2024-01-11 12:41:38 ET
The S&P 500's information technology sector ( NYSEARCA: XLK ) experienced solid growth of 12.7% in the fourth-quarter, behind only the real estate and the financials sectors.
The information technology sector, which holds the highest weightage of 27.2% on the S&P, rose a phenomenal 52.9% in 2023, comfortably outperforming all the other sectors.
Almost a third of Seeking Alpha readers believe that information technology will be the biggest winner among S&P 500 ( SPY ) sectors in 2024.
But according to a report from BMO Capital Markets , Street consensus believes the tech ( XLK ) momentum is likely to unravel in 2024 due to higher growth and higher valuation already factored in the sector.
Looking at a Goldman Sachs report , for tech ( XLK ), the fourth-quarter estimate for EPS Growth is 16%, with sales growth of 7% and median stock EPS growth of 3%.
Looking closer at the space with the help of Seeking Alpha's Quant Rating system, the technology sector secures an average health score of 3.33. The Quant Rating system assigns grades according to quantitative measures, like valuation, earnings growth, and recent stock performance, with the highest possible score of 5.
Diving deeper into the sector, seven out of 75 companies are considered a Strong Buy according to their Quant Ratings. Six stocks are labelled as a Buy, two are considered a Strong Sell, and 60 have a Neutral rating.
Enterprise software provider Salesforce ( CRM ) leads the pack with a Quant score of 4.94. The company's score received a boost from its high profitability and momentum grades. Its score was dragged down by its valuation grade of D+.
Baird upgraded CRM to Outperform from Neutral, noting it had "underestimated" the company's willingness to improve margins. CRM is Oppenheimer's top large-cap pick among 2024 SaaS names, and one of BofA 's top software stocks for 2024.
Arista Networks ( ANET ), maker of cloud networking gear, clinched second place with a score of 4.90. The company's score benefitted from high profitability and momentum grades but suffered from a low valuation grade.
Citi added ANET to its US Focus List on 'growing' AI opportunity. ANET is also among Citi 's top pick in tech.
Networking gear maker Juniper Networks ( JNPR ) secured the third place with a score of 4.84. It received solid grades for momentum and profitability but lagged in valuation.
On Tuesday, Hewlett Packard Enterprise ( HPE ) confirmed it would acquire JNPR for $14 billion in cash, valuing the company at $40 per share.
More on Technology Select Sector SPDR ETF
- Prepare For What May Be An Epic Chance To Buy Big Tech... If Oil Spikes
- XLK: Tech Still The Sector To Own, But Patience May Equal Profits
- XLK: Solid Qualities, But Not The Most Optimal Point To Stage An Entry
- Seeking Alpha readers predict information technology stocks big winners in 2024
- 25 bottom 90% market cap Tech stocks with highest growth-at-a-reasonable-price rank - BMO
For further details see:
Quant Ratings on 3 stocks to watch out for in the technology sector