The Top 5 Tech Stocks to Watch Following CES 2016

There's never a better time or place to look for tech stocks with potential than the annual Consumer Electronics Show (CES).

This year's CES, which ended Saturday, focused on several major tech trends that will bring billions in profits to their sectors over the next few years.

Some of the key trends at CES 2016 were the Internet of Things, ultra-high-definition TV (UHDTV, or 4K TV), self-driving cars, virtual reality, and drones. Less hyped but still getting attention this year were wearable tech and 3D printing.

The problem for investors is how to sort through the 3,600 exhibitors to find the best tech stocks to buy.

Fortunately, Money Morning kept a close eye on what came out of CES 2016, and we've identified five tech stocks that have the best chance to deliver outsized returns over the next year or so.

You'll want to give these tech stocks a good look...

The Five Best Tech Stocks from CES 2016

• Top CES 2016 Tech Stocks No. 1, Nvidia Corp. (Nasdaq: NVDA) - Nvidia is a well-known name in tech, mostly as a provider of GeForce graphics chips for PCs. But that's not why Nvidia is on this list. At CES, Nvidia was showing off its Drive PX 2, a powerful self-driving car system. Nvidia CEO Jen-Hsun Huang described the technology as the "the world's first in-car supercomputer for artificial intelligence." Swedish automaker Volvo AB (OTCMKTS ADR: VOLVY) will be the first to use it, but Nvidia is selling the tech to several other auto companies as well, including Ford Motor Co. (NYSE: F) and BMW (OTCMKTS: BAMXF). In fact, more than 10 million cars on the road today use Nvidia technologies. That's a great head start and a strong indication of growth to come.

Plus, Nvidia is a major force in the field of "virtual processing units," or VPUs, at the core of virtual reality systems. The company's GeForce GTX 980 Ti powers the Oculus Rift headset, for example. Being at the cutting edge of two major tech trends means NVDA stock has a lot of runway ahead of it, despite gains of more than 50% over the past 12 months.

And the other four tech stocks on this list are just as promising...

[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]

• Top CES 2016 Tech Stocks No. 2, Ambarella Inc. (Nasdaq: AMBA) - Ambarella first drew attention as a supplier of video chips to wearable camera maker GoPro Inc. (Nasdaq: GPRO). But as GoPro's fortunes have slid, so has AMBA stock. In 2015, the Ambarella stock price had doubled by June, but gave it all back by the end of the year. Lately this tech stock has been trading at about $44. But like Nvidia, Ambarella has plugged into two big tech trends from CES - drones and UHDTVs. Few people realize that most UHDTVs contain Ambarella video processors. Meanwhile, the rapidly growing drone market is also feeding demand for aerial cameras - devices ideal for Ambarella's chips. Ambarella introduced two new video-processing chips at CES, the H2 and H12, targeted at these low-powered "flying cameras." According to Yahoo! Finance, AMBA stock has a one-year price target of $77.60.
• Top CES 2016 Tech Stocks, No. 3: 3D Systems Corp. (NYSE: DDD) - A lot of investors have written off 3D printing tech in general, as the promise of an exploding market failed to materialize. All 3D printing stocks got slammed; 3D Systems is down more than 90% from its peak two years ago. DDD now trades below $8. But 3D Systems is alive and well and exhibiting its latest products at CES. The issue is that early on many mistakenly thought the opportunity in 3D printing was on the consumer side, when in fact it's on the enterprise side. Gartner says enterprise sales in the 3D printing market will double between 2013 and 2018. And 3D Systems is now focused solely on enterprise sales. Investors were premature on 3D printing and DDD stock. Shares of 3D Systems have an excellent chance of doubling over the next year or so.
• Top CES 2016 Tech Stocks, No. 4: Ford Motor Co. (NYSE: F) - So what's a century-old automaker doing on a list of hot tech stocks? The answer, of course, is self-driving cars. Just about every traditional automaker has realized by now that self-driving car tech is the future of the industry. And Ford has set the bar for innovation lately. For one thing, Ford is thought to be working with Alphabet Inc. (formerly Google Inc.) (Nasdaq: GOOGL) on self-driving cars, although there was no announcement at CES. What Ford did announce was a tripling of its own driverless car test fleet to 30. At CES, Ford also showed its own "SmartDeviceLink" connected-car platform. Rather than adopting a platform from a tech company like Alphabet or Apple Inc. (Nasdaq: AAPL), Ford wants to establish an industry standard. Rival Toyota Motor Corp. (NYSE: TM) has already signed on, and Ford is talking to Honda Motor Co. (NYSE: HMC), Mazda, and Subaru. Ford stock trades at just under $13 and has a one-year price target of $17.59.
• Top CES 2016 Tech Stocks, No. 5: Vuzix Corp. (Nasdaq: VUZI) - Vuzix is a small but promising player in the virtual reality segment. (When we say small, we mean it's a micro cap with a valuation of just $81.74 million.) At CES, Vuzix was showing its three primary products, and they were getting compared favorably to such big-name products as the Oculus Rift. In fact, Vuzix won eight CES Innovation Awards for its products this year. Customers can tell. In its most recent quarter, Vuzix increased year-over-year revenue by 46%, trouncing Wall Street forecasts. Some investors may shy away because Vuzix is still not turning a profit. But the losses are rapidly shrinking. This is the kind of small, aggressive company that can deliver huge gains as it grows. VUZI stock trades at about $5 and has a one-year target of $10.

Follow me on Twitter @DavidGZeiler or like Money Morning on Facebook.

More on CES 2016: Twenty years ago people would have laughed at the idea of the auto industry having anything to do with the Consumer Electronics Show. But the Detroit automakers completely dominated this year's show. Here's why...