Growth stocks have taken a backseat to cyclical names this year, but that may be about to change. The Fed appears to be sticking with its dovish monetary policy and rising cases of COVID-19 could lead to a return to lockdowns.This presents a great buying opportunity to pick up shares of tech stocks like Teradata Corporation (NYSE:TDC), HP Inc. (NYSE:HPQ), and Broadcom Inc. (NASDAQ:AVGO).Tech stocks soared last year as the COVID-19 pandemic accelerated the pace of the digital transformation. As more people were forced to stay home, technology stocks soared. As we entered 2021, and people were vaccinated, and more states opened up, tech stocks took a back seat to more cyclical names.
Over the past couple of months, technology growth shares and cyclical value stocks have traded leadership in the market each day. But minus today’s market sell-off, growth stocks appear to be making a comeback. Even amidst higher inflation, long-dated Treasury yields are no longer soaring due to the massive liquidity in the market. Plus, the latest Fed minutes came in dovish, indicating officials are not ready to tighten policy.
When you add in the highly infectious strain of the Delta variant of COVID-19 and the potential for more lockdowns, tech stocks look like a good bet. Teradata Corporation (TDC), HP Inc. (HPQ), and Broadcom Inc. (AVGO) are three highly-rated technology companies in our POWR Ratings system that look poised for gains in the weeks and months ahead.