by Bryan Perry,

September 22, 2020

September has been a “house of horrors” for NASDAQ and especially the FAANG and MAGA stocks. Fierce rotation out of the heavily weighted tech darlings into transportation, industrial, materials, and a swath of big IPOs has the QQQ reeling – 13% off its September 2 high of $303.50. The Qs have sliced through their 50-day moving average, leaving chartists wondering where the next support line may be.

As of Friday’s close at $266.87, QQQ entered some open water below the 50-day (blue line, below) but still well above the 100-day (orange) line. From an extreme overbought condition – part and parcel to the surge in call option buying juiced by SoftBank – an overshoot down to the 50-day isn’t crucially negative.

Nasdaq-QQQ Invesco-ETF Line Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

There is good technical support just underneath at the $260 level that should not only “hold” but also invite strong buying interest in that the fourth quarter is typically and historically the strongest period for sales and earnings growth within the tech sector. Part of the reason is that businesses and federal, state, and local governments often have budgets laced with “use it or lose it” year-end deadlines.

Assuming that NASDAQ catches a bid down here by month-end, in anticipation of a rock n’ roll third-quarter earnings season, the rebound will likely be measured, since the market is also entering the final weeks of the election year, where Democrats are expected to retain control of the House of Representatives while control for the White House and the Senate are up for grabs.

Against this backdrop, there are some investment themes within the broader tech sector that, like many great tech stocks, are now on sale, thanks to the past three weeks of unrelenting selling pressure. For income investors seeking to add some tech stocks with attractive dividend yields, your time has come.

The current correction has provided a sweet entry point for buying into the 5G and cloud storage markets, where best-of-breed stocks in both sub-sectors are trading 10%-15% off their 52-week highs. The advent of remote working spaces, AI-driven platforms, big data enterprise networks, the Internet of Things (IoT), digital payments, and mobile e-commerce are all huge contributors to cell tower and data center operators.

The global telecom tower market accounted for $40 billion in 2017 and is expected to grow at a CAGR of 18% from 2018 to 2025, to reach $145 billion by 2025. (Source:

Cell Tower Ownership Pie Charts

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

Two stocks within this space that rule the roost are American Tower REIT (AMT) that pays a current dividend yield of 1.76% and Crown Castle International Corp. (CCI), with a dividend yield of 3.01%.

The growth of data centers to handle the volume of data moving to the cloud is also as close to a ‘bulletproof’ trend as one can find. The demand for multi-cloud strategy and the advent of 5G technology will lead to the expansion of the global data center market at a CAGR of over 17% from 2020 to 2023.

Bar and Pie Chart Image Depicting Data Center Growth

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

The four primary drivers are the rise in adoption of multi-cloud and network upgrades to support 5G, the rising adoption of IoT devices, big data analytics as well as the rise in adoption of edge computing.

Edge computing is a network architecture, where the data is stored and processed near its origin. An edge server serves as the connection between separate networks. The advantage of edge computing is that the stored content is close to the client machine, thereby reducing latency and improving server response.

Growing demand for efficient and secure data management has spurred edge computing implementation in large-scale enterprises. This development is expected to have a positive impact on overall market growth. There are five data center stocks with attractive dividends to consider now:

CyrusOne Inc. (CONE) – dividend yield 2.81%.

QTS Realty Trust Inc. (QTS) – dividend yield 3.02%

Digital Realty Trust Inc. (DLR) – dividend yield 3.09%

CoreSite Realty Corp. (COR) – dividend yield 4.14%

Equinox Inc (EQIX) – has a lower dividend yield of 1.41% but it is the fastest growing stock.

Equinox is forecast to grow 2021 sales to $6.5 billion with profits soaring by 31%. The company sports a market cap of $67 billion, exponentially higher than the next competitor. It operates in five continents.

For those seeking high visibility of income and growth after a NASDAQ smackdown should look long and hard at the opportunity the market has just afforded investors. It’s been a while since I highlighted these special REITs, but anytime there is an opportunity to put money to work in these sectors at a meaningful discount, it’s worth casting a light where income-oriented investment capital has been well served.

Navellier & Associates does not own Crown Castle International Corp. (CCI), SBA Communications, AT&T (T), T Mobile, CyrusOne Inc. (CONE) QTS Realty Trust Inc. (QTS) or Equinox Inc (EQIX) but does own Digital Realty Trust Inc. (DLR) CoreSite Realty Corp. (COR), Verizon and American Tower in some Managed accounts. Bryan Perry does not personally own Crown Castle International Corp. (CCI), SBA Communications, AT&T (T), T Mobile, CyrusOne Inc. (CONE) QTS Realty Trust Inc. (QTS),  Equinox Inc (EQIX), Digital Realty Trust Inc. (DLR) CoreSite Realty Corp. (COR), Verizon or American Tower.

All content above represents the opinion of Bryan Perry of Navellier & Associates, Inc.

Please see important disclosures below.

About The Author

Bryan Perry

Bryan Perry

Bryan Perry is a Senior Director with Navellier Private Client Group, advising and facilitating high net worth investors in the pursuit of their financial goals.

Bryan’s financial services career spanning the past three decades includes over 20 years of wealth management experience with Wall Street firms that include Bear Stearns, Lehman Brothers and Paine Webber, working with both retail and institutional clients. Bryan earned a B.A. in Political Science from Virginia Polytechnic Institute & State University and currently holds a Series 65 license. All content of “Income Mail” represents the opinion of Bryan Perry

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