Apple stock may be dead money this year. But don’t make the mistake of writing off all big S&P 500 tech stocks — many are still working.




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Ten tech stocks in the S&P 500, including expertly run and IBD BigCap 20 member Applied Materials (AMAT), Seagate Technology (STX) and direct Apple rival HP (HPQ), are up 30{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} or more just this year alone, says an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. That’s tops the S&P 500’s 11.4{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} rise this year.

And this isn’t just a dead-cat bounce, either: Nine of these 10 outperforming S&P 500 tech stocks also topped the index’s 46.9{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} rise the past 12 months. Some of them are top tech stocks picks among analysts, too. Half of these tech stock winners also sport strong IBD Composite Ratings of 85 or higher.

“The weakness in technology stocks is undeniable, but it likely won’t be a straight line down for the sector and there will be zigs and zags along the way,” said David Bahnsen, chief investment officer at the Bahnsen Group.

Apple Is S&P 500 ‘Dead Money?’

It seems strange to call a tech stock up 73{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} in a year “dead money,” but Apple stock is a disappointment in 2021 so far.

Shares of the $2 trillion technology giant are down 2.2{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} this year so far. That’s a letdown if you consider the S&P 500 is up a double-digit percentage. And even the Technology Select Sector SPDR ETF (XLK), which Apple belongs to, is up 6{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} this year.

And Apple isn’t lagging due to any fundamental weakness. The company knocked the cover off the ball when it reported March quarter profit. Profit jumped more than 118{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} to $1.40 a share. That’s an astounding feat for a company of this size, seen making more than $88 billion in profit this year. Do you know what to look at before buying Apple stock?

Analysts think Apple stock is 18{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} undervalued based on a 12-month price target of 157.73. But there is some disagreement, too. Bank of America rates Apple stock a “neutral.” The bank cites the difficulty Apple may have topping last year’s numbers, especially in services.

But don’t think Apple’s struggles are dragging down the whole tech sector.

Ho-Hum S&P 500 Tech Masks Some Solid Gains

Apple is enormously important to the technology sector. But while its languishing stock price this year hurts the indexes, there are many bright spots, too.

The Technology Select Sector SPDR is up just 6{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} this year. That lags the SPDR S&P 500 ETF Trust’s (SPY) 9.5{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} year-to-date rise. And it also ranks the sector third from the last among the 11 S&P 500 sectors this year so far. But remember, Apple alone accounts for 22{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} of the sector.

If you equalize Apple’s languishing stock price, the S&P 500 technology sector as a whole is doing much better. The 75 information technology stocks in the S&P 500 are up, on average, more than 9{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} this year so far. And unlike Apple, more than 70{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} of the tech stocks in the S&P 500 have risen so far this year.

And some gains are head-turners.

Applied Materials Gives S&P 500 Investors Lots To Like

The global shortage in computer chips is hurting Apple and others. But it’s a lift for the top-performing technology stock in the S&P 500: Applied Materials.

The company is the global leader in designing gear used to make semiconductors. Just this year, shares of Applied Materials are up 50.8{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501}. Again, that’s not due to languishing in 2020. Shares have jumped 158{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} over the past 12 months. Investors are bullish on the enormous demand for new chipmaking manufacturing capacity. Analysts think Applied Materials will make $6.04 a share in 2021. That’s up more than 44{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} from 2020.

Apple’s S&P 500 Archrival Outperforms

HP makes a variety of computers and workstations competing directly with Apple. And this year, so far at least, HP’s stock is winning.

Shares of HP are up 42{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} just this year. That puts it up more than 138{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} in just 12 months. Analysts are eagerly awaiting the company’s April-quarter profit report later this month. Analysts think HP’s adjusted profit per share will leap more than 70{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} to 88 cents a share. And they might actually be hoping for a little bit more. HP topped profit views by nearly 40{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} when it reported January-quarter results on Feb. 25.

Likewise, computer storage device and systems maker Seagate continues to be a banner performing S&P 500 tech stock. Shares are up 44{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} this year and 89{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} in the past 12 months. That company, too, is benefiting from the runaway demand for laptop data storage, but also the boom in cloud computing. Analysts think the company’s profit will rise 7{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} this year.

So while Apple is synonymous with technology in many consumers’ minds, that’s not the case with tech stock investors. They’re finding plenty of money-making opportunities in the sector.

Top Performing S&P 500 Tech Stocks

All are up 30{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} or more in 2021 so far, while Apple is down 2.2{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501}

Company Symbol 12-Month {3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} Ch. YTD {3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} Ch. Composite Rating
Applied Materials (AMAT) 160.9{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} 52.6{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} 97
Seagate Technology (STX) 89.4{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} 44.8{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} 80
Gartner (IT) 101.2{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} 44.5{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} 89
HP (HPQ) 138.6{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} 42.3{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} 82
Hewlett Packard Enterprise (HPE) 75.1{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} 38.1{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} 68
Fortinet (FTNT) 85.3{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} 39.0{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} 96
FLIR Systems (FLIR) 30.0{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} 34.7{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} 78
DXC Technology (DXC) 108.5{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} 31.3{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} 68
CDW (CDW) 61.7{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} 31.0{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} 85
Lam Research (LRCX) 152.5{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} 30.7{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} 96
S&P 500 46.9{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} 11.4{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501}
Apple (AAPL) 72.6{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501} -2.2{3c6be4297db6c6dead22aac82e61edad92a520b73a55778b8446ff6b78406501}
Sources: IBD, S&P Global Market Intelligence, * – S&P 500, Apple shown for comparison

Follow Matt Krantz on Twitter @mattkrantz

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