3 Strong Buy Tech Stocks To Buy The Dip On

Last week, the S&P 500 snapped its losing streak, having closed some 2% on the week. Most of the gains came about from the Tuesday rally, but we’re not out of the woods yet, as the benchmark index struggled to mark further gains and was essentially flat after the midweek.

The geopolitical tensions driving recent market dynamics are still in play, and escalating tensions could very well lead to further downward momentum from here on out. Concurrently, the March jobs report came in significantly better than expected, and average earnings growth estimates for Q1 are increasing.

When shorter-term dynamics are hard to decipher, sometimes the best play is to “zoom out” and look at bigger timeframes. On a year-to-date (YTD) basis, energy, basic materials, and utilities have marked significant gains. In stark contrast, tech stocks have seen significant losses.

It has been clear for some time now that tech is no longer an easy trade — at the same time, underappreciated tickers in the sector, the ones with rock-solid fundamentals, are now trading at significant discounts thanks to sector-wide and market-wide dynamics.

The only question that remains is how do you identify stocks like those? Thankfully, it’s quite simple — all you have to do is turn to …

Technology Stock Strategy

Our in-house quant rating system looks at 115 metrics, split across 7 categories, to compare and contrast roughly 4,600 stocks each day. That mass of data is boiled down into a simple, approachable metric — a stock’s  Zen Rating.

The stocks that score in the top 5% when it comes to the fundamentals are given a Zen Rating of A, equivalent to a Strong Buy rating. Already, you’ve narrowed the search down significantly — but that does still leave roughly 230 stocks to consider on any given date. That’s not the end of it, however — you can further refine your search by taking a look at one of our exclusive Zen Strategies.

Each strategy is a portfolio consisting of just 7 carefully-selected stocks, hand-picked to deliver market-beating returns. There are 11 portfolios in total — today, we’ll be taking a look at a Strategy that has delivered an average annual return of 22.54%. It has also provided a gain of  5.73% since the start of the year, far outclassing the S&P 500’s 4% loss in the same timeframe. This week, the spotlight is on our Technology Stock Strategy.

Without further ado, let’s take a closer look at 3 very interesting stocks from the portfolio…

Zedge (ZDGE)

Zedge is a digital content platform for mobile personalization in the midst of an AI pivot. ZDGE shares currently rank in the top 1% of the equities we track, giving them a Zen Rating of A. ZDGE is also the top-rated stock in the entire Internet Content & Information industry, which has an Industry Rating of A.

Despite a blowout quarterly report on March 12, Zedge has lost roughly 7% in value since then. The operational metrics are promising — subscription revenue grew by 33% year-over-year (YoY), and active subscriber count increased by 49% in the same timeframe. The business also aims to have six alpha product launches by the end of the year.

The stock is a solid all-rounder — it carries either an A or B grade for each Component Grade, except for Momentum. ZDGE ranks in the 81st percentile for Value, the 84th percentile for Financials, and the 85th percentile for Safety. To boot, it’s also in the top 6% in terms of the Growth Component Grade rating, and the top 2% with regard to the Sentiment rating.

What about downsides? Zedge ranks in the 48th percentile for Momentum — in other words, lower than 52% of the stocks that we track. On top of that, it has an incredibly small market cap, so liquidity could be an issue. However, if you’re comfortable with a set-it-and-forget-it position, that 7% dip is hard to resist.

8x8 (EGHT)

8x8’s platform is geared toward enterprise customers, and provides an all-in-one business communication suite. EGHT ranks in the top 1% of the stocks that we track, and it’s also the 2nd highest-rated stock in the App industry, which has an Industry Rating of B.

The company’s last quarterly report was on February 3, and it marked the sixth consecutive earnings beat that the business delivered. What followed was a nearly 65% rally — after which the stock crashed by more than 35%. Right now, it’s trading at about 4% higher than pre-earnings levels.

Rosenblatt researcher Catharine Trebnick (who ranks in the top 20% of analysts based on actual stock picking performance) has a Strong Buy rating on the stock, with a price target that reflects an almost 60% upside. EGHT ranks in the top 6% for Sentiment — and it also ranks in the top 6% for Value and Growth. To boot, it’s in the top 5% of the stocks that we track when it comes to the Artificial Intelligence rating, meaning that a neural network trained on more than two decades of market data has singled it out as a likely outperformer.

There’s also a catalyst coming up — 8x8’s next earnings call is on May 13, and another beat could lead to a recovery rally.

Micron (MU)

A memory and storage chip titan, Micron ranks in the top 1% of the stocks that we track, and it’s currently the top-rated stock in the Semiconductor industry. The business has notched 12 earnings beats in a row, the last one delivered on March 18. For that quarter, MU delivered earnings per share (EPS) of $12.20, far ahead of analyst estimates, which were pegged at $9.19.

Despite that blowout, MU shares have lost about 20% in value since then on account of ongoing market rotations. The dip is a huge opportunity, as the valuation is now quite enticing. MU is currently trading at a price-to-earnings growth (PEG) ratio of 0.82x. It ranks in the top 2% for Value, as well as the top 1% for Growth.

The average price target from Wall Street analysts estimates an upside of more than 36% for the stock. This puts Micron in the 98th percentile for Sentiment. Lastly, it also ranks in the 98th percentile for Financials.

So, what’s the drawback? A D rating for Safety — where MU ranks in the bottom 15%. The stock has a Beta of 1.78, and memory has historically been volatile. However, if you’re able to stomach a potentially bumpy ride, the rest of the fundamentals are stellar.

Interested In More Great Stock Picks? 

The 3 stocks highlighted above are just a fraction of what you get from our proven Technology Stock Strategy.

That’s because each day our system recalibrates — and Zen Strategies members get access to the top 7 technology stocks based on 115 different parameters that point to outperformance. 

See all Top 7 Technology Stocks here > 

However, maybe none of the stocks you’ve seen here have caught your eye. Perhaps you would like to see all 11 of our market beating strategies including Growth, Momentum, Value, and our coveted AI Factor model. 

Each featuring the top 7 stocks.

Each featuring tremendous performance

We spell it all out in this timely presentation below that lives up to its name:

10 Minutes a Month to Beat the Market > 

What to Do Next?

• 77 Best Stocks NOW! >
• Options Trading with the Zen Ratings >
• 2 New Stocks to Buy from Steve Reitmeister >

Want to get in touch? Email us at news@wallstreetzen.com.