Buy these 13 tech stocks that are abnormally disconnected from Wall Street's expectations for profit growth and poised to rocket higher, Credit Suisse says
- Multiple technology companies have become oversold relative to their prospects for growing profits, according to Credit Suisse.
- Marketwide, however, most stocks have traded in a direction similar to changes in analysts' earnings forecasts since the market peaked on February 19.
- Credit Suisse identified 13 tech stocks that investors could profit from as their depressed prices catch up to lofty expectations for earnings.
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Major periods of market stress like the one Wall Street recently went through always lead to panic selling.
Amid the turmoil, investors dump shares of companies that continue to hold promising prospects for delivering profit growth. And this behavior makes it lucrative for stock pickers to pounce on companies that become oversold.
The opportunity set is limited in the aftermath of the March crash: Most stocks have traded in a direction similar to changes in analysts' earnings forecasts, according to Jonathan Golub, the chief US equity strategist at Credit Suisse.
However, there remain several disconnects between price and earnings-growth estimates in the technology, healthcare, and utilities sectors.
In a recent note, he highlighted 13 tech stocks that display a "fundamental disconnect": Their prices fell at the same time that analysts raised their estimates for forward earnings per share. He sees the opportunity for investors to profit as these stocks' depressed prices catch up to the reality of their business conditions.
The list below is based on price changes from the February 19 peak in the S&P 500 through May 8.