In this article, we will take a look at the 4 best tech stocks to buy according to Bank of America. If you want to read our analysis of the bank’s overall outlook on the tech sector, go directly to the 8 Best Tech Stocks to Buy According to Bank of America.
4. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Stock Price as of June 9: $178.84
Number of Hedge Fund Holders: 80
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is an Austin, Texas-based provider of cloud endpoint security. The company considers itself amongst the rank of other market leaders such as Salesforce, Inc. (NYSE:CRM) and ServiceNow, Inc. (NYSE:NOW) in the cloud computing space.
CrowdStrike Holdings, Inc.’s (NASDAQ:CRWD) subscription customers increased by 57% YoY and stood at 17,945 as of Q1 2022, with 65 of the Fortune 100 companies on board. The company has maintained a dollar-based retention rate of more than 120% in the past 17 quarters. This means that CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is generating more revenue from the same group of customers after incorporating the impact of the churn rate. The retention rate for the company stands at an all-time high of 98%.
Analysts at Bank of America have given CrowdStrike Holdings, Inc. (NASDAQ:CRWD) a price target of $210, reflecting a potential upside of over 21% from the current share price. BofA believes that the 20% reduction YTD in the share price of CrowdStrike Holdings, Inc. (NASDAQ:CRWD) makes it attractive due to various reasons. CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is continuing to introduce new modules to its Falcon platform, which is providing the company with more options and increasing the total addressable market. Data has revealed that the number of cloud modules used by subscription customers increases over time. The company is generating incremental revenue of $1.4 for every $1 spent on sales and marketing.
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) was discussed in the Q1 2022 investor letter of Baron Funds. Here’s what the asset management firm said:
“CrowdStrike, Inc. provides cloud-delivered, next generation security solutions via its Falcon platform consisting of end-point protection, advanced persistent threat, security information, event management, and cloud workload protection. Shares rose 11% in the first quarter, on the back of impressive quarterly results with net new annual recurring revenue (ARR) accelerating for the second straight quarter to 52% year-over-year and the company’s favorable unit economics driving 30% free cash flow margins. Moreover, key new disclosures highlight how non-end-point products are seeing momentum with cloud product-generated ARR surpassing $100 million, representing 8% of net new ARR in the quarter. With more workloads migrating to or starting in the cloud, we believe CrowdStrike is well positioned to compound at high growth rates for years given its unique product platform and attractive go-to-market business model.”
3. Zscaler, Inc. (NASDAQ:ZS)
Stock Price as of June 9: $165.57
Number of Hedge Fund Holders: 39
Zscaler, Inc. (NASDAQ:ZS) is a San Jose, California-based cybersecurity company that caters to the demand of enterprise customers as an online service. The company provides a ‘zero trust’ cloud-based network environment that can accept unknown devices like personal computers and smartphones without any significant risk of penetrability. The zero-trust system can also be installed on a traditional network.
Zscaler, Inc. (NASDAQ:ZS) has faced a sell-off due to growth-related concerns, but if looked closely, the stock offers strong fundamentals. According to Tal Liani, Jonathan Eisenson, Madeline Brooks, and Tomer Zilberman at Bank of America, Zscaler, Inc. (NASDAQ:ZS) offers a superior growth outlook as compared to its competitors. The analysts believe that the company will outperform its peers due to a stellar product portfolio along with industry tailwinds. The analysts have given Zscaler, Inc. (NASDAQ:ZS) stock a target price of $195 with a Buy rating. The company offers a growth story with significant levels of recurring revenue and low churn rates, reflecting customer satisfaction.
Zscaler, Inc. (NASDAQ:ZS) was held by 39 hedge funds as of Q1 2022.
2. Juniper Networks, Inc. (NYSE:JNPR)
Stock Price as of June 9: $30.25
Number of Hedge Fund Holders: 35
Juniper Networks, Inc. (NYSE:JNPR) is a Sunnyvale, California-based developer and marketer of network management software, network security products, routers, software-defined network technology, and switches. Amongst its competitors, Juniper Networks, Inc. (NYSE:JNPR) is more focused on artificial intelligence and software as opposed to hardware.
Despite uncertain macroeconomic circumstances and concerns related to inflation, Juniper Networks, Inc. (NYSE:JNPR) has been able to increase its operating margins to a higher level. The company recently joined forces with Dragos to secure critical infrastructure and bring together its abilities to secure the network. Tal Liani, Jonathan Eisenson, Madeline Brooks, and Tomer Zilberman at Bank of America have given Juniper Networks, Inc. (NYSE:JNPR) stock a Buy rating with a price target of $40. According to the analysts, the company has experienced a double-digit acceleration on an adjusted basis. This will translate into a higher top-line during 2022 and the next year once the supply chain-related concerns have been resolved.
Overall, 25 hedge funds held a position in Juniper Networks, Inc. (NYSE:JNPR) as of Q1 2022.
1. Jabil Inc. (NYSE:JBL)
Stock Price as of June 9: $61.70
Number of Hedge Fund Holders: 45
Jabil Inc. (NYSE:JBL) is a Detroit, Michigan-based provider of manufacturing solutions with 260,000 employees spread across 30 countries.
Wamsi Mohan, Ruplu Bhattacharya, Esha Vaish, and Jong Lee at Bank of America have given Jabil Inc. (NYSE:JBL) stock a price target of $82 and a Buy rating. The analysts are impressed with Jabil Inc.’s (NYSE:JBL) ability to increase its top line and expand margins amidst the supply chain-related challenges, which have resulted in component shortages, higher costs related to freight and logistics, and inflation. The procurement team is doing well in controlling the overall costs. Meanwhile, the management is trying to pass on any increase in cost directly to the customers due to the company’s pricing power. Jabil Inc. (NYSE:JBL) has been successful in its strategy because it focuses on high-margin opportunities instead of chasing growth through low-margin business. The emerging trends in the manufacturing operations of cloud computing and 5G computing, electric vehicles, and healthcare will provide a strong tailwind to Jabil Inc. (NYSE:JBL).
As of Q1 2022, 45 hedge funds held a stake in Jabil Inc. (NYSE:JBL).
You can also take a peek at the 10 Best Recession Stocks To Buy and 10 Stocks to Buy Now According to Steve Ketchum’s Sound Point Capital.
