7 Best-Performing Large Cap Technology Stocks

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 |  Includes: ARMH, ASML, INTU, NOK, NUAN, WDC, YHOO
by: Rash Menaria

The following is a list of 7 large cap tech stocks showing strong upward momentum and gaining ~ 25% or more in last three months.

Ticker

Company Name

Last 3 Months Gain

ARMH

ARM Holdings Plc.

26.66%

ASML

ASML Holdings N.V.

26.75%

INTU

Intuit Inc.

23.21%

NOK

Nokia Corp.

27.05%

SNDK

SanDisk Corp.

30.49%

YHOO

Yahoo! Inc.

29.81%

NUAN

Nuance Communications, Inc.

50.89%

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I like Nuance and Nokia the most among the above stocks and believe they can continue their outperformance going forward.

Nuance is a compelling investment in speech recognition and analytics. It is a market leader in speech recognition which is a relatively under-penetrated market with significant expansion opportunity. Further, two-thirds of its revenues are recurring in nature, giving it high visibility.

The stock is up 50% in last 3 months with the majority of the up move coming in October after Apple’s (AAPL) iPhone 4S launch. Siri on iPhone 4S requires NUAN’s transcription ability to operate. The success of Siri on iPhone 4S means NUAN’s speech recognition technology is ready for mainstream adoption - which could boost the demand significantly. There are growing expectations among investors that a future Apple TV could also be powered by Siri which is a positive for Nuance.

Other than a big Siri opportunity also, NUAN’s business is performing very well. It pre-announced better than expected results in October and also announced a $200 mn share buyback. Trading at 16x forward PE, I believe the stock is still undervalued and is not completely building in the upside which mainstream adoption of its technology can provide.

Nokia is another stock which is a good buy after the recent launch of its WP7 series of phones. Nokia unveiled its first two Windows Phone (WP) smart devices, the Lumia ($588) and 710 ($378) at the recent Nokia World Event. In addition it also launched four premium S40 Mobile Phones ranging from $84-$161, two of which have comparable hardware/ User Experience to mid-tier smart phones.

I find the products very compelling and believe they can see good consumer traction. This launch is likely the first step in Nokia’s turnaround and I believe the company would start seeing the positive trends from here onwards. With consensus sell side expecting a flat YoY revenues and earnings in the next year, I don’t believe the market is pricing in any big positives from Nokia. I believe it is a good opportunity to initiate a long position in the company before the broader market starts pricing in the upside potential.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.