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Philip van Doorn

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May 16, 2020, 1:46 p.m. EDT

Wall Street sees plenty of upside for these downtrodden tech stocks

Shares of companies including Micron Technology, Western Digital and Motorola Solutions have fallen this year

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By Philip van Doorn, MarketWatch


Micron Technology Inc.
A Micron Technology X100 NVMe solid-state drive. The company's stock is down 15% in 2020 through May 12, but the consensus price target among analysts polled by FactSet implies 31% upside potential over the next 12 months.

It’s easy to say investors should buy low and sell high, and you might think an opportunity to do so has escaped you because of the U.S. stock market’s remarkable recovery from its March lows. But there are still opportunities in the most highly regarded sector.

The information technology sector has been the best performer in the S&P 500 Index this year. Trends including cloud collaboration and software-as-a-service are impervious to the coronavirus lockdown, and even accelerated by it. People who are new to working at home have needed to upgrade computers, peripherals and communications equipment.

But the IT sector includes plenty of stocks that have declined significantly, some of which are expected by analysts to roar over the next 12 months.

The S&P 500 /zigman2/quotes/210599714/realtime SPX +0.15%  hit a 2020 closing low March 23, when it was down 31% for the year. Since then, it has risen 28%, so it is now down 11.2% this year through May 12. (All price changes in this article exclude dividends.)

Of the 11 sectors in the benchmark index, only information technology has risen this year:

S&P 500 sector Price change - 2020 Price change - 2019
Information Technology 1.9% 48.0%
Health Care -2.4% 18.7%
Consumer Discretionary -5.5% 26.2%
Communication Services -5.8% 30.9%
Consumer Staples -8.9% 24.0%
Utilities -14.4% 22.2%
Materials -17.0% 21.9%
Real Estate -18.6% 24.9%
Industrials -25.6% 26.8%
Financials -31.0% 29.2%
Energy -38.0% 7.6%
Source: FactSet

The sector’s impressive year-to-date price increase reflects the solid performance of some very large companies (the S&P 500 is weighted by market capitalization). Six of this year’s “tech winners” have market capitalizations of more than $100 billion:

Company Ticker Market capitalization ($ millions) Price change - 2020 Price change - 2019
Nvidia Corp. /zigman2/quotes/200467500/composite NVDA 191,984 33% 76%
PayPal Holdings Inc. /zigman2/quotes/208054269/composite PYPL 165,567 30% 29%
Microsoft Corp. /zigman2/quotes/207732364/composite MSFT 1,384,054 16% 55%
Adobe Inc. /zigman2/quotes/200389143/composite ADBE 175,906 11% 46%
Salesforce.com Inc. /zigman2/quotes/200515854/composite CRM 159,682 9% 19%
Apple Inc. /zigman2/quotes/202934861/composite AAPL 1,349,755 6% 86%
Source: FactSet

Among the 71 stocks in the S&P 500 IT sector, 22 are down at least 15% this year, and analysts polled by FactSet see double-digit upside potential of up to 75% over the next year for 17 of them:

Company Ticker Price change - 2020 Price change - 2019 Closing Price - May 12 Consensus price target Implied 12-month upside potential
DXC Technology Co. /zigman2/quotes/200279350/composite DXC -58% -29% $15.82 $27.71 75%
Western Digital Corp. /zigman2/quotes/204213617/composite WDC -35% 72% $40.98 $61.82 51%
Alliance Data Systems Corp. /zigman2/quotes/205162001/composite ADS -64% -25% $40.47 $55.07 36%
Micron Technology Inc. /zigman2/quotes/205710729/composite MU -15% 69% $45.69 $59.92 31%
HP Inc. /zigman2/quotes/203461582/composite HPQ -28% 0% $14.87 $19.18 29%
Hewlett Packard Enterprise Co. /zigman2/quotes/201998588/composite HPE -40% 20% $9.48 $12.03 27%
Motorola Solutions Inc. /zigman2/quotes/203308192/composite MSI -19% 40% $131.23 $161.67 23%
Microchip Technology Inc. /zigman2/quotes/208326291/composite MCHP -18% 46% $85.99 $102.79 20%
NetApp Inc. /zigman2/quotes/209297588/composite NTAP -31% 4% $43.03 $51.35 19%
FleetCor Technologies Inc. /zigman2/quotes/205312429/composite FLT -21% 55% $228.46 $272.22 19%
Corning Inc /zigman2/quotes/200045496/composite GLW -30% -4% $20.41 $23.78 17%
TE Connectivity Ltd. /zigman2/quotes/205324491/composite TEL -25% 27% $71.41 $82.38 15%
CDW Corp. /zigman2/quotes/208546399/composite CDW -29% 76% $101.98 $116.86 15%
Xerox Holdings Corp. /zigman2/quotes/201169674/composite XRX -54% 87% $16.90 $19.20 14%
Amphenol Corp. Class A /zigman2/quotes/207999687/composite APH -22% 34% $84.27 $94.00 12%
Seagate Technology PLC /zigman2/quotes/201824240/composite STX -18% 54% $48.62 $53.95 11%
Automatic Data Processing Inc. /zigman2/quotes/207661132/composite ADP -17% 30% $141.73 $156.19 10%
Source: FactSet

You can click on the tickers for more about each company.

You will have to scroll the table to see all of the data.

Don’t miss: 12 health-care stocks that will be winners because of coronavirus-led trends, according to Jefferies

/zigman2/quotes/210599714/realtime
US : S&P US
3,299.50
+4.89 +0.15%
Volume: 1.35B
Aug. 4, 2020 1:28p
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/zigman2/quotes/200467500/composite
US : U.S.: Nasdaq
$ 445.72
+5.31 +1.20%
Volume: 4.75M
Aug. 4, 2020 1:28p
P/E Ratio
83.19
Dividend Yield
0.14%
Market Cap
$270.85 billion
Rev. per Employee
$882,428
loading...
/zigman2/quotes/208054269/composite
US : U.S.: Nasdaq
$ 197.18
+0.11 +0.06%
Volume: 3.12M
Aug. 4, 2020 1:28p
P/E Ratio
90.44
Dividend Yield
N/A
Market Cap
$231.22 billion
Rev. per Employee
$710,138
loading...
/zigman2/quotes/207732364/composite
US : U.S.: Nasdaq
$ 212.54
-4.00 -1.85%
Volume: 29.70M
Aug. 4, 2020 1:28p
P/E Ratio
36.88
Dividend Yield
0.96%
Market Cap
$1638.70 billion
Rev. per Employee
$902,473
loading...
/zigman2/quotes/200389143/composite
US : U.S.: Nasdaq
$ 444.90
-3.07 -0.69%
Volume: 1.08M
Aug. 4, 2020 1:28p
P/E Ratio
58.59
Dividend Yield
N/A
Market Cap
$214.88 billion
Rev. per Employee
$445,024
loading...
/zigman2/quotes/200515854/composite
US : U.S.: NYSE
$ 200.81
-2.38 -1.17%
Volume: 2.19M
Aug. 4, 2020 1:28p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$182.75 billion
Rev. per Employee
$379,486
loading...
/zigman2/quotes/202934861/composite
US : U.S.: Nasdaq
$ 439.24
+3.49 +0.80%
Volume: 28.70M
Aug. 4, 2020 1:28p
P/E Ratio
33.40
Dividend Yield
0.75%
Market Cap
$1863.11 billion
Rev. per Employee
$1.98M
loading...
/zigman2/quotes/200279350/composite
US : U.S.: NYSE
$ 18.32
+0.17 +0.94%
Volume: 1.51M
Aug. 4, 2020 1:28p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$4.61 billion
Rev. per Employee
$145,113
loading...
/zigman2/quotes/204213617/composite
US : U.S.: Nasdaq
$ 44.24
+0.34 +0.77%
Volume: 2.12M
Aug. 4, 2020 1:28p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$13.16 billion
Rev. per Employee
$270,824
loading...
/zigman2/quotes/205162001/composite
US : U.S.: NYSE
$ 44.47
-0.47 -1.05%
Volume: 343,160
Aug. 4, 2020 1:28p
P/E Ratio
N/A
Dividend Yield
1.89%
Market Cap
$2.14 billion
Rev. per Employee
$389,560
loading...
/zigman2/quotes/205710729/composite
US : U.S.: Nasdaq
$ 50.92
+0.53 +1.05%
Volume: 10.10M
Aug. 4, 2020 1:28p
P/E Ratio
25.53
Dividend Yield
N/A
Market Cap
$55.98 billion
Rev. per Employee
$832,917
loading...
/zigman2/quotes/203461582/composite
US : U.S.: NYSE
$ 17.88
+0.11 +0.59%
Volume: 4.50M
Aug. 4, 2020 1:27p
P/E Ratio
8.79
Dividend Yield
3.94%
Market Cap
$25.41 billion
Rev. per Employee
$1.07M
loading...
/zigman2/quotes/201998588/composite
US : U.S.: NYSE
$ 9.94
+0.04 +0.46%
Volume: 4.23M
Aug. 4, 2020 1:28p
P/E Ratio
N/A
Dividend Yield
4.83%
Market Cap
$12.71 billion
Rev. per Employee
$510,483
loading...
/zigman2/quotes/203308192/composite
US : U.S.: NYSE
$ 137.06
-0.48 -0.35%
Volume: 369,797
Aug. 4, 2020 1:28p
P/E Ratio
26.39
Dividend Yield
1.87%
Market Cap
$23.39 billion
Rev. per Employee
$458,937
loading...
/zigman2/quotes/208326291/composite
US : U.S.: Nasdaq
$ 106.30
+1.43 +1.36%
Volume: 1.02M
Aug. 4, 2020 1:28p
P/E Ratio
47.95
Dividend Yield
1.38%
Market Cap
$26.47 billion
Rev. per Employee
$352,817
loading...
/zigman2/quotes/209297588/composite
US : U.S.: Nasdaq
$ 42.82
+0.04 +0.11%
Volume: 1.34M
Aug. 4, 2020 1:27p
P/E Ratio
12.08
Dividend Yield
4.48%
Market Cap
$9.49 billion
Rev. per Employee
$601,456
loading...
/zigman2/quotes/205312429/composite
US : U.S.: NYSE
$ 261.03
-2.18 -0.83%
Volume: 230,207
Aug. 4, 2020 1:25p
P/E Ratio
26.91
Dividend Yield
N/A
Market Cap
$22.06 billion
Rev. per Employee
$321,041
loading...
/zigman2/quotes/200045496/composite
US : U.S.: NYSE
$ 31.09
+0.19 +0.61%
Volume: 1.48M
Aug. 4, 2020 1:28p
P/E Ratio
305.85
Dividend Yield
2.83%
Market Cap
$23.51 billion
Rev. per Employee
$219,223
loading...
/zigman2/quotes/205324491/composite
US : U.S.: NYSE
$ 90.53
+0.74 +0.82%
Volume: 692,755
Aug. 4, 2020 1:27p
P/E Ratio
N/A
Dividend Yield
2.12%
Market Cap
$29.63 billion
Rev. per Employee
$179,562
loading...
/zigman2/quotes/208546399/composite
US : U.S.: Nasdaq
$ 119.38
+1.92 +1.63%
Volume: 496,494
Aug. 4, 2020 1:27p
P/E Ratio
23.21
Dividend Yield
1.28%
Market Cap
$16.72 billion
Rev. per Employee
$1.80M
loading...
/zigman2/quotes/201169674/composite
US : U.S.: NYSE
$ 15.80
-0.21 -1.32%
Volume: 1.53M
Aug. 4, 2020 1:27p
P/E Ratio
8.18
Dividend Yield
6.33%
Market Cap
$3.41 billion
Rev. per Employee
$303,395
loading...
/zigman2/quotes/207999687/composite
US : U.S.: NYSE
$ 108.10
+0.71 +0.66%
Volume: 474,673
Aug. 4, 2020 1:28p
P/E Ratio
30.19
Dividend Yield
0.92%
Market Cap
$32.04 billion
Rev. per Employee
$111,440
loading...
/zigman2/quotes/201824240/composite
US : U.S.: Nasdaq
$ 45.02
+0.25 +0.57%
Volume: 1.61M
Aug. 4, 2020 1:28p
P/E Ratio
11.85
Dividend Yield
5.78%
Market Cap
$11.49 billion
Rev. per Employee
$263,814
loading...
/zigman2/quotes/207661132/composite
US : U.S.: Nasdaq
$ 135.71
+1.25 +0.93%
Volume: 1.15M
Aug. 4, 2020 1:27p
P/E Ratio
23.78
Dividend Yield
2.69%
Market Cap
$57.80 billion
Rev. per Employee
$242,819
loading...

Philip van Doorn covers various investment and industry topics. He has previously worked as a senior analyst at TheStreet.com. He also has experience in community banking and as a credit analyst at the Federal Home Loan Bank of New York.

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