Continue to focus on technology

The S&P 500 delivered a monster performance in the first six months of the year, gaining 14.5% on the back of a huge tech stock. It’s entirely possible the second half of the year will be similar.

First, let’s familiarize ourselves with the history.

In January, MAPsignals data showed strong performance for semiconductor and software companies. About a month ago, after a heavy sell-off in tech stocks, our data suggested a big revision trade was coming.

Both statements were correct.

The S&P 500 Packaged Software industry and the S&P 500 Semiconductor industry are up 9.9% and 53.6%, respectively. And the Technology Select Sector SPDR ETF (XLK) is up more than 9% since the capitulation:

In addition to the technology sector, the technology-driven communications sector, represented by the Communication Services Select Sector SPDR Fund (XLC), grew in the first half of 2024:

Technology and communications are the only two sectors to outperform the S&P 500 this year:

The data shows that it is worth continuing to focus on technology this year.

Continue to focus on technology

In our modern economy, as technology goes, so goes the market. The technology and communications sectors account for 41% of the total weighting of the S&P 500. So sticking to this theme seems like a good long-term plan.

But the market isn’t just tech. Looking back to 2002, when the S&P 500 gained 10% or more in the first half of the year, several sectors tend to outperform the market toward the end of the year… including tech:

MAPsignals sector data (below) shows how many sectors are gaining. Based on history, it seems that many of them could continue to grow on better fundamentals.

Higher results from higher foundations

It’s time to reinforce the call for booming semiconductor and software stocks. They’ve surged in the first half of the year, and the fundamentals seem to support a repeat performance.

This is particularly true for two stocks included in the MAP data.

One of them is semiconductor superstar NVDA Corporation (NVDA). Its fundamentals are fantastic:

The story continues

Source: FactSet

It’s no wonder this title made it onto our top 20 list several times this year:

The second company is software company N-able, Inc. (NABL), which is a new target for large funds with strong financial performance:

• Annual sales growth rate (+13.5%)

• Annual EPS growth rate (+14%)

• 3-year EPS growth rate (+7702.5%)

Source: FactSet

There has been a lot of talk about big money lately:

NABL has made it to our top 20 stocks list twice since it began trading in 2021. The first signal came in April 2023, and the stock is up 13.2% since then.

To find outliers, use MAP

The bottom line is that this bull run has legs. Technology could continue to lead, and other sectors will show strength as well. As always, better fundamentals generate better returns.

To find outliers, use MAP. Discover tomorrow’s winners today with MAPsignals data.

If you are a serious investor, registered investment advisor (RIA), or fund manager looking for high-quality hedge fund analysis, start your MAP PRO subscription today.

Disclosure: At the time of publication, the author holds no position with NVDA or NABL.

This article was originally published on FX Empire

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