The S&P 500’s information technology sector rose slightly in the previous quarter, even as the broader markets underwent a volatile turn of events beginning with a government shutdown, which lasted 43 days.
The State Street Technology Select Sector SPDR ETF (XLK) inched up 1.17% in the fourth quarter, slightly behind the S&P 500’s 2% rise. Year-to-date, the tech sector remains shy of a 1% rise.
Heading into the earnings season, analysts have been more bullish than normal in their outlooks, with the majority of their optimism concentrated in the information technology sector, as per FactSet.
The information technology sector has recorded the largest percentage increase in estimated (dollar-level) earnings among the eleven sectors tracked by FactSet, rising 6.2% since the start of the quarter.
Overall, 51 of the 70 companies in the tech sector have seen an increase in their mean EPS estimate during this time. Of these, Apple (AAPL), NVIDIA (NVDA), Oracle (ORCL), Micron Technology (MU), and Microsoft (MSFT) have been the largest contributors to the increase in expected (dollar-level) earnings for this sector since September 30, as per FactSet.
According to Seeking Alpha’s Quant rating system, the sector has an average health score of 3.22. The system awards grades based on quantitative measures, like valuation, earnings growth, and recent stock performance. The highest possible score for any individual company is a 5.
Among individual companies in the tech sector, 51 stocks were rated as Buy or higher based on their Quant ratings, 204 stocks were rated Neutral, and 27 stocks were considered Sell or lower.
The following is a list of five of the top- and bottom-rated quant stocks with their quant ratings and analysts’ calls ahead of the upcoming earnings season.
Top five stocks
Micron Technology (MU): 4.99; Strong Buy
Lumentum Holdings (LITE): 4.99; Strong Buy
Ciena Corp. (CIEN): 4.98; Strong Buy
CommScope Holding (VISN): 4.98; Strong Buy
TTM Technologies (TTMI): 4.98; Strong Buy
Bottom five stocks
Insight Enterprises (NSIT): 1.32; Strong Sell
Power Integrations (POWI): 1.29; Strong Sell
Wix.com (WIX): 1.29; Strong Sell
Commvault Systems (CVLT): 1.23; Strong Sell
Bitdeer Technologies Group (BTDR): 1.17; Strong Sell