DOX - Ahead of the Curve: 3 Tech Stocks to Get In on Early

2024-06-20 14:00:00 ET

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Wall Street is soaring to new heights in 2024, buoyed by a robust U.S. economy as well as investor interest in advancements in artificial intelligence. As a result, the S&P 500 index gained over 15%, while the tech-heavy Nasdaq Composite index has advanced over 18% year-to-date. This impressive rally has sparked investor interest in tech stocks to buy in July despite concerns about a potential market peak.

Anticipated earnings growth and potential Federal Reserve rate cuts are further buoying optimism. In other words, despite the recent gains, there are still potential opportunities to establish strategic positions within the tech sectors. Getting in early allows investors to capitalize on the full growth potential of innovative firms and maximize returns as these stocks appreciate.

Amdocs (DOX)

A top tech stock to buy on our list is Amdocs (NASDAQ: DOX ). The company provides software and services for global communications, media, and entertainment sectors. Its solutions include customer experience systems, network automation, and cloud-native services.

In the second quarter of 2024 , Amdocs reported record revenue of $1.25 billion, a 2% year-over-year increase in constant currency terms. Adjusted earnings per share were $1.56, up from the prior year’s $1.47, though slightly below analysts’ expectations .

Management anticipates robust demand for Amdocs’ innovative solutions, particularly in cloud services, supporting double-digit revenue growth in 2024. The company also aims for a double-digit EPS increase.

Recently, Amdocs partnered with Alphabet’s (NASDAQ: GOOG , NASDAQ: GOOGL ) Google Cloud to streamline eSIM activation, enhancing remote device management and customer satisfaction. Collaborations with industry leaders like Virgin Media O2 , Japan’s JCOM , and Paramount Global (NASDAQ: PARA ) for the MTV operations in Japan further strengthen the company’s market position.

Despite a 13% decline in 2024, DOX stock remains a strong dividend-growth stock with a 2.5% yield. Currently, the shares trade at 10.6 times forward earnings and 1.8 times sales, indicating a potentially attractive valuation for long-term investors. Analysts have a 12-month median price forecast of $100.00 for Amdocs stock, suggesting a more than 30% upside potential.

Axcelis Technologies (ACLS)

Next up on today’s list of tech stocks to buy is Axcelis Technologies (NASDAQ: ACLS ), which designs ion implantation systems crucial for semiconductor chip fabrication. The company’s product lineup includes high energy, high current and medium current implanters, complemented by aftermarket services.

In its latest earnings report , Axcelis posted revenue of $252.4 million, slightly below the year-ago quarter but exceeding forecasts. Earnings per diluted share rose 10% to $1.57, driven by improved gross margins. The company holds approximately $134 million in cash and $396 million in short-term investments and has no outstanding debt.

The global semiconductor sector, valued at $545 billion in 2023, is anticipated to grow at a 7.6% compound annual growth rate from 2024 to 2033, driven by AI, Internet of Things (IoT), and 5G technologies. Axcelis leads in ion implantation, ensuring consistent demand for products such as its Purion Power series . Despite fluctuations in silicon carbide demand due to slowdowns in electric vehicle adoption, Axcelis remains positioned for long-term growth in a dynamic market.

ACLS stock has gained nearly 9% since January, with shares trading at a price-to-sales (“P/S”) ratio of 4x. Analysts project a 12-month median price target of $150 for Axcelis, implying a 6% upside from current levels.

CrowdStrike (CRWD)

Rounding up today’s discussion on top tech stocks to buy, we highlight the cybersecurity company CrowdStrike (NASDAQ: CRWD ). Its Falcon platform leverages AI and machine learning to swiftly detect, prevent, and respond to cyber threats.

CrowdStrike’s first quarter fiscal 2025 earnings showed robust growth, with revenue up 33% from a year ago to $921 million. Annual recurring revenue also increased by 33% to $3.65 billion, adding $211.7 million in net new annual recurring revenue for the quarter. Adjusted diluted EPS rose to 93 cents compared to 57 cents last year. The company achieved a record free cash flow of $322 million, representing 35% of revenue and raised its fiscal year 2025 guidance.

With a robust position in cloud-based cybersecurity solutions, CrowdStrike benefits from strategic partnerships with tech giants like Google Cloud , Amazon (NASDAQ: AMZN ) for its Amazon Web Services (AWS), and Nvidia (NASDAQ: NVDA ). Notably, AWS is consolidating its cybersecurity efforts around CRWD, while Nvidia has endorsed the Falcon platform . Additionally, CrowdStrike is expanding its offerings beyond core cybersecurity, venturing into endpoint and identity protection, and cloud security.

In 2024, CRWD stock surged over 53%, hitting an all-time high on June 17. Despite trading at premium valuations of 97.1x adjusted forward earnings and 29.3x sales, Wall Street remains optimistic, with a 12-month price target of  $400, signaling a more than 2% upside potential .

On the date of publication, Tezcan Gecgil has both long and short positions in NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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