3 Tech Stocks with Perfect Smart Scores

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There’s so much raw data flowing from the stock markets that it can be difficult even for seasoned analysts to find the best picks. That’s why TipRanks developed the Smart Score tool.

We already have the information in our databases. Smart Score takes it to the next logical step and uses our data processing technology to put it all together. Using 8 common factors – including analyst ratings, hedge fund activity, insider trades, and traditional technical and fundamental analysis – the tool distills all the data into one score, with clear explanations.

So now let’s dive in and look at three tech stocks, each with a perfect Smart Score of 10. We’ll break it down, to show where each stock is strong.

Broadcom, Inc. (AVGOResearch Report)

The #6 semiconductor chip maker in the world, with a 4.5% market share by sales volume, saw a 4% year-over-year gain in sales revenue last year, and back in March reported $5.789 billion in revenues with $5.55 in non-GAAP EPS. The EPS number was up from one year ago, while the quarterly revenues were down slightly. AVGO shares jumped 8% after the earnings report.

With that as background, we can start making sense of the Smart Score.

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You’ll see right away that a stock doesn’t need to be perfect everywhere to hold a score of 10. In recent weeks, Broadcom has seen hedge funds sell off its stock, while individual investors have sold off some AVGO shares in the past month. But that’s it for the negatives. Let’s turn to the positives.

The technical and fundamental indicators are traditional measures of stock analysis. The technical are consistently positive, with nearly 45% gains for the stock over the past year, and the fundamentals show that AVGO has generated a 26% return in the same time.

News sentiment on this company is rated ‘very bullish,’ as 100% of the recent coverage has been positive. The financial bloggers are also bullish – 96% so, in fact, far more than average for tech sector coverage.

And now we come to the analyst ratings, what TipRanks is famous for. AVGO gets a ‘Moderate Buy’ here, a mid-level rating, with an average price target of $319. When compared with the current share price of $315, this gives AVGO a decidedly modest 1.24% upside.

Turning directly to the analysts, we find the most recent review comes from John Vinh (Track Record & Ratings). Vinh, a five-star analyst with KeyBanc, looks at sales and market data and tells investors, “Given recent supply chain feedback, he believes Broadcom has regained the mid-high band PAD share back from Qorvo (QRVO) in the 2019 iPhone.” His price target, of $350, suggests a 10% upside to the stock.

So, while AVGO’s consensus rating is a ‘Moderate Buy,’ a recent analyst review suggests it may be stronger than that. Taken all together, the preponderance of the data points to AVGO shares outperforming the market and backs up the Smart Score.

International Business Machines Corporation (IBMResearch Report)

IBM is the doyen of old-school tech companies. It deals in some of the stand-bys of modern life: computer hardware and software, and cloud and mainframe technology. IBM’s inventions include some of the basic features of our technological society: floppy disks, hard drives, the ATM machine, and the magnetic stripe card. It’s a pretty good record for a company founded way back in 1911.

The company’s Smart Score of 10 – indicating that it will likely outperform the markets near-term – is based on a 6 out of 8 positive data points. Technicals show positive trends in the 20- and 200-day moving averages, while the fundamentals show nearly 50% return on equity and 4.5% asset growth in the past year. Hedge funds have increased their IBM holdings, offsetting declines from insiders and individual investors. Analysts, bloggers, and news media are bullish to varying degrees.

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We can turn to five-star Stifel analyst David Grossman (Track Record & Ratings) to sum up IBM’s current situation. He looks at the April 16 first quarter earnings report, which showed EPS meeting expectations at $2.25 and full year guidance reiterated, and then points out the company’s forward looking business plans: “IBM is exiting certain capital intensive, low growth/margin GTS segments and contracts… [F]undamentals underlying the core business are stable to improving and the pending RHT acquisition should enhance their competitive position.”

Grossman gives IBM shares a target price of $169, indicating his confidence in a 20% upside to the stock, based on the current share price of $140. This compares favorably with the $158 average price target and 13% average upside.

Universal Display Corporation (OLEDResearch Report)

Universal Display has made its name in the world of organic light emitting diodes – it even takes its stock ticker from the technology’s initials. OLEDs are the high end of the light emitting diode business and have applications to two widely separated fields: display screens, and lighting technology.

You would think that a leading place in a high-end tech niche would give a company a clear path to success, and you would be right. On May 2, OLED beat the earnings forecast by a wide margin. EPS came in 153% higher than expected (66 cents against 26). Quarterly revenue, and full-year revenue guidance, also beat expectations.

With the quarterly results in mind, a look at the Smart Score shows the foundations of such strong performance. This is the third ‘10’ rating we are looking at, and we see plenty more green in the details.

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For starters, OLED has a ‘Strong Buy’ on the analyst consensus. The $188 average price target, compared to the $170 share price, indicates an upside potential of 10% — not huge, but definitely significant. Financial bloggers are bullish on the stock, as is the news sentiment. Purchase activity from hedge funds and investors offset sales activity from insiders. The fundamental analysis factors are neutral, but the technical analysis is strongly positive, especially the 87% 12-month momentum. In short, 6 out of 8 indicators are pointing toward this stock outperforming.

Writing from Oppenheimer, Andrew Uerkwitz (Track Record & Ratings) sets out the forward outlook for this company: “As Chinese panel makers start to prove their ability to ship OLED display in high volume, we believe 2019-2021 will see significant expansion of OLED markets across display sizes. We reiterate our Outperform rating…” Uerkwitz gives a $180 price target, suggesting a 6% upside. This is slightly lower than, but in line with, the average.

Search the Smart Scores

You can find these stocks, and more, directly on TipRanks’ Smart Scores page. Take a look, and pick your next investment today.

Author: Michael Marcus

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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