Buy Alert: Why “Don’t Stop Believin’” Is Tech’s Theme Song
I’m a huge fan of the band Journey.
As an “’80’s baby” and a ridiculous rock ’n’ roller, I grew up blasting their jams without shame.
This year, Journey’s hit record Escape turns 40 years old.
And the lead single from this musical masterpiece “Don’t Stop Believin’” is the anthem for tech investors like me.
Love that song or hate it…
Growth-y tech stocks have been bashed in bulk by the mainstream financial media as “too expensive.”
The “gloom and doom” analysts that are always hoping for a market crash agree with them. They say these stocks are “ripe for a reckoning” as corporate borrowing costs rise.
And with all the negative press, it would be easy to lose faith in the tech trade.
But here’s why you can’t stop believing in tech yet…
This earnings season, the tech sector has reported revenue growth of 16%, according to FactSet.
That’s higher than any other of the 11 stock market sectors by far.
So it should come as no surprise that ahead of the biggest week of earnings season…
Tech stocks are breaking out big.
And to set you up for success…
In today’s video, I highlight two tasty tech breakouts that you should come to with “Open Arms.” (To quote yet another Journey hit.)
Click the image below to get started.
Hey there, it’s J-Rod here for Rich Retirement TV.
And in case you didn’t know, 2021 is the 40th anniversary of the seminal Journey record Escape, on which you can find the song “Don’t Stop Believin’” — which aside from being a favorite of mine is a theme song really for this stock market
Particularly tech stocks have been beaten up by rising interest rates and inflation expectations.
But you know what — these stocks keep on runnin’.
And if there’s anybody who’s crying now, it’s the bears, because these stocks are just ripping
Earnings season kicked off last week, and the last couple of weeks earnings are just like we thought they were going to be — they’re fabulous.
Twenty-five percent of the S&P 500 have reported already.
And tech stocks despite taking a little bit beating pricewise are still showing net margins at 22% or higher, according to FactSet.
And so far they’ve reported the highest level of revenue growth of all own sectors at 16%, which is fabulous.
So if you thought it was time to sell off all your tech stocks and start buying reopen stocks, maybe sell some, but definitely keep your eye on tech stocks.
And today we’re going to take a look at two stocks that are breaking out ahead of earnings and why you might want to come to these names with open arms, to quote Journey again.
So let’s dig right on in.
Stock Pick #1: Identiv Inc. (INVE)
So first stock on my list is Identiv Inc. Its ticker: INVE.
And as you can see here, we have a nice pre-earnings breakout, a move here of $2.
I think a total of some 15% just for the last three days on above-average volume here. The stock reports earnings on the sixth of May.
And I just love, first off, the setup here.
We’ve got a nice range here formed on the stock between $10 and $15 basically for the last three months or so. The stock slams through $15 on the news of a new video management system for security management teams.
The company specializes in physical access control.
They make corporate ID cards. They have a phenomenal smart card reader system for companies, controlling access in and out of facilities.
They do it for network access, and they also facilitate identity management for passports.
So a lot of really good stuff, especially now as we head into the reopening world.
We’ve got some nations out there that are calling for a vaccine passport or a way to verify that people have been vaccinated against COVID-19.
Don’t know if this is coming for the U.S., but we know there are some names in Europe that would really like to see this happen.
INVE is a kind of company that has the kind of technology to make that happen.
But either way I love the breakout here ahead of earnings. And my price target in the stock is 20 bucks.
This at least gives you about a nearly 20% upside from where the stock is currently trading now just below $17.
They report earnings on May 6. They’ve beaten on sales estimates in four straight quarters. They don’t have the greatest track record in terms of earnings but in sales, which to me is a more important number because that’s the number from which earnings are derived, right?
The bottom line is just a subtraction of all the costs from the top line. And if you see the top line growing, margins can always be boosted out.
So Identiv: a lot of great stuff going on in terms of quarterly sales growth and it’s looking at a 12% gain in the one week following earnings announcements, regardless of how the stock reports.
So this right in line here, get the breakout. We’ve got a beautiful post-earnings pop from the stock, plus 12% Bloomberg estimates here, Bloomberg numbers here.
So yes, a lot to love here pre-earnings. We did a video a couple of weeks ago on a couple of tech stocks that were popping pre-earnings. NCR was one of them. It broke out ahead of earnings and just today, a day after reporting earnings, they were up last — I love it — more than 10%.
So these breakouts ahead of earnings can lead to some real post-earnings action. So a good stock to look at right now.
Stock Pick #2: Veeco Instruments Inc. (VECO)
Let’s take a look at the second stock on my list, Veeco Instruments. That is the ticker: VECO. And these guys focus on semiconductor equipment and materials.
If you’ve watched my videos for a while, you know I love these companies.
They’re breaking out. They’re doing very, very well despite an overall pullback in tech after a really strong run-up here in the last year or so. Semiconductors companies have still done very well.
Put simply, in order for the tech products that we want to see, new products from Apple, Microsoft, what have you, they need computer chips — and the companies that make these chips. And in the case of Veeco, it’s a company that actually produces the materials that go into chips.
So pick-and-shovel-type plays for chip companies — they’re doing very, very well.
And take a look here at this stock Veeco. You see here you had a nice range here between 20, 23 bucks at a nice, a nice breakout here ahead of their earnings call, which is on the fifth of May.
Here you see a nice breakout and my price target here on the stock.
And the near-term is 30 bucks, which offers you about a 25% upside from where the stock is trading now.
And if you head out even further, this breakout we’re seeing here is a near-term breakout, but in all, on a longer-term basis, let me bring you out here to the monthly chart of this beautiful stock here. Take a look at this…
The last couple of months, the stock has broken out of a downtrend that extends all the way back to 2001.
That’s what this little yellow line here is. You see the, you know, boom, boom, boom, boom, lots of points here of contact stock.
And just the last couple of months has retaken the 50-month moving average, broken out here above the 200-month moving average.
So this is a stock that on this breakout not only do we have a nice near-term upside here at 25% or so, up to 30 bucks here, but this is a stock that, again, on the sheer momentum behind semiconductor stocks, could make a run at 50 bucks here, which is the high that the stock set back in 2000. And just below a halfway to that top here in 2001.
So in the near term, you’ve got 20%, 25% upside or so in the longer term. You’ve got a potential upside here of 100% or more, which again is not bad in today’s market, or any market really.
But you know, in terms of earnings, these guys have an even better track record than Identiv. The first time we looked, they beat earnings and sales estimates in seven of the last eight quarters.
And they show an average gain of 8% in the one week following an earnings report, regardless of how the stock does.
So a lot to love here just in the near term and the long term and as the company comes up on an earnings reports.
They’ll be providing you with upside for a long time to come.
So thank you so much. Take a closer look at these two names: Identiv, ticker INVE, and Veeco Instruments, ticker VECO. And thank you so much for watching my video today for Rich Retirement TV. I’m J-Rod, and I’ll see you next week.
On the hunt,