What are we looking for?
U.S. technology companies showcasing strong earnings and impressive revenue growth, identified through Trading Central’s Quantamental Factor investing framework.
Tech shares have been making strong gains, with the SPDR Select Technology Sector fund ETF (XLK) outperforming all other SPDR sector ETFs with a 26.68-per-cent return over three months. This week, we focused on the technology sector to identify top quant-rated U.S. tech stocks demonstrating upward price and earnings momentum using Trading Central’s Quantamental Factor investing methodology.
The screen
To narrow our focus to more established companies, we set a minimum market capitalization of US$5-billion, effectively filtering out smaller, potentially more volatile names.
We then screened for tech stocks with accelerating earnings momentum, requiring both earnings per share and revenue to have grown by more than 10 per cent in the most recent quarter compared with the same period a year earlier.
Lastly, we applied Trading Central’s Quantamental rating system, which scores stocks from 0 to 100 (with 100 being most bullish). We selected only those stocks scoring at least 50 in both the Momentum and Growth factors.
For informational purposes, we have also included the recent stock price, four-week, year-to-date and one-year price return.
Trading Central is a global leader in financial market research and investment analytics for retail online brokers and institutions. Its product suite provides actionable trading ideas based on technical and fundamental research covering stocks, exchange-traded funds, indexes, forex, options and commodities. Strategy Builder, our stock screener, is available through leading retail brokers in Canada and worldwide.
What we found
Stocks are ranked based on the average of all screening criteria selected.
Topping our list is Seagate Technology, a leading provider of data storage services, specializing in hard drives and storage systems used worldwide by businesses and consumers. The company recently reported revenue growth of 30.5 per cent and an extraordinary 1,208-per-cent jump in earnings per share last quarter. Seagate’s Trading Central momentum and growth factor ratings are 72 and 90, respectively, with a year-to-date return of 64.4 per cent and a one-year gain of 33.1 per cent.
Palantir Technologies develops software platforms for big data analytics, serving government agencies and enterprise clients in sectors ranging from defence to health care. The company posted revenue growth of 39.3 per cent and doubled its earnings per share in the latest quarter. Palantir boasts high Trading Central factor ratings, 91 for momentum and 57 for growth, and has surged 90.4 per cent year-to-date, with a remarkable 403.6-per-cent return over the past year.
Uber Technologies is a global leader in ride-hailing and food delivery, connecting millions of users to transportation and logistics services. Uber reported 13.8-per-cent revenue growth and a 386-per-cent increase in earnings per share last quarter. Its Trading Central momentum and growth ratings are 72 and 82, respectively. The stock is up 53 per cent so far this year and 39.5 per cent over the past 12 months.
Nvidia is the global leader in graphics processing units (GPUs) and AI infrastructure, powering everything from gaming to advanced data centres and autonomous vehicles. The company just made history as the first to surpass a US$4-trillion market capitalization, driven by explosive demand for its AI chips and software ecosystem. NVIDIA reported 69.2-per-cent revenue growth and 26.7-per-cent EPS growth last quarter. Its Trading Central momentum and growth factor ratings are 59 and 76, respectively, with a year-to-date return of 17.8 per cent and a one-year gain of 20.7 per cent.
Trading Central Strategy Builder provides a backtesting capability to evaluate how well an investing strategy would have worked in the past. Using a five-year historical period with quarterly rebalancing, the screen described had an impressive 32-per-cent annualized total return compared with 14 per cent for the Nasdaq Composite Index.
The investment ideas presented here are for information only. They do not constitute advice or a recommendation by Trading Central in respect of the investment in financial instruments. Investors should conduct further research before investing.
Gary Christie is head of North American research at Trading Central in Ottawa.