Today’s episode of Full Court Finance at Zacks explores the recent stock market selloff, and why the healthy selling represents a wonderful opportunity for investors. The episode then turns its attention to three highly-ranked Zacks tech stocks—Spotify Technology S.A. (SPOT), Shopify (SHOP), and Vertiv Holdings Co (VRT)—trading at least 20% below their highs to consider buying before earnings.
The Nasdaq’s mid-week tumble sent it below its 21-day moving average for the first time in months. Massive selling across semiconductors and other standout 2024 growth areas fueled the fall, with Nvidia, Taiwan Semi, Constellation Energy, and others leading the way lower.
The Nasdaq fell 0.7% on Thursday, as Wall Street continued to take profits from stocks that are still up 30%, 40%, 50%, or more YTD. A healthy pullback was needed and the Nasdaq is still trading solidly above its 50-day and 21-week moving averages.
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Don’t be surprised if Nvidia and other large-cap tech stocks get a bit more of a haircut in the coming days and weeks. Thankfully, the selling likely sets up a strong rally in the back half of the year since the market desperately needed a cooldown, with the Nasdaq already down from heavily overbought RSI levels to below neutral.
Investors who can stomach the possibility of more near-term selling and volatility should start buying great stocks on sale right now.
Spotify Technology S.A. (SPOT) Stock – Q2 2024 Earnings July 23
Spotify Technology (SPOT) changed the music industry forever and it is thriving amid competition from Apple and a few other tech titans. SPOT grew its monthly active users by 19% YoY in Q1 to 615 million, with paid Premium Subscribers up 14% to 239 million.
Spotify in June announced its second set of price hikes in the last year-plus to match its rivals, keep up with inflation, and boost profits. Spotify has also streamlined its business, helping it reach a potential inflection point for profits.
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Spotify’s adjusted earnings outlook has skyrocketed over the past 12 months, up 723% for FY24 and 215% for FY25, landing it a Zacks Rank #1 (Strong Buy). Spotify is projected to grow its revenue by 18% in 2024 and 15% in FY25, doubling its sales in five years. Spotify is also projected to swing from an adjusted loss of -$2.95 a share last year to +$5.02 in 2024 and surge another 44% next year.
Spotify’s impressive earnings outlook is helping improve its valuation levels. Spotify is trading around 13% below its early June highs and over 20% below its 2021 records. Any pullback to SPOT’s 200-day moving average would mark a fantastic buying opportunity for Spotify. Spotify is already trading at its most oversold RSI levels in the past 24 months.
Vertiv Holdings Co (VRT) Stock – Q2 2024 Earnings July 24
Vertiv (VRT) transformed from an under-the-radar tech stock into an AI darling over the last two years, with VRT stock up 770% vs. Nvidia’s (NVDA) 600% during that stretch. Vertiv’s power, cooling, and IT infrastructure solutions and services operate across data centers, communication networks, and beyond.
Vertiv partnered with the current king of AI Nvidia to help solve future data center efficiency and cooling challenges. Better yet, Vertiv will grow alongside the AI super-cycle no matter who comes to dominate the industry. VRT grew its Q1 organic orders by 60% and closed with a record $6.3 billion backlog, “reflecting increasing pipeline velocity and acceleration of AI-driven demand,” according to its CEO Giordano Albertazzi.
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Vertiv is a picks-and-shovels AI stock set to post double-digit sales and earnings growth in 2024 and 2025. Vertiv’s improved EPS outlook helps it earn a Zacks Rank #2 (Buy). VRT stock is still up 70% YTD, yet it closed Thursday trading 25% below its highs at around $82 per share. Vertiv pays a dividend and 10 of the 11 brokerage recommendations Zacks has for Vertiv are “Strong Buys.” Vertiv stock trades at its most oversold RSI levels since April 2023.
Shopify (SHOP) Stock – Q2 2024 Earnings August 7
Shopify (SHOP) provides the “essential internet infrastructure for commerce,” thriving in an e-commerce world dominated by Amazon (AMZN) by focusing on sellers from entrepreneurs to big businesses.
Shopify’s portfolio includes everything from website design and sales to marketing, payments, and much more. Shopify’s days of 60% revenue growth are over, but it is making up for that with higher prices and a focus on profits.
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Shopify is projected to grow its sales by roughly 20% in 2024 and 2025 to surge from $7 billion last year to over $10 billion next year. Meanwhile, it is expected to boost its adjusted earnings by 34% and 24%, respectively. Shopify’s upbeat earnings revisions help it land a Zacks Rank #2 (Buy). On top of that, Shopify’s balance sheet is stellar.
Shopify fell again after its Q1 earnings release. But its outlook remains impressive and the selling has SHOP stock trading over 60% below its 2021 highs. Despite the pullback, Shopify stock has doubled Amazon since SHOP’s 2015 IPO.
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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Shopify Inc. (SHOP) : Free Stock Analysis Report
Spotify Technology (SPOT) : Free Stock Analysis Report
Vertiv Holdings Co. (VRT) : Free Stock Analysis Report
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