a 0.93% dividend. Jefferies has a $370 price target on the shares, and the consensus target across Wall Street is $318.84. Apple stock closed trading on Wednesday at $352.84, up almost 3% on the day.

Motorola Solutions

This was a recent addition to the Jefferies Franchise Picks stock list. Motorola Solutions Inc. (NYSE: MSI) is a provider of communication infrastructure, devices, accessories, software and services. The company operates through two segments.

The Products segment has two product lines: Devices and Systems. The primary customers of the Products segment are government, public safety and first-responder agencies, municipalities and commercial and industrial customers operating private communications networks and manage a mobile workforce.

The Services segment provides a range of service offerings for government, public safety and commercial communication networks. This segment’s product lines include Integration services, Managed & Support services and Integrated Digital Enhanced Network.

Jefferies has noted the backup in the shares and said this when adding the stock to its Franchise Picks list:

We expect the shares to re-rate higher as the company leverages their franchise position in Public Safety via new technologies/capabilities (such as Video surveillance), tuck-in software acquisition, and an increased mix of recurring revenue – 33% currently. Motorola Solutions is the dominant provider of mission-critical Public Safety infrastructure and handsets globally. Moreover, there are major barriers to entry around this business, both competitively and technologically. In addition, we view the senior management team as top tier.

Shareholders receive a 1.73% dividend. The Jefferies price objective is $155, but the consensus price target is higher at $160.83. Motorola Solutions stock traded down over 2% on Wednesday to $148.23.

This smaller cap company could be a great takeover target, and it is a member of the Jefferies Franchise Picks list. RingCentral Inc. (NYSE: RNG) offers a cloud-based solution for business communications that replaces legacy and expensive on-premise communications systems. It is delivered as an application that follows the user regardless of device (office phone, smartphone, desktop, tablet). Features include voice, text, fax, audio conferencing and integration with document and customer relationship management systems.

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For some time, Jefferies has believed the company has multiple catalysts, including continued traction with mid/enterprise customers, increased partner traction, international expansion and continued dislocation in the industry from legacy PBX/UC vendors.

Last year, Avaya entered into a strategic partnership with RingCentral in which it will introduce a new unified communications as a service (UCaaS) solution. Under the agreement, RingCentral will contribute $500 million to the deal and will be Avaya’s exclusive provider of UCaaS solutions.

Jefferies feels the potential for growth is high:

RingCentral is one of the biggest beneficiaries of the migration from on-prem to cloud-based unified communications solutions. Its products are best-in-class and its competitive advantages will allow it to grow faster and for a longer duration than the market appreciates. One key competitive advantage is its carefully crafted partner-led go-to-market strategy. The company’s partnership with Avaya changed the landscape of the industry and structurally advantages RingCentral versus other UCaaS providers.

The $245 Jefferies price target was recently raised to $290. The consensus target is $277.14, and RingCentral stock closed at $274.96, after climbing 6.4% on Wednesday.

Texas Instruments

This old-school legacy semiconductor tech company offers solid value at current levels and is a great pick for more conservative investors. Texas Instruments Inc. (NASDAQ: TXN) is a broad-based supplier of semiconductor components, ranging from digital signal processors to high-performance analog components, to digital light-processing technology and calculators.

Some 65% of the company’s sales are exposed to the well-diversified, business-to-business industrial, automotive, communications infrastructure and enterprise markets. While business from those sectors, especially automotive, could suffer in the near term, the analyst feels the solid dividend should support the shares.

The company is also a big Apple supplier, so the long-term outlook for this venerable leader makes it a safer bet for accounts with less risk tolerance. Jefferies has remained positive on the shares for years and said this:

We consider Texas Instruments to be the premier IoT play in our “Analog Renaissance” thesis, which argues that analog companies will see higher growth over the next 5 years versrs the previous 5 due to their position as critical component players in the IoT side of the “4th Tectonic Shift in Computing” to an IoT and Parallel Processing model. The company is the analog market share leader, and continues to gain share, which supports our view that it will be the first company in the analog sector to capture 40-50% share and the lion’s share of the profits in the industry.

Investors receive a 2.72% dividend. Jefferies has set a $136 price target. The consensus target is $117.22, and Texas Instruments stock was last seen trading at $131.40.

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Note that technology has been off-the-charts hot and the sector could be ready to consolidate some after printing all-time highs. With the Nasdaq possibly headed much higher than the 10,000 level, it may make sense to scale buy shares over a two- or three-month period and hope to catch a sector reversal and buy some stock lower than current levels.

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