Bargain hunting for tech stocks

Could companies that make payment processing software offer big-tech growth prospects without big-tech prices?

  • Facebook.
  • Twitter.
  • LinkedIn.
  • Print

With technology companies leading the S&P 500® to record highs, finding tech stocks with both reasonable prices and strong growth potential is no easy task. But mutual fund managers who rely on rigorous research and practice careful stock selection may still be able to find those opportunities.

Rebecca Baker, manager of Fidelity® Select Software and IT Services Portfolio (FSCSX) says, "Great stories are not easy to find, but I'm excited about a handful of tech services firms that I consider underpriced based on my longer-term view of their earnings potential."

Baker points to Intuit (INTU), Ceridian HCM Holding (CDAY), and Square (SQ) as examples of companies with positive long-term fundamentals and valuations that she describes as reasonable.

In December, she added to the fund's holdings in Intuit, based on her belief that the company can sell services such as payment processing and payroll as part of its QuickBooks® accounting software and can gain subscribers for its TurboTax® offering—thanks in part to its recent acquisition of credit monitoring and personal finance service Credit Karma.

Baker says Ceridian's payroll-processing business is set to benefit as the company's customers increase hiring with the economy reopening from COVID-related shutdowns. She also believes that a new real-time payments service offered through the company's Dayforce app could boost Ceridian's profits over time.

Baker also expects innovations in payment technology apps to benefit payment processor Square. She believes the person-to-person payments technology in its Cash App will be difficult for competitors to replicate, and that Square has opportunities to add more services to its platform.

Fidelity® Select IT Services Portfolio held securities mentioned in this article as of its most recent holdings disclosure. For specific fund information, including holdings, please click on the fund trading symbol above.

Next steps to consider



Find stocks


Match ideas with potential investments using our Stock Screener.



5-step guide to trading


Learn what you need to know before trading the market.

A collection of current insights from our portfolio managers.

  • Facebook.
  • Twitter.
  • LinkedIn.
  • Print
Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

Because of their narrow focus, sector investments tend to be more volatile than investments that diversify across many sectors and companies.

Stock markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. Investing in stock involves risks, including the loss of principal.

As with all your investments through Fidelity, you must make your own determination whether an investment in any particular security or securities is consistent with your investment objectives, risk tolerance, financial situation, and evaluation of the security. Fidelity is not recommending or endorsing this investment by making it available to its customers.

Past performance is no guarantee of future results.

Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information.

Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917

857246.138.0
close
Please enter a valid e-mail address
Please enter a valid e-mail address
Important legal information about the e-mail you will be sending. By using this service, you agree to input your real e-mail address and only send it to people you know. It is a violation of law in some jurisdictions to falsely identify yourself in an e-mail. All information you provide will be used by Fidelity solely for the purpose of sending the e-mail on your behalf.The subject line of the e-mail you send will be "Fidelity.com: "

Your e-mail has been sent.
close

Your e-mail has been sent.