The technology sector is comprised of businesses that sell goods and services in electronics, software, computers, artificial intelligence, and other industries related to information technology (IT). The sector includes companies with the largest market capitalizations in the world such as Apple Inc. (AAPL), Microsoft Corp. (MSFT), and Amazon.com Inc. (AMZN).
Tech stocks, as represented by the Technology Select Sector SPDR ETF (XLK), have dramatically outperformed the broader market. XLK has provided a total return of 43.1% over the past 12 months, well above the Russell 1000’s total return of 13.4%, as of September 25, 2020.1 All statistics in the tables below are as of September 28.
Here are the top 3 tech stocks with the best value, the fastest earnings growth, and the most momentum.
1. Best Value Tech Stocks
These are the tech stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
2. Fastest Growing Tech Stocks
These are the tech stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
3. Tech Stocks with the Most Momentum
These are the tech stocks that had the highest total return over the last 12 months.
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