4 Hot Picks While Technology Feels December Freeze
Zacks Investment Research | Dec 01, 2016 10:28PM ET
Technology bellwethers thrive on international trade and depend on a diverse talent pool. But President-elect Donald Trump’s new policies could go against the tech industry.
Trump's proposed policies will give technology companies a hard time doing business internationally. They will have to move headquarters abroad or forget about selling outside the U.S. Also, most tech companies lean heavily on Chinese manufacturers and Trump intends to impose a 45% tax on Chinese imports. He would like to bring back these manufacturing jobs and thereby lower the country's unemployment rate. As a result, the entire supply chain is expected to get disrupted.
Another major concern is Trump’s position on H1B visas that help technology companies bring in required talent. Technology development flourishes in a free labor market, so if there are restrictions, development activity can move overseas to places that are more conducive.
These restrictions can curb the growth opportunities for the technology sector. On a whole, this sector slumped 3.66% to close at 2,735.43 on the very first day of December. A group of tech stocks – Facebook (NASDAQ:FB) , Amazon (NASDAQ:AMZN) , Netflix (NASDAQ:NFLX) and Alphabet (NASDAQ:GOOGL) referred to as FANG stocks – saw a decline, pulling the Nasdaq and the S&P 500 indexes into the red on Thursday.
The Nasdaq Composite Index went down more than 1% and the S&P 500 declined 0.35% to close at 2,191.08. However, the Dow Jones Industrial Average (DJI) increased a meager 0.36%, to close at 19,191.93, with a thrust from bank and energy shares.
However, Trump’s other promises, including expansion of infrastructure spending and tax cut proposals should continue to boost investors’ sentiment going forward.
A few technology bellwethers with strong sector fundamentals and a diverse talent base saw their shares soaring even after Thursday’s trading session. Here is a list of these tech companies:
Cotiviti Holdings, Inc. (NYSE:COTV)
Cotiviti Holdings, Inc. is headquartered in Atlanta, GA. The company is focused primarily on the healthcare sector and provides payment processing services. Its integrated solutions help clients manage payment accuracy in the healthcare environment. The company operates in two segments: Healthcare, and Global Retail and Other.
This Zacks Rank #1 stock was up 8.22% on the last trading day. It has an estimated long-term growth rate of 13.0%. It also has a good track record, with an average positive earnings surprise of 6.38%.
Harmonic Inc. (NASDAQ:HLIT)
Harmonic designs, manufactures and markets digital and fiber optic systems for delivering video, voice and data services over cable, satellite, telephone, and wireless networks. The company’s advanced solutions enable cable television and other network operators to provide a range of broadcast and interactive broadband services that include high-speed Internet access, telephony and video on demand.
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This stock was up 6.45% on the last trading day. Further upside appears to be in the cards because the company’s long-term growth rate of 10.0% is greater than the estimated industry average of 8.9%.
Kimball International, Inc. (NASDAQ:KBAL)
Headquartered in Jasper, IN, Kimball International was incorporated in 1939. The company manufactures and sells products under two segments: Electronic Manufacturing Services and Furniture. Kimball started producing wood furniture in 1950, selling to offices and hospitals under different brand names. Kimball started providing EMS services much later in 1961.
This stock was up 5.33% in the last trading day. Further upside appears to be in the cards because the company’s long-term growth rate of 21.7% is greater than the estimated industry average of 6.4%.
Mobile TeleSystems is a Russia-based company. The company provides a range of mobile and fixed line voice and data telecommunications services, including transmission, broadband, pay-television (TV) and various value-added services as well as selling equipment and accessories to over 100 million customers in Russia, Central and Eastern Europe.
This stock was up 5.49% in the last trading day. It has an estimated long-term growth rate of 13.0%.
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