After an extended exile as tech stocks got ravaged in the bear market, Apple (AAPL) is back for a second straight month on the latest list of new buys by the best mutual funds. These top money managers scooped up $1.2 billion worth of AAPL stock. They also grabbed $1.9 billion worth of Nasdaq (NDAQ). While energy and medical names dominated the list, Apple and Nasdaq join 27 other technology sector plays on this stock screen.
One factor that attracts top-performing institutional investors is stable earnings growth. Cadence Design Systems (CDNS) and Synopsys (SNPS) both share that trait, earning them a spot on this screen and IBD Long-Term Leaders.
Cadence, which develops design automation software, has delivered average annual EPS growth of 24% over the last three years. Semiconductor design and verification firm Synopsys has generated average earnings growth of 29% over the same period.
As the Nasdaq composite rebounds to retake its 50-day line to close out last week, leading funds continue to show a growing appetite for more tech stocks.
The best mutual funds plunked down roughly $121 million in cybersecurity leader Palo Alto Networks (PANW). PANW stock gapped up Friday in below-average but rising volume. The Silicon Valley-based company closed the week 2% shy of a 578.89 buy point in a cup with handle. It reversed higher Monday to close in positive territory.
ON Semiconductor (ON), which has also secured a spot on the IBD 50 and IBD Big Cap 20, has reclaimed a buy zone it initially cleared last month before retreating. ON stock flashed a sell signal during that pullback but has been rebounding in good volume.
Top money managers bet nearly $149 million on ON Semiconductor as the iShares Semiconductor ETF (SOXX) begins to come off its recent lows.
AAPL Stock Leads Tech’s Return From Digital Woodshed
As outlined in this month’s overview of the top new buys by the best mutual funds, one sign of renewed technical strength is when a stock reclaims its 50-day moving average.
NDAQ already trades above that benchmark as it nears a 64.88 buy point. AAPL stock shot past its 200-day line in heavy and rising volume Monday. PANW stock recently found support at its 50-day line and has also retaken its 200-day moving average. It is now just 2% shy of a breakout.
In addition to a nice bounce off its 50-day line, Paycom Software (PAYC) offers another good indicator of rebounding technical strength, with its 50-day moving average moving back above its 200-day line.
Data storage leader Pure Storage (PSTG) and tech services firm Grid Dynamics (GDYN) both aim to do the same after finding support at their rising 50-day lines.
Medical software stock and 2021 IPO Privia Health (PRVA) also received an encouraging diagnosis of demand from the best mutual funds. The provider of a cloud-based platform to improve patient care and reward doctors saw six leading funds collectively pick up roughly $20 million in PRVA stock.
Privia has continued to climb, flashing a nice bounce off its 10-week moving average in August.
So as AAPL, NDAQ, CDNS, PANW and other tech names show signs of demand among the best mutual funds, look for strength in the tech sector and the major indexes to build and expand.
New Buys By The Best Mutual Funds: Tech Stocks
| Company | Symbol | Industry Group | No. Of Funds Buying | Total Amount Invested ($ mil) |
|---|---|---|---|---|
| Nasdaq | NDAQ | Financial Svcs-Specialty | 13 | 1,925 |
| Apple | AAPL | Telecom-Consumer Prods | 23 | 1,200 |
| On Semiconductor | ON | Elec-Semiconductor Mfg | 26 | 149 |
| Synopsys | SNPS | Computer Sftwr-Design | 23 | 123 |
| Palo Alto Networks | PANW | Computer Sftwr-Security | 23 | 121 |
| Cadence Design Systems | CDNS | Computer Sftwr-Design | 19 | 81 |
| Paycom Software | PAYC | Computer Sftwr-Enterprse | 15 | 57 |
| Epam Systems | EPAM | Computer-Tech Services | 17 | 47 |
| Arista Networks | ANET | Computer-Networking | 15 | 44 |
| Pure Storage | PSTG | Computer-Data Storage | 16 | 42 |
| Qualys | QLYS | Computer Sftwr-Security | 12 | 37 |
| Parsons | PSN | Computer Sftwr-Enterprse | 13 | 32 |
| Super Micro Computer | SMCI | Computer-Hardware/Perip | 13 | 22 |
| Privia Health | PRVA | Computer Sftwr-Medical | 6 | 20 |
| Grid Dynamics | GDYN | Computer-Tech Services | 9 | 17 |
| Paylocity | PCTY | Computer Sftwr-Enterprse | 11 | 16 |
| Jack Henry & Associates | JKHY | Computer Sftwr-Financial | 12 | 14 |
| CTS | CTS | Elec-Semiconductor Mfg | 7 | 14 |
| Manhattan Associates | MANH | Computer Sftwr-Enterprse | 14 | 13 |
| Progressive Software | PRGS | Computer Sftwr-Database | 7 | 12 |
| Instructure | INST | Computer Sftwr-Edu/Media | 4 | 9 |
| Fair Isaac | FICO | Computer Sftwr-Financial | 13 | 6 |
| Axcelis Technologies | ACLS | Elec-Semiconductor Equip | 9 | 5 |
| Digi International | DGII | Computer-Networking | 8 | 5 |
| Simulations Plus | SLP | Computer Sftwr-Medical | 7 | 2 |
| Verra Mobility | VRRM | Comp Sftwr-Spec Enterprs | 7 | 2 |
| HireRight | HRT | Computer Sftwr-Security | 3 | 2 |
| Model N | MODN | Computer Sftwr-Enterprse | 2 | 2 |
| RCM Technologies | RCMT | Computer-Tech Services | 3 | 1 |
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
