For better gains in tech stocks from here, look beyond the 'Magnificent Seven.'

The so-called Magnificent Seven stocks have been leading the U.S. market this year, but now they look richly valued by many key measures — and they’re crowded trades.

Second-tier tech names For tech exposure now, it makes more sense to consider what I call second-tier tech names. This does not mean they’re lower quality. It just means they are not on everyone’s radar. But insiders like them a lot. In each of the second-tier tech names suggested below, insiders have been buying not too far below current prices.

2. Akami Technologies: Akami Technologies AKAM, +0.75% recently traded at a forward p/e of 16.8, a 9% discount to its trailing average of 18.5. It also has a PEG ratio of 2.1, below the cutoff of 2.5, which signals a discounted valuation for growth names in tech. Akami’s problem is that in recent years a lot of its customers figured out they could do this job in house, at a lower cost. Rather than just stand still, Akami has pivoted to cybersecurity, in part via acquisitions. The strategy is paying off. Security-related sales grew 14.4% in the second quarter, offsetting declines in delivery revenue of 8.2%. Total sales grew 4.4%.

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U.S. market is too heavily reliant on pricey 'Magnificent Seven' stocks for gains, says Credit Suisse strategistCredit Suisse warned the U.S. stock market may not be the safe haven it usually is during an economic downturn. Here's why.
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