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The Zacks Analyst Blog Highlights: Chegg, Tencent, GoDaddy, Fortinet and ServiceNow

Zacks Equity Research

For Immediate Release

Chicago, IL – June 5, 2020 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Chegg CHGG, Tencent TCEHY, GoDaddy GDDY, Fortinet FTNT and ServiceNow NOW.

Here are highlights from Thursday’s Analyst Blog:

Market Surge to Maintain Momentum in June: 5 Tech Stocks to Buy

The rally in all three major US indices namely, the Dow Jones Industrial Average, the S&P 500 and the Nasdaq have continued unabatedly so far in June. Backed by an unprecedented government stimulus and the reopening of U.S. and global economies post coronavirus-induced lockdowns and shelter-in-place guidelines, the three indices closed strongly in both April and May.

On Jun 3, the Dow Jones inched up 2.1% to close at 26,269.89 while the S&P 500 rose 1.4% to 3,112.87. This is the highest finish for both benchmarks since Mar 4, per Dow Jones Market Data.

Tech-laden Nasdaq closed 0.8% higher at 9,682.91 and now remains just 1% off its Feb 19 high of 9,838.37.

Lower-than-expected private-sector job losses, per Automatic Data Processing report on Jun 3, and the growing optimism that overwhelming fiscal and monetary stimulus will limit the coronavirus-caused damages drove the aforementioned rally.

Markedly, Nasdaq is up 7.9% year to date, driven by a resilient performance of tech stocks. Given their impressive prospects, tech stocks are definitely the best bets at present. Notably, the S&P 500 Information Technology Index has been up 9.2% year to date versus the loss of 2.5% for the S&P 500 Index.

Teeming Prospects in Tech Space

Technology stocks remain attractive owing to consistent digital transformation in the sector. Rapid adoption of cloud computing along with the ongoing infusion of AI and machine learning as well as the accelerated deployment of 5G technology, blockchain, IoT, autonomous vehicles, AR/VR and wearables are major tailwinds.

Coronavirus-induced work-from-home as well as online-learning wave is not only driving demand for computers and peripherals but also for remote-working management tools and video conferencing software.

Furthermore, the lockdown bolstered the usage of online and e-commerce services globally. Therefore, data-center operators are enhancing their capacities to accommodate the demand spike for cloud services.

Moreover, a strong trend of getting glued to online gaming, music and video-streaming services, which further received a boost from the coronavirus-led lockdowns and shelter-in-home guidelines, is a major lever.

Contactless payment and delivery also gained a significant traction from the coronavirus outbreak.

Here we pick five tech stocks that apart from boasting strong fundamentals carry a favorable combination of a VGM Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Per the Zacks’ proprietary methodology, stocks with such a perfect mix of elements offer solid investment opportunities.

These fundamentally robust stocks have outperformed the S&P 500 composite on a year-to-date basis.

Top Picks

Chegg operates a direct-to-student learning platform. The company benefited significantly from the coronavirus-induced online-learning wave. As schools and colleges are likely to remain shut for a prolonged time, the ongoing momentum is expected to continue for this currently Zacks #1 Ranked stock that has a VGM Score of B.

The Zacks Consensus Estimate for 2020 earnings is pegged at $1.21 per share, having been revised 11% upward in the past 30 days. Earnings are expected to surge 33% from the figure reported in the previous year.

Tencent benefits from the continuing popularity of its online multiplayer battle royale game, PlayerUnknown's Battlegrounds (PUBG), which was the leading mobile game in terms of revenues, globally in April, per Sensor Tower data. The company boasts a solid video game portfolio that includes Peacekeeper Elite and Honour of Kings.

Tencent currently has a Zacks Rank of 1 and a VGM Score of B. The consensus mark for fiscal 2020 earnings is pegged at $1.67 per share, having moved 5% north in the past 30 days. Earnings are expected to climb 20.1% from the prior-year reported number.

GoDaddy thrives on the growing adoption of its domain products. Higher subscriptions to Websites and Marketing, and managed WordPress offerings, international expansion, robust feature engagements and strength in GoCentral are tailwinds for this currently #2 Ranked stock’s Hosting and Presence business. The company has a VGM Score of A.

Notably, post the recently-announced acquisition of Neustar’s Registry business, which is expected to close in second-quarter 2020, GoDaddy will emerge as one of the largest players in the Internet Infrastructure industry.

The consensus mark for GoDaddy’s 2020 earnings has increased 14.1% to $1.05 over the past 30 days, suggesting growth of 28.1% from the year-ago reported figure.

Fortinet is benefiting from its dominance in the Unified Threat Management (UTM) space, which is one of the fastest-evolving segments in Network Security. This currently Zacks Rank #2 stock has a VGM Score of B.

The Zacks Consensus Estimate for Fortinet’s 2020 earnings stands at $2.75 per share, having moved 6.6% north over the past 30 days. Earnings are expected to grow 11.3% from the figure reported in the preceding year.

ServiceNow  is advancing on the back of a rapid uptake of its diverse application-based products across all industries. This currently Zacks #2 Ranked company’s expanding global presence, strong partnerships and strategic buyouts are expected to aid its financial performance in the near term.

ServiceNow has a VGM Score Score of B. The consensus mark for fiscal 2020 earnings is pegged at $4.24 per share, having been raised 5.5% in the past 30 days. Earnings are expected to improve 27.7% from the figure reported a year earlier.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit information about the performance numbers displayed in this press release.

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