Chicago, IL – January 3, 2024 – Zacks.com announces the list of stocks and featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Five9, Inc. FIVN, Qualys, Inc. QLYS, Zscaler, Inc. ZS and VTEX VTEX.
Here are highlights from Friday’s Analyst Blog:
4 Bargain Tech Stocks to Supercharge Your Portfolio
The technology sector delivered another stellar year in 2024, proving its resilience and importance in the global economy. The Nasdaq Composite Index, packed with tech heavyweights, soared 28.6%, outperforming the S&P 500’s 23.3% rise and the Dow Jones Industrial Average's 12.9% gain. This performance underscores the unmatched strength of tech companies in reshaping industries and driving market growth.
Tech Sector’s Growth Drivers
The tech boom in 2024 was fueled by the widespread adoption of artificial intelligence (AI), high-performance computing and cloud technologies. Businesses worldwide embraced generative AI and advanced analytics, pushing demand for semiconductors to new heights. Simultaneously, hybrid and multi-cloud solutions became essential for organizations seeking to optimize operations and reduce costs.
Macroeconomic tailwinds also played a significant role. The Federal Reserve’s interest rate cuts, coupled with easing inflation, boosted investor confidence in growth-focused tech stocks. Stabilized supply chains revitalized hardware production, rounding out a robust year for the sector.
Why Bargain Tech Stocks Make Sense
While the tech sector's rally sent many stocks to record highs, some fundamentally strong companies remained underappreciated or even witnessed significant decline. These overlooked gems offer compelling investment opportunities as they are fundamentally strong and have promising growth prospects. For 2025, a focus on these under-focused tech stocks with solid fundamentals could lead to outsized returns.
In our opinion, Five9, Inc., Qualys, Inc., Zscaler, Inc. and VTEX are among the stocks that were left behind last year’s tech rally. Given the strength of their fundamentals and solid prospects, it seems wise to add these stocks to your portfolio. These are among the bargain stocks that are poised for robust gains in 2025.
Moreover, these stocks have a favorable combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or #2 (Buy). The Growth Style Score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 or #2 and a Growth Score of A or B offer solid investment opportunities.
Our Picks
Five9 provides cloud software for contact centers. The company offers software products such as workforce management, speech recognition, predictive dialers and voice applications. The stock plunged 48.4% in 2024, significantly underperforming the Zacks Internet – Software industry’s rise of 31.4%.
Despite the challenging market conditions in 2024, Five9's fundamental business strength, strategic initiatives and market positioning suggest a potential for a strong recovery in 2025. The company's focus on AI innovation, enterprise customer growth and improved profitability metrics provides a solid foundation for future growth. With the continuing digital transformation of customer experience and the growing adoption of AI-powered solutions, Five9 appears well-positioned to capitalize on these trends and potentially deliver substantial returns for investors in 2025.
The Zacks Consensus Estimate for Five9’s 2025 earnings has been revised upward by 9 cents to $2.57 per share in the past 60 days. The stock currently sports a Zacks Rank #1 and has a Growth Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
Five9, Inc. price-consensus-chart | Five9, Inc. Quote
Qualys is a provider of cloud security and compliance solutions that enable organizations to identify security risks to their information technology infrastructures and help protect their IT systems and applications from cyber-attacks. QLYS stock tanked 28.6% in 2024, underperforming the Zacks Security industry, which declined 18.6%.
Qualys shares are poised for a strong recovery in 2025 on surging demand for security and networking products amid the growing hybrid working trend. Accelerated digital transformations by organizations are likely to continue fueling the demand for the company’s cloud-based security solutions. QLYS’ solutions are provided through its QualysGuard Cloud Platform. QLYS offers products for vulnerability management, policy compliance, web application scanning, malware detection and associated security products.
The stock carries a Zacks Rank #2 and has a Growth Score of B. The Zacks Consensus Estimate for 2025 earnings has been revised upward to $6.02 per share from $5.82 per share over the past 60 days.
Qualys, Inc. price-consensus-chart | Qualys, Inc. Quote
Zscaler offers a full range of enterprise network security services, including web security, internet security, antivirus, vulnerability management, firewalls and control over user activity in mobile, cloud computing and Internet of Things environments. ZS stock plunged 18.5% last year, underperforming the Zacks Internet – Services industry’s jump of 31.1%.
Zscaler is poised to benefit from the rising demand for cyber-security solutions due to the slew of data breaches. The increasing demand for privileged access security in digital transformation and cloud migration strategies is a key growth driver. A strong presence across verticals, such as banking, insurance, healthcare, public sector, pharmaceuticals, telecommunications services and education, safeguards it from the negative impacts of ongoing macroeconomic headwinds. Portfolio expansion through acquisitions with the likes of Avalor, Canonic Security and ShiftRight is praiseworthy.
Zscaler carries a Zacks Rank #2 and has a Growth Score of A at present. The Zacks Consensus Estimate for fiscal 2025 earnings has been revised upward by 12 cents in the past 30 days to $2.99 per share.
Zscaler, Inc. price-consensus-chart | Zscaler, Inc. Quote
VTEX provides a software-as-a-service digital commerce platform for enterprise brands and retailers. The company's platform enables customers to execute commerce strategy, including building online stores, integrating and managing orders across channels and creating marketplaces to sell products from third-party vendors. The stock plunged 14.3% in 2024, significantly underperforming the Zacks Internet – Software industry’s growth of 31.4%.
VTEX's growth in 2025 is likely to be driven by its robust digital commerce platform, empowering businesses with seamless multichannel solutions. Expansion in Latin America and global markets, rising adoption of e-commerce by enterprises and strategic partnerships with major retailers bolster its growth. Continuous innovation in AI-powered tools and customer-centric features enhances its competitive edge.
The stock carries a Zacks Rank #2 and has a Growth Score of A. The Zacks Consensus Estimate for VTEX’s 2025 earnings has moved up by a penny to 16 cents per share in the past 30 days.
VTEX price-consensus-chart | VTEX Quote
Conclusion
The tech sector remains a powerhouse, and 2025 promises even greater opportunities with advancements in AI, cybersecurity and cloud technologies. Stocks like Five9, Qualys, Zscaler and VTEX offer a unique blend of value and growth potential, making them attractive picks for savvy investors. By adding these bargains to your portfolio, you could be well-positioned to ride the next wave of tech innovation.
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Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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