Author: Craig Adeyanju
Estimated read time: 3 minutes
Publication date: 8th Jul 2019 11:55 GMT+1
After posting a loss in 2018, the early indications in 2019 are that stock will the year in the green. In the first half of the year, the S&P 500 and the Dow Jones Industrial Average rose roughly 17.4 percent and 14 percent respectively. For reference, the S&P 500 and Dow Jones Industrial Average lost roughly 6.2 percent and 5.6 percent respectively in 2018. In fact, the S&P 500's performance in the from January to June is the best in 22 years. With tech stocks being a major contributor to the strong first half performance, it could be a good idea to know and keep an eye out on the biggest drivers in the sector. Here are the three best gainers among the mega cap group of the sector. You can easily use your own indicators to assess the first half performance of stocks using our advanced stock screener.
Note: Time references are as of market close on July 5 unless otherwise stated.
Mega-cap stocks have a market capitalization of at least $200 billion. As of July 5, this group had seven companies including Facebook, Google parent company Alphabet, Microsoft, Cisco, Intel, AT&T and Verizon. Note that Amazon isn't included here because the company belongs in the services sector. That said, here are the three best first half gainers in this group.
Facebook Inc. (NASDAQ: FB): despite challenges from regulators regarding how the company handles user data, shares of Facebook are having a great year, gaining just over 47 percent from January to June. Investor optimism is likely to be around the companies earning potential, which is estimated to grow at an average of 18.3 percent over the next five years. FB stock currently trades at a PE ratio of 28.7 compared to its industry average of 41.3. It current forward PE is 25.
Microsoft Corp. (NASDAQ: MSFT): In the first half of 2019, MSFT stock gained roughly 32 percent. This can be attributed to its recent strong earnings, particularly in its Azure business, which grew by 75 percent in the most recent quarter. It's Intelligent Cloud arm grow by a more modest 24 percent. MSFT stock currently trades at a PE ratio of 29.80, compared to the industry average of 108.4 and median of 43.6. Amazon, with which Microsoft competes in its highest growth segments, has a PE ratio about 80.
Cisco Systems Inc. (NASDAQ: CSCO): on the back of strong earnings and revenue growth, shares of Cisco have rallied 32.5 percent this year. On a longer-term outlook, there is optimism that the ongoing trade disputes won't have as much effect on Cisco's business as feared. While out of the top three performers, AT&T Inc. (NYSE: T) deserves a mention for gaining about 17.4 percent in the first half of the year. Shares of the next best performer to it, Alphabet Inc. (NASDAQ: GOOG) rose by only 4.37 percent and 3.62 percent respectively in the first quarter.
Disclaimer: Craig Adeyanju is an experienced financial consultant who writes for Finscreener.com. The observations he makes are his own and are not intended as investment or trading advice.