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Investors’ renewed interest in tech stocks is evidenced by the Technology Select Sector SPDR ETF’s (XLK) 6.7% returns over the past month. However, the current, ultra-loose monetary policy, in part, has led to stretched valuations for several tech stocks. Nevertheless, the ongoing digital transformation and increasing use of cloud computing, artificial intelligence (AI), and other advanced technologies should keep driving the technology industry’s growth. According to GoRemotely, the tech industry is expected to reach a $5 trillion market value by the end of 2021.
Consequently, we think it could be wise to bet on Endava plc (DAVA) and Fabrinet (FN). Though these two stocks are trading at lofty valuations, there could be plenty of upside still to be had because of their fundamental strength. These stocks are rated ‘Buy’ in our proprietary POWR Ratings system.
