These Are The 5 Best Tech Stocks To Buy Or Watch Now

The best tech stocks to buy or watch aren’t hard to find, as long as you’re fishing in the right pond. Whether it’s a widely held name like Adobe stock or a lesser-known name like Cloudflare stock, the best tech stocks share many common traits.




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The best tech stocks boast strong fundamentals along with leading price performance in their industry group. Many also show favorable fund ownership trends.

Fund sponsorship has tripled in Cloudflare (NET) over the past year. At the end of Q2, 964 funds had a position in the stock, up from 328 in the year-ago period.

Meanwhile, Adobe (ADBE) gapped up on June 17 after reporting strong earnings. The gap up came on a breakout from a long consolidation a week earlier.

Fishing in the right pond means targeting top stocks showing resilience and holding near highs. Use IBD Stock Checkup to quickly identify industry group leaders with the potential to be stock market leaders.

Stock Market Health

Making money in growth stocks has become more challenging after a 40%+ gain for the Nasdaq composite in 2020.

The 2020 stock market rally started with a follow-through day for the S&P 500 on April 2. It soared 2.3% in higher volume, confirming a new uptrend on the eighth day of its rally attempt. The Nasdaq composite confirmed a new uptrend on April 6 when it soared 7.3% in higher volume.

The stock market went into a correction on Sept. 23 after the S&P 500 flashed its eighth distribution day, falling 2.3% in higher volume. But it didn’t take the stock market long to recover. The Dow Jones Industrial Average flashed a follow-through day on Sept. 30, rising 1.2% in higher volume.

After a sharp pullback for the stock market in October, the S&P 500 followed through again on Nov. 4, rising 2.2% in higher volume.

The stock market uptrend came under pressure, hurt by six distribution days for the S&P 500 between Feb. 18 and March 4. But the stock market went back to a confirmed uptrend on March 16.

With stock indexes back near highs, the stock market is in a confirmed uptrend, even though the distribution day count is relatively high, with seven distribution days for the S&P 500 and five on the Nasdaq through Aug. 9.

You can monitor the current stock market outlook and distribution day count every day in The Big Picture column. Read it daily for exclusive stock market analysis.

5 Top Tech Stocks

The best tech stocks to buy or watch now include Adobe, Cloudflare, DocuSign (DOCU), Bill.com (BILL) and Asana (ASAN).


Why This IBD Tool Simplifies The Search For Top Stocks


The technology sector is loaded with stocks with outstanding fundamentals. Many sell at a hefty premium, but a high valuation is warranted due to strong growth prospects.

Finding The Best Tech Stocks To Buy Or Watch

Screening for the best tech stocks to buy or watch is as easy as looking at the MarketSmith Growth 250, a daily screen of high-quality stocks. Click on any column header to sort the screen as you wish, either by those closest to their highs, stocks with the highest Composite Rating, or stocks trading up in price with the heaviest volume.

The best tech stocks to buy or watch aren’t guaranteed to be huge stock market winners. But they do have qualities seen in past stock market winners before big price gains.

Adobe Stock

Adobe, a Leaderboard stock and IBD Long-Term Leader, has been holding gains bullishly after a breakout from a 40-week consolidation in June.

The software leader has been trending nicely above the 10-week moving average. A first test of the 10-week line and bounce off the support level would put the stock in an alternate buy zone. The 10-week line is an area where funds will often add to a winning position.


See Which Stocks Are In The Leaderboard Portfolio


With a market capitalization near $300 billion, Adobe is still in growth mode. Fiscal 2021 profit is expected to rise 21%, with growth slowing a bit in 2022, up 15%.

Over the past eight quarters, earnings growth has ranged from 23% to 38%. Over the same time, revenue growth has ranged from 14% to 26%.

Composite Rating: 98

Latest-quarter EPS % change: +24%

Latest-quarter sales % change: +23%

Five-year EPS growth rate: 35%

Annual return on equity: 41%

Up/down volume ratio: 1.8

Cloudflare Stock

Cloudflare speeds up and provides security for web applications routed through its network. It’s not profitable yet, but sales growth has been impressive in recent quarters and fund sponsorship has accelerated sharply in recent quarters.

The company on Aug. 5 reported a narrower-than-expected loss, with revenue up 53% to $152.4 million. Sales guidance for Q3 and the full year was above expectations.

“We had our strongest quarter ever as a public company, and our revenue growth continued to accelerate, growing 53% year over year. We also added a record number of large customers, signing the equivalent of more than two six-figure customers every single business day in Q2.” said Matthew Prince, co-founder & CEO.

Cloudflare broke out over the 88.14 buy point on June 8. It’s held gains nicely and recently found support at its 21-day exponential moving average. Tight trading near highs could present an alternate entry. So would a pullback and second bounce off the 10-week line.

Composite Rating: 81

Latest-quarter EPS % change: n/a

Latest-quarter sales % change: +53%

Five-year annualized EPS growth rate: n/a

Annual return on equity: n/a

Up/down volume ratio: 2.2

DocuSign Stock

The company is the leader in the e-signature market and is still in the early stages of breaking out of a long consolidation that started all the way back in early September. It’s currently testing support at the 10-week line. A bounce off the line with conviction would put the stock in an alternate buy zone.

DOCU stock is strong from a fundamental and technical perspective. It also sees growth opportunities beyond e-signatures as more and more firms go paperless and automate workflows. Annual earnings estimates are bullish, with fiscal 2022 profit expected to soar 88% and another 28% in 2023.

DocuSign was added to Leaderboard in early June when it gapped above its 200-day moving average.

Composite Rating: 99

Latest-quarter EPS % change: +267%

Latest-quarter sales % change: +58%

Five-year annualized EPS growth rate: +251%

Annual return on equity: 42%

Up/down volume: 2.0

Bill.com Stock

The company provides a cloud-based software platform for back-office financial operations for small and midsize businesses. It’s not profitable yet, but the company has delivered impressive sales growth in recent quarters. In its latest reported quarter, sales jumped 45% to $59.7 million.

Earnings are due Thursday after the close. According to the Zacks consensus estimate, Bill.com is expected to lose 5 cents a share, with revenue up 46% to $61.36 million.

The stock market fell sharply on July 19, but Bill.com reversed higher after the company announced plans to buy Invoice2Go for around $625 million. The bullish price action ultimately paved the way for a breakout over an alternate entry of 197.81. The 5% buy zone went up to 207.70.

After a bounce off the 10-week line during the week ended Aug. 20, Bill.com cleared a shelf pattern Monday, giving an alternate entry of 211.95.

Composite Rating: 74

Latest-quarter EPS % change: n/a

Latest-quarter sales % change: +45%

Three-year annualized EPS growth rate: n/a

Annual return on equity: n/a

Up/down volume ratio: 1.4

Asana Stock

The enterprise software firm has the look of an emerging leader. It broke out powerfully from a cup base during the week ended June 11 and continues to hold gains bullishly. It’s too extended to buy now, but a pullback to the 10-week line and bounce off the support level would put the stock in an alternate buy zone.

It’s not profitable yet, but when the company reported earnings in June, sales growth accelerated for the second straight quarter, rising 61% to $76.7 million.

At the end of Q2, 212 funds had a position in the stock, up sharply from 55 funds at the end of September last year.

Composite Rating: 65

Latest-quarter EPS % change: n/a

Latest-quarter sales % change: +61%

Five-year EPS growth rate: n/a

Annual return on equity: n/a

Up/down volume ratio: 2.4

Follow Ken Shreve on Twitter @IBD_KShreve for more stock market analysis and insight.

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