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3 Growth-Focused Tech Stocks to Buy Amid Coronavirus Market Pullback

Coronavirus fears crushed U.S. and global stocks Monday and Tuesday, with the Dow’s 1,900 point decline its largest two-day downturn on record. Much uncertainty remains, as cases spread in South Korea, Italy, and elsewhere. And the CDC has called on the U.S. to prepare for the possible spread at home.

With that said, the number of deadly cases remains small overall, especially outside of China and the epicenter. Plus, all three major U.S. indexes tried to fight back Wednesday, after they saw all of their 2020 gains washed away in just two days.

Clearly, much uncertainty remains and the impact on China and the global economy will be felt. Apple AAPL, Mastercard MA, and others have already warned Wall Street that the virus will hurt their sales.

But for investors who don’t want to stay on the sidelines, with the yield on the 10-year U.S. Treasury note near all-time lows, it might be time to hunt for stocks.

Today, we are diving into three growth-focused tech stocks that investors might want to buy, or at least put on their watchlists until they see signs of a sustained turnaround amid the coronavirus worries…

Atlassian Corporation Plc TEAM

Atlassian, as its ticker might suggest, is a leading provider of team collaboration and productivity software. The San Francisco-based firm boasts over 160,000 customers and its various offerings compete in a growing industry alongside Slack WORK, Microsoft MSFT, and others. Atlassian is poised to grow as part of the massive digitalization of work, from small businesses to large enterprises, and everyone in between.

TEAM stock climbed following its Q2 fiscal 2020 earnings release on January 23, which is part its impressive run since it went public in late 2015. Shares of Atlassian have now surged 180% in the last two years to blow away its industry’s average. More recently, the stock is up over 21% in 2020, and it has topped our bottom-line estimates by 24% in the trailing four periods.

Last quarter, the project management and workflow software firm’s sales surged 37% and it generated record free cash flow and profitability. Meanwhile, its subscription revenue jumped 50% as it rolls out its cloud-first strategy. Our Zacks estimates call for Atlassian’s fiscal 2020 sales to pop 32% to $1.6 billion, with 2021 set to climb another 26% to $2.01 billion. Plus, its adjusted earnings are poised to surge 25% in both FY20 and FY21. And Atlassian’s longer-term earnings revisions help it hold a Zacks Rank #1 (Strong Buy) right now.

Dropbox, Inc. DBX

Dropbox is a cloud storage firm that refers to itself as a “global collaboration platform” and a “smart workspace,” which puts it in the same bubble as Atlassian. The firm has struggled since it went public in March 2018, but the stock soared last week after its Q4 results impressed Wall Street. DBX stock is still trading under $20 per share, which is below its summer 2019 highs and might make it attractive to some investors.

Dropbox has accumulated over 600 million registered users around the world and its fiscal 2019 revenue jumped 19%. “We closed the year with more than $1.6 billion in revenue, over 450,000 Dropbox business teams, and millions of people using our new foreground app that keeps Dropbox at the center of our users' workflows,” CEO Drew Houston said in prepared remarks.

On top of that, analysts have raised DBX’s earnings outlook in a big way. The firm’s adjusted fiscal 2020 consensus EPS figure jumped from $0.57 a share prior to its Q4 release to $0.72, with 2021 up 43% from $0.65 to $0.90 a share. This positivity helps Dropbox hold a Zacks Rank #1 (Strong Buy), and it also rocks an “A” grade for Growth and a “B” for Momentum in our Style Scores system. Looking ahead, Dropbox’s adjusted 2020 earnings are projected to soar 44% to $0.72 a share, on over 14% higher sales. 

Nvidia NVDA

Nvidia is a GPU giant that has been on a tear in the last six months, even as it fell victim to the cyclical nature of the semiconductor industry and its own outsized success. Then, NVDA returned to growth and blew away Wall Street when it easily topped our Q4 fiscal 2020 earnings and revenue estimates on February 13. NVDA’s video game business remains strong as its graphics chips provide more realistic gameplay to the $152 billion global gaming market.

More importantly, it has expanded its data center business, which is vital in the cloud computing age. Plus, the company is set to benefit from the expansion of artificial intelligence, IoT, and more.“New NVIDIA computing applications in 5G, genomics, robotics and autonomous vehicles enable us to continue important work that has great impact,” CEO Jensen Huang said in prepared remarks. “We are well positioned for the greatest technology trends of our time.”

Nvidia’s longer-term earnings revisions have soared since it reported to help it hold a Zacks Rank #2 (Buy), alongside “A” grades for Growth and Momentum. NVDA’s adjusted Q1 earnings are projected to skyrocket 93% on 35.3% stronger revenue. Meanwhile, its adjusted fiscal 2021 earnings are projected to jump 35% on the back of 22% higher sales that would see it reach $13.28 billion. And the coronavirus pullback has made its stock price more attractive.

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Microsoft Corporation (MSFT): Free Stock Analysis Report
 
NVIDIA Corporation (NVDA): Free Stock Analysis Report
 
Apple Inc. (AAPL): Free Stock Analysis Report
 
Mastercard Incorporated (MA): Free Stock Analysis Report
 
Atlassian Corporation PLC (TEAM): Free Stock Analysis Report
 
Dropbox, Inc. (DBX): Free Stock Analysis Report
 
Slack Technologies, Inc. (WORK): Free Stock Analysis Report
 
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