I love summer and, thankfully, I didn’t have to wait a full-year to enjoy my favorite season. I simply looked at the stock market: “It's getting hot in here!”

Snapshot of the “Hottest” Month in 4 Years

Following August’s market rout and the slump in September, stocks staged a dramatic comeback in October turning the heat up.

In fact, it was the “hottest” month in four years.

Why?

Because the U.S. stock indexes posted the highest monthly gain since 2011.

Let’s look at the major indexes for October-

What propelled the stocks? In our view, 3 things:

• China and European Central Bank’s commitment to give a boost to waning growth
• Federal Reserve’s decision to keep the rates steady, and
• Solid quarterly results posted by several large companies

4 Red Hot Tech Stocks of October

Aided by strong earnings reports and continued consolidation in the semiconductor industry, the technology sector witnessed excellent returns during the period.

Here is a list of 4 tech stocks that had a stellar October.

We expect this trend to continue in the near term since all these stocks have a favorable Zacks Rank as well as an attractive Growth and Momentum Style score.

Our Growth Style Score condenses all the essential metrics from the company’s financial statements to achieve a true sense of quality and sustainability of its growth. Our research shows that stocks with Growth Style Scores of ‘A’ or ‘B’ when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best investment opportunities in the growth investing space.

KLA-Tencor Corporation KLAC

October Return: 34.24%

Zacks Rank #2

Growth Style Score: B

Momentum Style Score: A

KLA-Tencor’s first-quarter fiscal 2016 earnings of 71 cents a share, topped the Zacks Consensus Estimate of 56 cents by 26.8%. Apart from this, what drove the shares higher was its decision to merge with semiconductor equipment maker, Lam Research Corp. LRCX.

The acquisition is expected to be accretive to earnings and cash flow in the first 12 months following the closure. The companies expect to realize $250 million in annual ongoing pre-tax cost synergies within the next one-and-a-half to two years and $600 million by 2020.

The merger of these two companies will create an equipment powerhouse with a massive range of products, customer base and scale. The increased integration and efficiency of operations could also help the combined entity drive further extension of Moore’s Law.

Amazon.com, Inc. AMZN

October Return: 22.40%

Zacks Rank #2

Growth Style Score: A

Momentum Style Score: A

Amazon’s stock was driven mainly by robust quarterly results. The company’s adjusted EPS came in at 17 cents, much better than the Zacks Consensus Estimate of a loss of 10 cents. Revenues of $25.4 billion beat the consensus estimate of $24.851 billion and increased 23% year over year from $20.6 billion.

In the recently reported quarter, AWS was the biggest positive. Its revenue share was steady, while operating profit margin expanded 1,660 basis points (bps) from the year-ago quarter, operating profit dollars skyrocketed 431.6% (511% ex-FX). Accounting for just 8% of revenues, AWS comprised more than 52% of profit.  

First Solar, Inc. FSLR

October Return: 33.50%

Zacks Rank #2

Growth Style Score: B

Momentum Style Score: B

First Solar reported adjusted third-quarter 2015 earnings of $3.38 a share sweeping past the Zacks Consensus Estimate of $1.55 by 118.1%.

First Solar is steadily expanding its global footprint. The company primarily caters to the North American market but is also keen on securing a larger market share. Like the other solar majors, such as Canadian Solar and SunPower, the company is looking to expand its operations in the Middle East, India, Japan, Australia and South America. Expansion into other geographies would lead to both top-line and margin growth.

First Solar is able to develop economically sustainable businesses as it has established its expertise in PV generation solutions as well as in other areas of the solar-value chain, such as project development, EPC capabilities and O&M services. It continues to focus on retaining its competitive edge and aims to further consolidate its position in the market. The company’s R&D investments are also proving beneficial.

Citrix Systems, Inc. CTXS

October Return: 18.50%

Zacks Rank #2

Growth Style Score: A

Momentum Style Score: A

Citrix Systems beat third-quarter earnings and revenue estimates and issued a bullish view.

The cloud-computing company’s earnings (excluding special items) came in at 87 cents per share, ahead of the Zacks Consensus Estimate by 20 cents and up 53% from the year-ago quarter. Higher-than-expected revenues contributed to the earnings beat.

Citrix expects revenues in the range of $3.24 billion to $3.25 billion for 2015. Earnings per share (on an adjusted basis) are projected in the range of $3.85 to $3.90. These projections are much higher than the 2015 Zacks Consensus Estimates of $2.97 per share in earnings on revenues of $3.23 billion.

Summer’s Not Over Yet

We believe that 2015 is playing out just as it should — easy profits from this 6-year bull market have already been earned and valuations are near fully engorged. Gladly, there is not much fear of a bear market, either.

When you add it all up, it says the bull market is still on, only the pace is slowing down to around 5% per year.

I agree that doesn't sound quite attractive. But compared with the subdued returns for cash, bonds and precious metals, it is a pretty fair deal.

Though early in a bull market there are many hidden gems that can generate substantial returns, it has been six years and nearly every stone has been turned.

So don't go looking for a needle in a haystack... it ain't there! Instead look where the sun is shining to make your hay!

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