Increasing demand for advanced technologies in almost every industry as part of a widespread digital transformation, and a low interest rate environment, position the tech industry to generate solid growth. So, we think fundamentally sound tech stocks SS&C (SSNC) and Avid (AVID) should deliver significant returns in the near term.After suffering a slump earlier this year due to investors’ rotation to cyclical stocks, the tech space is again attracting investors’ attention. Increasing adoption of advanced technological solutions in every industry and the expected continuation of low interest rates are the key factors driving the recovery in tech stocks. Investors’ renewed interest in the sector is evident in the Technology Select Sector SPDR Fund’s (XLK) 4.6% returns over the past month versus the SPDR S&P 500 Trust ETF’s (SPY) 1.1% gains.
The Federal Reserve recently signaled that interest rates will remain at the current near zero level and that the central bank will not raise rates on inflation fears alone. This bodes well for tech stocks. As a result, the tech-heavy Nasdaq Composite has been hitting new highs. According to GoRemotely, the tech industry is expected to hit a $5 trillion market value by year’s end.
Given this backdrop, we think it makes sense to bet on SS&C Technologies Holdings, Inc. (SSNC) and Avid Technology , Inc. (NASDAQ:AVID) now. These companies’ solid financials and constant innovations should help these stocks continue advancing.