Investors will often flock to smaller tech names when they’re looking for a fast profit. But, it’s often bigger companies embracing new technologies that have the expertise and financial depth needed to carry big projects to fruition.
That’s why the big-tech companies have come to dominate markets in recent years, and why they may yet further increase their market share. But a group of up-and-coming big tech plays could disrupt the biggest players in the mega-stock club.
One such company is Honeywell (HON). Perhaps best known for your home thermostat, the company has moved quickly in recent years to embrace everything from blockchain technology to better track parts and inventory to getting into a leading position in quantum computing.
More recently, the company reported better-than-expected earnings and raised full-year guidance. While the numbers were good, the market took shares off of their all-time high.
That’s creating a buying opportunity. Earnings are up 32 percent over the past year, and revenues are up 18 percent. The company’s profit margin has nudged higher to nearly 15 percent. Continued improvement in these numbers could easily help lead shares higher, and any one of their disruptive technologies could unlock a monster surge.
Action to take: Investors may like shares here. The company pays a 1.6 percent dividend yield. While not massive, the company has raised the yield over time.
For traders, shares are still in an uptrend, even with the earnings-related selloff. The September $230 calls are an at-the-money trade going for about $6.45. Traders can likely flip those for a profit in the coming weeks in the mid-to-high double-digit range.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.