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3 Highly Profitable Tech Stocks to Buy

Stock MarketsSep 15, 2021 10:31AM ET
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© Reuters. 3 Highly Profitable Tech Stocks to Buy

Aside from a recent fall, tech stocks have shown bullish momentum since May. Whether or not this momentum continues, making sure you're invested in highly profitable tech stocks can provide your portfolio the potential for strong returns. That's why investors should consider high profit tech stocks such as Cadence Design Systems, Inc. (NASDAQ:CDNS), KLA Corporation (KLAC), and Skyworks Solutions, Inc. (NASDAQ:SWKS).Technology stocks resumed their bullish momentum in the Spring as the Technology Select Sector SPDR Fund (XLK) has gained 19.6% since May 12th. While investors can't predict how long this current run will last for tech stocks, a great way to limit your losses is to focus on highly profitable tech stocks. Picking high-profit stocks can lead to substantial gains.

Studies have found that investing in profitable stocks can generate above-average returns. Profit margins can tell us how well a management team is running a business. It represents the percentage of sales that has turned into profits. While there are a few ways to look at net profits, I prefer net margin since it shows a company's bottom line after other expenses have been taken out of revenue.

As we've seen over the last couple of quarters, companies are generating billions in sales. But if the sales aren't turning into profits, then a company may not be worth buying. So, I ran a screen for technology stocks rated a Buy in our proprietary POWR Ratings systems with a net profit margin of 20% or higher. The results included top stocks such as Cadence Design Systems, Inc. (CDNS), KLA Corporation (KLAC), and Skyworks Solutions, Inc. (SWKS).

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3 Highly Profitable Tech Stocks to Buy
 

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