In the past few weeks, there’s been considerable selling pressure in the tech space, though tech remains the equity market’s leading sector.
Facebook’s (NASDAQ: FB) earnings report wiped out over $100 billion in market value in a single day, Netflix (NASDAQ: NFLX) shares tanked after disappointing new subscriber numbers, but then Google (NASDAQ: GOOGL, GOOG) reported impressive results, sending its stock soaring.
Amid the selloff of the Nasdaq, rollercoaster-like earnings news from the FANGs, and even the noise coming from the trade war with China, many investors have been running scared from the tech space.
But when others are fearful, it’s likely time to buy. These three stocks all look likely to deliver big returns.
Adobe (NASDAQ: ADBE)
Shares of Adobe (NASDAQ: ADBE) are up 71% in the last 12 months, and 44% year-to-date.
The company has shown impressive performance in recent quarters. In Q2, it posted 24% year-over-year revenue growth, setting a new quarterly record of $2.2 billion.
Adobe’s top-line gains have been spurred on by its largest segment, digital media, which includes the Adobe Creative Suite of professional software including Photoshop and Illustrator. Revenue in this segment jumped 22% over the same quarter last year to $1.55 billion.
The digital experience segment—which helps companies with multi-channel digital marketing campaigns—was also impressive, posting 18% revenue growth to $586 million.
As the company has grown in recent years, so too has its operating margin. In the last four years, operating margins have tripled to 32% which has in-turn positively impacted cash flow. In its fiscal second quarter, the company boosted operating cash flow more than 50% to $976.4 million.
Consensus forecasts have Adobe’s sales growth for 2018 at an impressive 22.4%, and earnings growth at an even more impressive 56.1%, with annual expected earnings growth at nearly 24% over the next five years.
Last month, Bank of America boosted its price target for the stock from $278 per share to $292 – nearly 16% higher than today’s price.
Salesforce (NYSE: CRM)
Salesforce (NYSE: CRM) is a pioneer in the software as a service (SaaS) industry. The company’s customer relationship management (CRM) software has grown to become a leader in its sector offering customers a growing list of tools to lure businesses to embrace its cloud computing services.
In its fiscal first quarter, Salesforce grew revenue 25% year-over-year to $3.01 billion, exceeding both the company’s own guidance and analysts’ consensus estimates. Profits were also higher than expected, coming in at $0.74 per share, crushing analysts’ expectations of $0.46 per share.
The company boasts an impressive $20.4 billion in future revenues from its backlog of contracts, up 36% from the same quarter a year ago.
Salesforce CEO Marc Benioff said the company’s first quarter performance demonstrates “phenomenal momentum.”
Brokerage Stifel Nicolaus upped its price target for Salesforce just last week from $160 to $175, or 24% higher than Thursday’s closing price.
Splunk (NASDAQ: SPLK)
Splunk (NASDAQ: SPLK) is a leader in the Big Data space. While Big Data isn’t new, many companies are just beginning to understand its value, benefitting this data-parsing company.
Splunk is up 24% year-to-date, though it has struggled since June.
In addition to its cloud-based app that organizes and analyzes data generated by an enterprise’s systems, the company’s software has also been put to use in cybersecurity and fraud protections, fleet tracking, website monitoring, and system failure detection.
It has a high rate of retention for existing clients, and has quickly been adding new customers. In its fourth quarter 2017, the company added 570 new customers, bringing its total count to over 15,400. The company is on-track to reach 20,000 customers by 2020.
This has led to big revenue gains. Splunk exceeded $1 billion in revenue for the first time in 2017, and is expected to hit $2 billion by 2020.
Bank of America recently reiterated its Buy rating on the stock and boosted its price target from $124 to $128 – 25% higher than today’s price.