The market rally continues to gain momentum as we head into the final weeks of 2023, with the bulls firmly in control. In this episode of Full Court Finance at Zacks, we explore three top-ranked Zacks technology-centric stocks that investors should consider buying for both short-term and long-term gains.
Last week, Wall Street took a breather from its white-hot rally, but this pause should be seen as a positive sign. It indicates that there is not much appetite to sell and take profits, even after the huge rebound from the October lows. The bulls remain in control, with the S&P 500 and the Nasdaq comfortably above their 50-day and 200-day moving averages. The bears, who have been largely pushed out of their positions, are cautious not to get caught on the wrong side of a potential rally that could push the benchmark back towards its all-time highs in the coming months.
The recent comfort among big investors in calling for rate cuts in the latter half of 2024 has led to increased inflows into stocks. Even if the US falls into a recession at some point, Wall Street is more concerned about lower interest rates and aggregate earnings growth, which is currently being driven by the technology sector.
With this backdrop, let’s delve into three Zacks Rank #1 (Strong Buy) tech-focused stocks that investors may want to consider buying ahead of Thanksgiving.
LegalZoom.com, Inc. (LZ):
LegalZoom is a digital-focused business that provides a range of products and services across legal, tax, compliance, and more. The company also helps entrepreneurs start their businesses by offering services for LLCs, corporations, nonprofits, and other entities. In addition, LegalZoom provides legal assistance for wills, trusts, real estate, and divorce. Recently, the company launched LZ Books, a small business accounting software. LegalZoom’s Q3 results exceeded estimates and the company raised its guidance. It currently trades around 70% below its highs and 28% under its average Zacks price target. With a PEG ratio of 0.93, LegalZoom’s valuation level is attractive compared to the Zacks Tech sector.
Pinterest shares have soared after beating estimates in late October and providing upbeat guidance. The platform remains popular among advertisers, small businesses, and users looking for visual inspiration. Pinterest refers to itself as a “visual discovery engine” where users can find and share ideas for various topics. The company has been enhancing its ad tech and video features, while also introducing more e-commerce and shopping features. Pinterest’s global monthly active users grew by 8% YoY in Q3, and its sales and earnings growth outlook for 2023 and 2024 is strong. Despite its recent surge, Pinterest trades 63% below its all-time highs and 12% below its average Zacks price target.
Vertiv Holdings Co (VRT):
Vertiv provides power, cooling, and IT infrastructure solutions that are essential for maintaining the smooth operation of various technologies. The company is benefiting from the broader AI investment cycle, with many companies and industries investing in computing capacity. Vertiv posted impressive Q3 results, ending the period with a record-high $5 billion backlog. Its EPS estimates for FY23, FY24, and FY25 have surged, earning it a Zacks Rank #1 (Strong Buy). Despite its outperformance in the tech sector over the last three years, Vertiv trades at a discount to its industry and the Zacks Tech sector, making it an attractive investment opportunity.
As the market rally continues, these three tech-focused stocks offer investors the potential for significant gains. LegalZoom, Pinterest, and Vertiv are well-positioned to capitalize on the current market trends and deliver both short-term and long-term upside.