Best Tech Stocks To Buy Or Watch: 5 Growth Stocks Leading The Stock Market

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The best tech stocks to buy or watch aren’t hard to find, as long as you’re fishing in the right pond. Whether it’s a widely held name like Shopify stock or a lesser-known name like Etsy stock, the best tech stocks share many common traits.


The best tech stocks boast strong fundamentals along with leading price performance in their industry groups. Many also show favorable fund ownership trends.

Fishing in the right pond means targeting top stocks showing resilience and holding near highs. Use IBD Stock Checkup to quickly identify industry group leaders with the potential to be stock market leaders.

Stock Market Health

The S&P 500 flashed a sign of strength on April 2. It soared 2.3% in higher volume, confirming a new uptrend on the eighth day of its rally attempt. The Nasdaq composite confirmed a new uptrend on April 6 when it soared 7.3% in higher volume.

The stock market went into a correction on Sept.23 after the S&P 500 flashed its eighth distribution day, falling 2.3% in higher volume. But it didn’t take the stock market long to find its footing. The Dow Jones Industrial Average flashed a follow-through day on Sept. 30, rising 1.2% in higher volume.

After a sharp pullback for the stock market in October, the S&P 500 followed through again on Nov. 4, rising 2.2% in higher volume.

You can monitor the distribution day count every day in The Big Picture column. Read it every day for exclusive stock market analysis.

The coronavirus stock market crash resulted in a lot of broken stock charts. Some growth stocks have come under selling pressure, but there’s still a fair supply of bullish stock charts out there.

The best tech stocks to buy or watch now include Shopify (SHOP), CrowdStrike (CRWD), Etsy (ETSY), Qorvo (QRVO) and Pinduoduo (PDD). The common bond among all five stocks? Bullish relative strength lines and high Composite Ratings from IBD.

The technology sector is loaded with stocks with outstanding fundamentals. Many sell at a hefty premium, but a high valuation is warranted due to strong growth prospects. Leadership is broad-based in the technology sector, which means it has a good chance of maintaining its market leadership.

Finding The Best Tech Stocks To Buy Or Watch

Screening for the best tech stocks to buy or watch is as easy as looking at the MarketSmith Growth 250, a daily screen of high-quality stocks. Click on any column header to sort the screen as you wish, either by those closest to their highs, stocks with the highest Composite Rating, or stocks trading up in price with the heaviest volume.

The best tech stocks to buy or watch aren’t guaranteed to be huge stock market winners. But they do have qualities seen in past stock market winners before big price gains.

Shopify  Stock

E-commerce sales have been booming during the coronavirus pandemic, and that’s been good news for Shopify, which operates a cloud-based commerce platform designed for small and medium-sized businesses.

If you thought Shopify’s run was over when it corrected 49% off it high in March, you weren’t alone. But it didn’t take long for Shopify to find its footing. Shopify quickly built the right side of a cup base in April and broke out during the week ended April 24. It touched a high of 11,46.91 in early September before settling into a new consolidation.

In its latest reported quarter, adjusted profit of $1.13 a share more than doubled expectations. Revenue soared 96% to $767.4 million. Gross merchandise volume jumped 109% to $30.9 billion.

“The accelerated shift to digital commerce triggered by Covid-19 is continuing, as more consumers shop online and entrepreneurs step up to meet demand,” Shopify President Harley Finkelstein said in a statement.

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Shopify is just past the 5% buy zone after a Dec. 16 breakout over the 1,112.51  buy point.

Composite Rating: 98 (scale of 1-99 with 99 being the best)

Latest-quarter EPS % change: n/a

Latest-quarter sales % change: +96%

Three-year annualized EPS growth rate: 101%

Annual return on equity: 1.3%

Annual pretax profit margin: 5.8%

Qorvo Stock

The wireless chipmaker wireless has benefitted from the launch of Apple‘s (AAPL) iPhone 12 and other 5G smartphones.

One of the top performers in IBD’s chipmaker group, Qorvo is holding gains nicely after gapping over a 140.79 buy point on Nov. 5. Tight trading from there resulted in a three-weeks-tight pattern with an alternate entry of 154.53. The pattern is a way a stock shows strength after a breakout. It’s best used to add shares to a current position. Qorvo topped that entry on Nov. 30.

The company on Nov. 4 reported a 60% rise in quarterly profit. Sales increased 31% to $1.06 billion.

Qorvo hasn’t tested its 10-week moving average yet after the initial breakout. If it pulls back and finds support at the line, Qorvo will be in an alternate buy zone. Another interpretation is that Qorvo is forming an ascending base with a 171 entry.

Composite Rating: 97

Latest-quarter EPS % change: 60%

Latest-quarter sales % change: +31%

Three-year annualized EPS growth rate:13%

Annual return on equity: 17.4%

Annual pretax margin: 25%

Etsy Stock

The company provides an e-commerce platform where creators of arts and crafts, vintage items, household products, apparel and other unique goods sell their products.

Etsy’s earnings report in late October was a sight to behold, with adjusted profit of 70 cents per share, up 483 year-over-year. Sales soared 128% to $451.5 million. Wall Street expected Etsy to report earnings of 57 cents on revenue of $412.7 million. Gross merchandise sales jumped 119% to $2.6 billion.

Etsy broke out over a 146.70 buy point on Nov. 27. The buy point was derived by adding 10 cents to the stock’s Nov. 6 intraday high.

It’s extended past the buy point now, but because Etsy triggered the eight-week hold rule after the breakout, it could holds gains and trade sideways from here. Tight, sideways price action often results in a new entry point.

Composite Rating: 99

Latest-quarter EPS % change: 483%

Latest-quarter sales % change: +128%

Three-year annualized EPS growth rate: 71%

Annual return on equity: 23.8%

Annual pretax margin: 9.9%

Pinduoduo Stock

The company, with a market capitalization of around $175 billion, operates an e-commerce platform in China. The company’s e-commerce model combines social networking with group shopping. Pinduoduo runs the third-largest e-commerce platform in China by gross merchandise volume, behind Alibaba Group (BABA) and (JD).

Regulatory concerns have hit many Chinese stocks, but Pinduoduo continues to hold gains nicely after gapping up on earnings in November. Watch for a first test of the 10-week moving average, currently around 132. A conviction bounce off the line would put PDD stock in an alternate buy zone.

The company on Nov. 12 reported adjusted profit of 5 cents a share. Revenue jumped 99% to $2.o9 billion. The company counted 643.4 million monthly average users during the quarter, up 50% from the year-ago period.

Composite Rating: 94

Latest-quarter EPS % change: n/a

Latest-quarter sales % change: +99%

Three-year annualized EPS growth rate: n/a

Annual return on equity: n/a

Annual pretax margin: n/a

CrowdStrike Stock

The large-cap stock is one of several leaders in the security software group, along with Palo Alto Networks (PANW), Zscaler (ZS), SailPoint Technologies (SAIL) and others.

CrowdStrike, a Leaderboard stock, gapped up on Dec. 3 after reporting earnings. It also triggered the eight-week hold rule because the gain from the 154 buy point hit 20% in less than three weeks.

CrowdStrike, a provider of cloud-based endpoint protection, just turned profitable. For its current fiscal year 2021, annual profit is expected to come in at 22 cents a share. Growth is expected to accelerate sharply in 2022, up 45% to 32 cents.

Why This IBD Tool Simplifies The Search For Top Stocks

Fund sponsorship has been rising sharply in recent quarters. At the end of September, 945 funds owned shares, up sharply from 203 at the end of 2019.

Composite Rating: 98

Latest-quarter EPS % change: n/a

Latest-quarter sales % change: 86%

Three-year annualized EPS growth rate: n/a

Annual return on equity: n/a

Annual pretax margin: n/a

Follow Ken Shreve on Twitter @IBD_KShreve for more stock market analysis and insight.


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