September has been a bumpy ride for the stock market, with the major indices ending last week with marginal losses. The tech-heavy Nasdaq 100 witnessed its worst day since May this Monday as investors exhibited concern about the Federal Reserve’s meeting this week, surging COVID-19 cases, and possible financial market contagion from China’s big property developer Evergrande’s liquidity crisis. However, the tech-heavy index roared back in Tuesday’s session as investors shifted their attention to tech stocks.
Although the anxiety surrounding the Evergrande Group’s potential default on interest payments has kept the market on edge, economist Ed Yardeni of Yardeni Research believes that the Chinese government would not let the real estate firm fail. And its intervention could drive relief rallies in the major indices.
Given this backdrop, investors remain bullish about prominent Nasdaq 100 stocks’ strong momentum lately. Applied Materials, Inc. (AMAT), Zebra Technologies Corporation (ZBRA), and Gartner, Inc. (IT) possess solid growth potential and we think are well-positioned to keep soaring.
Applied Materials, Inc. (AMAT)
AMAT is a Santa Clara, Calif.-based provider of materials engineering solutions used to produce virtually every new chip and advanced display globally. The company also has expertise in modifying materials at atomic levels and on an industrial scale. AMAT operates through three segments: Semiconductor Systems; Applied Global Services; and Display and Adjacent Markets.
This month, AMAT introduced an innovation by securing industry collaborations to combine its technologies in advanced packaging and large-area substrates to speed the availability of solutions that deliver improved power, performance, area, cost, and time to market. AMAT users can accelerate technology roadmaps for heterogeneous chip design and integration through this technology co-optimization and collaborations.
AMAT’s net sales increased 41% year-over-year to $6.2 billion in its third fiscal quarter, ended August 1, 2021. The company’s gross profit grew 51.8% from its year-ago value to $2.98 billion. Its operating income rose 81.7% from the prior-year quarter to $2.01 billion. Also, the company’s EPS increased 105.5% year-over-year to $1.87.
Analysts expect AMAT’s revenue for its fiscal year 2021 to be $23.31 billion, representing 35.5% growth year-over-year. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Its EPS is expected to grow 64.3% in the current year. Furthermore, the stock has gained 56.4% in price over the past nine months and 56.6% over year-to-date.
AMAT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has a B grade for Momentum, and Quality. We’ve also graded AMAT for Stability, Sentiment, Value, and Growth. Click here to access all AMAT’s ratings.
AMAT is ranked #26 of 97 stocks in the B-rated Semiconductor & Wireless Chip industry.
Click here to checkout our Semiconductor Industry Report for 2021
Zebra Technologies Corporation (ZBRA)
ZBRA manufactures and sells marking, tracking, and computer printing technologies. The company operates in two segments: Asset Intelligence & Tracking; and Enterprise Visibility & Mobility. Its products include rugged mobile computers and tablets, thermal barcode labels, RFID printers, encoders, and other intelligent software and solutions. ZBRA is headquartered in Lincolnshire, Ill.
This month, ZBRA introduced the ET80 and ET85, a new series of Windows 12-inch rugged tablets and 2-in-1s. With this innovation, ZBRA users can experience flexible and portable tablets with support for Wi-Fi 6E and 5G with improved productivity, speed, and reliability across all areas of operations.
During its second fiscal quarter, ended July 3, 2021, ZBRA’s net sales increased 44% year-over-year to $1.38 billion. The company’s gross profit grew 57% from its year-ago value to $658 million. Its net income rose 119% from the prior-year quarter to $219 million. Also, the company’s EPS increased 89.6% year-over-year to $4.57.
ZBRA’s revenue is expected to increase 24.5% year-over-year to $5.55 billion in its fiscal year 2021. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the four trailing quarters. Its EPS is expected to increase 37.7% in the current year. The stock has gained 44.5% in price over the past nine months and 41.3% over year-to-date.
ZBRA’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The stock also has a B grade for Growth, Quality, and Stability.
In addition to the POWR Rating grades I’ve just highlighted, one can see ZBRA’s ratings for Value, Momentum, and Sentiment here. The stock is ranked #8 of 82 stocks in the A-rated Industrial – Machinery industry.
Click here to check out our Industrial Sector Report for 2021
Gartner, Inc. (IT)
IT is a global research and advisory firm that provides information, objective insights, and tools in information technology, finance, HR, marketing sales, and many other sectors. The Stamford, Conn., company operates through three segments: Research; Conferences; and Consulting.
Last month, IT identified engineering trust, accelerating growth, and sculpting as the three trends on its Hype Cycle for Emerging Technologies 2021. It believes leading organizations should lean on the emerging technologies in the Hype Cycle to build trust and new growth opportunities .IT's total revenues increased 20% year-over-year to $1.17 billion for the second quarter ended June 30, 2021. The company’s operating income grew 175.5% from its year-ago value to $274.7 million. Its net income rose 392.2% from the prior-year quarter to $271.2 million. Also, the company’s EPS increased 413.1% year-over-year to $3.13.
For its fiscal year 2022, analysts expect IT’s revenue to be $5.25 billion, representing 13.5% year-over-year growth. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. In addition, its EPS is expected to increase 59.5% in the current year. IT’s stock price has surged 96.5%% in price over the past nine months and 92% year-to-date.
It’s no surprise that IT has an overall A rating, which equates to a Strong Buy in our POWR Rating system. Also, the stock has an A grade for Growth and Quality, and a B for Sentiment.
Click here to see the additional POWR Ratings for IT (Momentum, Stability, and Value). In addition, IT is ranked #2 of 11 stocks in the A-rated Outsourcing – Tech Services industry.
AMAT shares were trading at $137.87 per share on Wednesday afternoon, up $2.69 (+1.99%). Year-to-date, AMAT has gained 60.63%, versus a 18.45% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.
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