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Sept. 4, 2021, 8:43 a.m. EDT

Forget short-term stock-market fads and just buy these 5 rocketing tech stocks

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By Jeff Reeves

Looking at the latest headlines, it’s easy to concoct a narrative around short-term investment trends based on your personal tastes. Is the Afghanistan chaos good or bad for defense firms? Will inflation lift oil stocks or miners? What are the best infrastructure stocks for the trillion-dollar spending bill?

But here’s the thing: Tactical investments and market timing is incredibly difficult, regardless of how good a story you tell yourself. So why overthink things — particularly when the S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.47% continues to set new records every few days, with the ever-dynamic technology sector continuing to drive much of that success?

Read: The S&P 500 is headed for 5,000, says UBS. Here’s the when and how.

Recent share performance and recent earnings in these five $20 billion-plus companies proves this sector remains a massive growth center for Wall Street regardless of the short-term news cycle. So if you’d rather go with tried-and-true profits over a quirky play based on your personal interpretation of the headlines, here are five tech stocks to consider for their current growth and long-term potential.

Fortinet

In a modern digital economy, hacking and high-tech risks remain a persistent threat. That creates a constant need for companies like $50 billion security giant Fortinet /zigman2/quotes/205733290/composite FTNT -1.01% to ply their services, likely for years to come.

Proof of this growth trend isn’t built on some hysterical headline about data breaches, but rather through tangible profit and sales growth. Fortinet’s second-quarter earnings on July 29 featured revenue expansion of 30% year-over-year and record free cash flow. What’s more, product sales exploded 41% higher thanks to what is seen as a new data center upgrade cycle — meaning these installed products will deliver down the road via recurring service and maintenance revenue.

Fortinet has been around since the dot-com days and sometimes gets overlooked for younger and more volatile cyber players that find short-term appeal. But this is not a sleepy legacy tech stock; it has 12-months returns of more than 140% thanks to impressive fundamentals and the long-term megatrend of cybersecurity growth. In fact, those gains make it the top-performing tech stock in the S&P 500 over the last 12 month.

And with $3.3 billion in cash on the books and more than 1,000 patents issued or pending, this is not a tech stock that will easily be disrupted by some of those upstart cyber firms that may make flashy headlines, too.

Nvidia

This $560 billion chipmaking powerhouse is one of Wall Street’s biggest success stories. Nvidia’s stock is up more than 1,300% in the last five years. Momentum hasn’t slowed much of late, with gains of more than 70% in the last 12 months.

That’s because the fundamentals are just too good to pass over. In Nvidia’s /zigman2/quotes/200467500/composite NVDA +1.94% second-quarter earnings report , it reported better-than-expected revenue growth of 68% year-over-year to tally a record $6.51 billion on the top line. Earnings surged even more, with an 89% year-over-year growth rate that also topped analysts’ estimates.

This comes on the heels of another sales record in its first-quarter report — an impressive performance despite supply-chain disruptions and chip shortages that could be holding Nvidia back from meeting the full appetite of the marketplace.

Looking forward, Nvidia is still suffering through antitrust review of its $40 billion acquisition plan for Arm Ltd., a big-ticket move that could cement this tech stock as the leading artificial intelligence firm on the planet. It all adds up to a tremendous growth story that has proved durable, regardless of broader headlines or economic cycles.

Read: Nvidia’s ARM acquisition is stalled, and there’s a deadline with more than a billion dollars at stake

Square

Shares in this mobile payments giant founded and run by Jack Dorsey have soared 2,100% over the last five years and continue to outperform with a roughly 70% gain in the last 12 months.

/zigman2/quotes/210599714/realtime
US : S&P US
4,566.48
+21.58 +0.47%
Volume: 1.85B
Oct. 25, 2021 5:26p
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/zigman2/quotes/205733290/composite
US : U.S.: Nasdaq
$ 331.91
-3.38 -1.01%
Volume: 994,199
Oct. 25, 2021 4:00p
P/E Ratio
107.11
Dividend Yield
N/A
Market Cap
$54.76 billion
Rev. per Employee
$314,931
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/zigman2/quotes/200467500/composite
US : U.S.: Nasdaq
$ 231.66
+4.40 +1.94%
Volume: 23.02M
Oct. 25, 2021 4:00p
P/E Ratio
82.70
Dividend Yield
0.07%
Market Cap
$568.15 billion
Rev. per Employee
$878,788
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