Technology sector is benefiting from its deep involvement with other sectors in this meaningful data-insights driven age. From digitizing retail outlets with automated check-out tech, modernizing payment systems with robust cybersecurity functionalities to revolutionizing health care mechanisms and education with credible data-driven insights, the technology sector is ubiquitous.

The sector’s performance has been impressive year-to-date. The Technology Select Sector SPDR’s (XLK) year-to-date return of 30.7% outperformed the S&P 500’s rally of 19.4%.

The outperformance is expected to continue on strong demand for AI-based tools, rapid adoption of IoT, AR/VR, blockchain, biometrics, ML, ADAS in autonomous cars, wearables, drones, and cloud computing solutions.

Accelerated deployment of 5G technology has set the stage for further development. International expansion via increasing Internet penetration opens up new horizons for the technology companies. Increasing allegiance to online gaming, music and video-streaming services also deserves a special mention in this regard.

Growing demand for smart speakers, connected devices, virtual assistants, automated business and productivity software, robots, are key catalysts. Increasing adoption of cloud-based subscription services amid ongoing digital transformation is bolstering revenues and earnings visibility of technology solution providers.

Despite the heightening uncertainty owing to recession rumors, ongoing trade war between the United States and China, and Brexit-related volatility, the aforesaid factors present significant opportunities for technology investors for the rest of 2019.

Picking the Winning Stocks

With the help of the Zacks Stock Screener, we pick five tech stocks that have gained more than 50% year to date, defying the macro headwinds concerning the tech sector. Apart from having strong fundamentals, these stocks either flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).

To further narrow down the list, we have selected those that have Growth Score of A or B. Our research shows that stocks with a Growth Score of A or B when combined with a Zacks Rank #1 or 2 offer the best upside potential in the growth investing space.

We have zeroed in on five technology stocks with the favorable combination.

Year-to-Date Price Performance

Austin, TX-based Digital Turbine APPS is riding on increasing advertiser demand and incremental adoption of innovative offerings, including SingleTap, Notifications and Folders.

This Zacks Rank #1 stock has soared 249.2% year to date. The company has a Growth Score of A. Moreover, the Zacks Consensus Estimate for fiscal 2020 earnings has been revised 42.9% upward in the past 60 days to 20 cents.

Hillsboro, OR-based, Lattice Semiconductor LSCC continues to gain from the 4th Tectonic Shift in computing market with its low-power parallelizable architecture, which is required in edge computing devices.

Lattice has a Growth Score of A and a Zacks Rank #2. The stock has gained 177.2% year to date. Notably, over the past 60 days, the Zacks Consensus Estimate for current fiscal year has moved upward by 16.3% to 57 cents.

Racine, WI-based Model N MODN is riding on rapid adoption of Revenue Cloud offering for med-tech, pharma, semiconductor, manufacturing and high-tech companies.

This Zacks Rank #2 company has a Growth Score of A. Shares of Model N soared 104.7% year to date. The Zacks Consensus Estimate for fiscal 2019 earnings has been revised 28.6% upward in the past 60 days to 18 cents.

Ewing, NJ-based, Universal Display OLED is a leading developer of technology and intellectual property (IP) for the organic light emitting diodes market.

Universal Display has a Growth Score of A and a Zacks Rank #2. The stock has surged 103.5% year to date. Notably, over the past 60 days, the Zacks Consensus Estimate for current fiscal year has moved north by 9.8% to $2.68.

Houston, TX-based PROS Holdings PRO is benefiting from growing clout of its Configure Price Quote or CPQ, pricing and revenue optimization offerings.

The company has a Zacks Rank #2 and a Growth Score of A. The stock has gained 98.1% year to date. The Zacks Consensus Estimate for current year has narrowed from a loss of 36 cents to a loss of 34 cents in the past 60 days.

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