- The fourth-quarter earnings season could be the biggest in a decade after stocks plunged in early 2022.
- Wedbush Securities’ Dan Ives thinks the tech’s best days are ahead of us, although some foam is fading.
- Here are 13 of Ives’ favorite tech stocks to hold ahead of the fourth quarter earnings season.
Few stock analysts are more optimistic than Dan Ives.
The Wedbush Securities software analyst is one of the most outspoken voices in the investment world and regularly appears on finance-focused TV shows. Ives isn’t afraid to go out on a limb; he is well known for his aggressive Tesla price target (currently $1,400, implying a 48% upside). Of the 38 companies it covers, it has issued no sell ratings and only seven holdbacks.
But even Ives acknowledges that the market — and tech stocks, in particular — have serious challenges ahead. It’s been a tough start to the year and there’s a lot of risk, Ives says: an increasingly belligerent Federal Reserve, high inflation, a tighter view on equity valuations and the risk of a serious conflict between Russia and Ukraine. .
Add it all up, and Ives thinks the fourth quarter should be “the biggest tech earnings season in a decade.”
“We’ve seen tech stocks sell off at a brutal pace so far in 2022,” Ives wrote in a Jan. 25 note. “Amid a choppy macro economy and Fed rate hikes, tech stocks have become enemy number one for the bears, saying the multi-year rally in tech stocks led by
names is now over with darker days ahead.”
This pessimistic sentiment, though recently revived, is nothing new, says Ives. The so-called “tech-naysayer camp” has overlooked “tech-led transformative growth since 1995,” Ives wrote, citing 2002-2003, 2011, 2018 and March 2020 as instances where the bears are betting wrong against tech stocks.
Despite the emphasis
it will come as the Fed unveils how it plans to unwind its emergency easy-money policies, Ives and his teams hold firm to their pro-tech beliefs.
“The underlying growth drivers of the tech space today are unmatched by anything we’ve seen since the mid-1990s and are not priced into stocks at these oversold levels,” wrote Ives.
Ives continued, “The digital transformation happening today on the business and consumer fronts is not slowing down, but rather accelerating over the next few years and this momentum will be on full display during earnings season.”
That said, not all tech stocks are created equal. Ives noted the “bifurcation of the tech space” that emerged in early 2022 in which work-from-home stocks like
(NFLX), DocuSign (DOCU) and Snap (SNAP) tumble as their extremely rich valuations take the spotlight. In comparison, more value-oriented tech names held up.
The bears are partly right that some moss is bound to die out as work-from-home names come down to earth as interest rates rise and the world returns to normal, a writes Ives.
But that doesn’t mean investors should throw the baby out with the bathwater and ditch all tech stocks, according to Ives. Strong performance from the tech giants would help put the fundamentals back in the spotlight, Ives wrote, just as a healthy report from tech stalwart IBM (IBM) recently did.
The Best Stocks to Own “During the Storm”
Below are 13 of Wedbush’s favorite tech stocks to hold ahead of the pivotal Q4 earnings season, along with each company’s ticker, market cap and price target from Ives. The first two names are mega-caps, the next four are cybersecurity companies, and the last seven are value names that Ives says could be “security blanket names during the storm.”