While 2019 has seen a solid performance from the tech sector, concerns regarding the economic climate have begun creeping into investors’ minds. Threatened by tariffs, the space has even seen some firms lower guidance going into third quarter earnings season.
That being said, Wall Street pros tell investors that there are still opportunities to be found within the sector. Chief market strategist at Ameriprise Financial, David Joy stated, “Tech is the primary growth engine of the economy. You have to have exposure in technology. We just think as you look around at the market landscape, it’s one of the better places to be right now.”
But how are investors supposed to pick the tech stocks with the strongest long-term growth narratives? We recommend using TipRanks’ Best Stocks to Buy tool. Using the tool, we were able to find 3 tech stocks all with a “Perfect 10” Smart Score. The score combines eight data sets including analyst ratings, insider activity and news sentiment, with a “10” score representing the most compelling investments.
Okta Inc. (OKTA)
Okta develops cloud-based software to provide secure identity management using single sign-on, multi-factor authentication as well as lifecycle management or provisioning. With the tech name garnering substantial support from the Street, Okta appears poised for even more gains on top of its 58% year-to-date growth.
One top analyst believes its new products can drive sustainable long-term growth. Oppenheimer’s Shaul Eyal highlights both its DynamicScale and SecurityInsights products as especially noteworthy.
On October 10, Okta broke the news of DynamicScale, a high capacity customer identity offering that allows for transformative scale for highly-trafficked applications and websites as well as large businesses. It also supports traffic bursts and extended use of up to 500,000 authentications per minute to give DevOps and engineering teams the flexibility to test their applications with massive volumes of authentication, authorization and user management traffic. That same day, it announced SecurityInsights, a group of products that provide organizations with personalized security detection and remediation capabilities at the end user, administrator and customer network level.
In addition to these new offerings, its partnerships with Atlassian and Proofpoint as well as its commitment to remaining “laser focused” on identity-based security prompted Eyal to reiterate his Buy rating on OKTA stock along with $140 price target. This price target implies that the five-star analyst sees 39% upside potential in store.
All in all, Wall Street is in agreement with Eyal. With 9 Buy ratings compared to 3 Holds assigned in the last three months, the stock earns a ‘Strong Buy’ analyst consensus. Not to mention its $141.27 average price target suggests 31% upside potential.
Baidu (BIDU)
While Baidu shares have undoubtedly taken a beating this year, the Chinese tech company is working hard to fuel a turnaround.
BIDU is widely known for being the name behind China’s largest search engine. Nonetheless, its foray into the world of artificial intelligence (AI) is making the company a force to be reckoned with.
Baidu’s pivot towards AI includes a $200 million investment in Neusoft Holdings, which management hopes will help the company scale its AI product offerings. This is on top of its rollout of autonomous vehicles in September and its conversational operating system launched back in 2017. The system provides voice recognition and conversational solutions for Internet of Things (IoT) applications.
Mizuho analyst James Lee points out that voice has continued to gain traction in user growth and volume, with it on the path towards monetization in 2021. The four-star analyst adds that headwinds facing BIDU have already stabilized and are likely to ease up next year. As a result, he reiterated his Buy rating and $170 price target. Lee thinks shares could climb 64% higher over the next twelve months.
Wall Street takes a slightly more cautious approach when it comes to BIDU. 9 Buy ratings and 5 Holds assigned in the last three months add up to a ‘Moderate Buy’ analyst consensus. Overall, its $140.58 average price target puts the upside potential at a solid 35%.
Alteryx (AYX)
Alteryx is one of the leading providers of data science and self-service analytics solutions. With one top analyst recently giving Alteryx a ratings boost, it’s no wonder investors are getting excited about this tech stock.
Wedbush analyst Steven Koenig just published a bullish call after performing both industry and customer checks. The analyst argues that “AYX's ability to maintain its revenue momentum” makes it a stand-out in his view.
Part of this revenue momentum is expected to be driven by its acquisition of data science software company Feature Labs, which was announced earlier in October. The acquisition is part of a larger effort to improve AYX's machine-learning and artificial-intelligence operations. Through the deal, the company will now have access to Feature Labs’ data libraries that include more than 350,000 downloads.
Based on the above factors, Koenig is “less concerned about near term competition from Tableau Prep and the relatively nascent state of AYX's data science efforts”. As a result, the 4.5-star analyst raised his price target from $123 to $135 along with his upgrade to a Buy rating. His new price target demonstrates his confidence in AYX’s ability to gain 45% over the next twelve months.
Echoing the bullish stance Koenig laid out, Compass Point's Marshall Senk noted, “Our field checks with customers and partners point to another quarter of strong expansion, with nearly every customer we spoke with continuing to expand usage across multiple use cases. In particular we are seeing new use cases in the supply chain management area, where data can be sourced from dozens of locations and the complexity is high. We continue to hear from sophisticated users that despite some market noise, Alteryx remains the technology leader around data prep and modeling.”
All in all, Wall Street loves this stock, earning a stellar analyst consensus rating, as TipRanks analytics demonstrate AYX as a Strong Buy. Out of 7 analysts polled in the last 3 months, 6 are bullish on Alteryx stock, while one is neutral. With a return potential of over 50%, the stock's consensus target price stands at $143.86.