10 Best Tech Stocks in the S&P 500 This Year

NEW YORK (TheStreet) -- Technology stocks have somewhat underperformed the broader markets in the first six months of the year, but some of the best performing stocks were the semiconductors, fueled by recent industry consolidation. Investors are also betting on which semiconductor companies could be the next to merge.

The S&P 500 Information Technology Index fell 0.02% through June 30, 2015, slightly underperforming the broader S&P 500, which eked out a 0.2% gain. 

Several big combinations announced this year include: Avago Technologies (AVGO) and Broadcom Corp. (BRCM), in a deal worth $37 billion; Intel (INTC) and Altera (ALTR) also announced they would merge in a transaction worth $17 billion; as well, NXP Semiconductors (NXPI) announced it would acquire Freescale Semiconductor Ltd. (FSL) for $12 billion.

These S&P tech stocks had big wins in the first half of the year. That said not all of the stocks on this list are buys. TheStreet pairs each of these tickers with TheStreet Ratings to let you know if you should buy, sell, or hold these best-performing stocks.

TheStreet Ratings, TheStreet's proprietary ratings tool, projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.

Check out which tech stocks were among the best S&P 500 tech performers to date. And when you're done be sure to see which stocks in the S&P 500 had the best overall gains this year

CTSH Chart CTSH data by YCharts
10. Cognizant Technology Solutions ( CTSH)
Sub-Industry: IT Consulting & Other Services
Market Cap: $37.3 billion
Rating: Buy, A
Year-to-date return: 16%

Cognizant Technology Solutions Corporation provides information technology (IT), consulting, and business process services worldwide. The company operates through four segments: Financial Services, Healthcare, Manufacturing/Retail/Logistics, and Other.

TheStreet said: "We rate COGNIZANT TECH SOLUTIONS (CTSH) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, solid stock price performance and growth in earnings per share. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 22.5%. Since the same quarter one year prior, revenues rose by 20.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CTSH's debt-to-equity ratio is very low at 0.13 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.08, which clearly demonstrates the ability to cover short-term cash needs.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 29.08% over the past year, a rise that has exceeded that of the S&P 500 Index. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • COGNIZANT TECH SOLUTIONS has improved earnings per share by 8.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, COGNIZANT TECH SOLUTIONS increased its bottom line by earning $2.35 versus $2.02 in the prior year. This year, the market expects an improvement in earnings ($2.95 versus $2.35).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the IT Services industry. The net income increased by 9.8% when compared to the same quarter one year prior, going from $348.88 million to $382.90 million.

JNPR Chart JNPR data by YCharts

9. Juniper Networks Inc. (JNPR)
Sub-Industry: Communications Equipment
Market Cap: $10.3 billion
Rating: Buy, B
Year-to-date return: 16.4%

Juniper Networks, Inc. designs, develops, and sells high-performance network products and services worldwide.

TheStreet said: "We rate JUNIPER NETWORKS INC (JNPR) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Net operating cash flow has significantly increased by 74.04% to $219.30 million when compared to the same quarter last year. In addition, JUNIPER NETWORKS INC has also vastly surpassed the industry average cash flow growth rate of -72.15%.
  • The gross profit margin for JUNIPER NETWORKS INC is rather high; currently it is at 66.45%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 7.51% trails the industry average.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • Despite currently having a low debt-to-equity ratio of 0.42, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that JNPR's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.53 is high and demonstrates strong liquidity.
  • JUNIPER NETWORKS INC's earnings per share declined by 13.6% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, JUNIPER NETWORKS INC swung to a loss, reporting -$0.90 versus $0.86 in the prior year. This year, the market expects an improvement in earnings ($1.68 versus -$0.90).

 

Fiserv, Inc., together with its subsidiaries, provides financial services technology worldwide.

TheStreet said: "We rate FISERV INC (FISV) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, increase in net income and reasonable valuation levels. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 22.6%. Since the same quarter one year prior, revenues slightly increased by 3.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 40.04% over the past year, a rise that has exceeded that of the S&P 500 Index. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • FISERV INC has improved earnings per share by 12.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, FISERV INC increased its bottom line by earning $2.98 versus $2.45 in the prior year. This year, the market expects an improvement in earnings ($3.81 versus $2.98).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the IT Services industry average. The net income increased by 6.0% when compared to the same quarter one year prior, going from $168.00 million to $178.00 million.
CRM Chart CRM data by YCharts

7. Salesforce.com (CRM)
Sub-Industry: Application Software
Market Cap: $45.7 billion
Rating: Hold, C
Year-to-date return: 17.4%

Salesforce.com, inc. provides enterprise cloud computing solutions, with a focus on customer relationship management to various businesses and industries worldwide.

TheStreet said: "We rate SALESFORCE.COM INC (CRM) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and compelling growth in net income. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 7.2%. Since the same quarter one year prior, revenues rose by 23.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 106.25% and other important driving factors, this stock has surged by 31.07% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • SALESFORCE.COM INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SALESFORCE.COM INC reported poor results of -$0.42 versus -$0.40 in the prior year. This year, the market expects an improvement in earnings ($0.71 versus -$0.42).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Software industry and the overall market, SALESFORCE.COM INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite currently having a low debt-to-equity ratio of 0.34, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that CRM's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.50 is low and demonstrates weak liquidity.




BRCM ChartBRCM data by YCharts
6. Broadcom Corp. (BRCM)
Sub-Industry: Semiconductors
Market Cap: $30.8 billion
Rating: Buy, B+
Year-to-date return: 18.8%

Broadcom Corporation provides semiconductor solutions for wired and wireless communications. Its products offer voice, video, data, and multimedia connectivity in the home, office, and mobile environment.

TheStreet said: "We rate BROADCOM CORP (BRCM) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel its strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • BRCM's revenue growth has slightly outpaced the industry average of 0.7%. Since the same quarter one year prior, revenues slightly increased by 3.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • BRCM's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.13, which clearly demonstrates the ability to cover short-term cash needs.
  • BROADCOM CORP has improved earnings per share by 21.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, BROADCOM CORP increased its bottom line by earning $1.08 versus $0.74 in the prior year. This year, the market expects an improvement in earnings ($3.01 versus $1.08).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 26.7% when compared to the same quarter one year prior, rising from $165.00 million to $209.00 million.
  • The gross profit margin for BROADCOM CORP is rather high; currently it is at 56.41%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 10.15% trails the industry average.

 

TSS Chart TSS data by YCharts

5. Total Systems Services Inc. (TSS)
Sub-Industry: Data Processing & Outsourced Services
Market Cap: $7.7 billion
Rating: Buy, A+
Year-to-date return: 23%

Total System Services, Inc. provides electronic payment processing services to banks and other financial institutions in the United States, Europe, Canada, Mexico, and internationally.

TheStreet said: "We rate TOTAL SYSTEM SERVICES INC (TSS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 22.5%. Since the same quarter one year prior, revenues rose by 11.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.84, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, TSS has a quick ratio of 1.87, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Powered by its strong earnings growth of 61.53% and other important driving factors, this stock has surged by 38.42% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • TOTAL SYSTEM SERVICES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, TOTAL SYSTEM SERVICES INC increased its bottom line by earning $1.46 versus $1.27 in the prior year. This year, the market expects an improvement in earnings ($2.24 versus $1.46).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the IT Services industry. The net income increased by 57.7% when compared to the same quarter one year prior, rising from $49.30 million to $77.76 million.

 


AVGO ChartAVGO data by YCharts
4. Avago Technologies Ltd. (AVGO)
Sub-Industry: Semiconductors
Market Cap: $34.5 billion
Rating: Buy, A+
Year-to-date return: 32.2%

Avago Technologies Limited designs, develops, and supplies semiconductor devices with a focus on analog III-V based products. The company operates through four segments: Wireless Communications, Wired Infrastructure, Enterprise Storage, and Industrial & Other segments.

TheStreet said: "We rate AVAGO TECHNOLOGIES LTD (AVGO) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, good cash flow from operations, increase in net income and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • AVGO's very impressive revenue growth greatly exceeded the industry average of 0.7%. Since the same quarter one year prior, revenues leaped by 134.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for AVAGO TECHNOLOGIES LTD is rather high; currently it is at 63.83%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 20.91% is above that of the industry average.
  • Net operating cash flow has significantly increased by 164.14% to $663.00 million when compared to the same quarter last year. In addition, AVAGO TECHNOLOGIES LTD has also vastly surpassed the industry average cash flow growth rate of 20.44%.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 117.7% when compared to the same quarter one year prior, rising from $158.00 million to $344.00 million.
  • Powered by its strong earnings growth of 95.08% and other important driving factors, this stock has surged by 100.78% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

 

ALTR ChartALTR data by YCharts
3. Altera Corp. (ALTR)
Sub-Industry: Semiconductors
Market Cap: $15.5 billion
Rating: Buy, B
Year-to-date return: 38.6%

Altera Corporation, a semiconductor company, designs and sells programmable logic devices (PLDs), HardCopy application-specific integrated circuit (ASIC) devices, power system-on-chip devices (PowerSoCs), pre-defined design building blocks, and associated development tools.

TheStreet said: "We rate ALTERA CORP (ALTR) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, ALTR's share price has jumped by 47.73%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ALTR should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The current debt-to-equity ratio, 0.45, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 4.41, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has slightly increased to $136.63 million or 4.75% when compared to the same quarter last year. Despite an increase in cash flow, ALTERA CORP's cash flow growth rate is still lower than the industry average growth rate of 28.23%.
  • The gross profit margin for ALTERA CORP is rather high; currently it is at 67.05%. Regardless of ALTR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ALTR's net profit margin of 21.78% compares favorably to the industry average.
  • ALTR, with its decline in revenue, underperformed when compared the industry average of 5.0%. Since the same quarter one year prior, revenues slightly dropped by 5.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

 


EA ChartEA data by YCharts
2. Electronic Arts Inc. (EA)
Industry: Technology/Home Entertainment Software
Market Cap: $20.9 billion
Rating: Buy, A-
Year-to-date return: 41.4%

Electronic Arts Inc. develops, markets, publishes, and distributes game software content and online services for video game consoles, Internet-connected consoles, personal computers, mobile phones, and tablets worldwide. The company operates through EA Studios, EA Mobile, and Maxis divisions.

TheStreet said: "We rate ELECTRONIC ARTS INC (EA) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, solid stock price performance and increase in net income. We feel its strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 7.2%. Since the same quarter one year prior, revenues slightly increased by 5.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • EA's debt-to-equity ratio is very low at 0.21 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.23, which illustrates the ability to avoid short-term cash problems.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Software industry and the overall market, ELECTRONIC ARTS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 75.69% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, EA should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 7.6% when compared to the same quarter one year prior, going from $367.00 million to $395.00 million.




SWKS ChartSWKS data by YCharts
1. Skyworks Solutions Inc. (SWKS
Industry: Technology/Semiconductors
Market Cap: $19.9 billion 
Rating: Buy, A+
Year-to-date return: 43.2%

Skyworks Solutions, Inc., together with its subsidiaries, designs, develops, manufactures, and markets analog and mixed signal semiconductors worldwide.

TheStreet said: "We rate SKYWORKS SOLUTIONS INC (SWKS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • SWKS's very impressive revenue growth greatly exceeded the industry average of 0.7%. Since the same quarter one year prior, revenues leaped by 58.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SWKS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.46, which clearly demonstrates the ability to cover short-term cash needs.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, SKYWORKS SOLUTIONS INC's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for SKYWORKS SOLUTIONS INC is rather high; currently it is at 51.31%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 21.84% is above that of the industry average.
  • Powered by its strong earnings growth of 112.50% and other important driving factors, this stock has surged by 131.39% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SWKS should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.

 

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