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2020 is a great year for technology stocks. It’s a year that the market experienced the fastest crash and recovery in history. It’s the year that technology stocks like Tesla and Zoom rose to prominence, registering one of the biggest valuation increase in a single year.
Tesla became more valuable than Ford and General Motors combined in January 2020 and in December 2020 it became worth more than the 9 largest automakers. And yes, Tesla is a technology stock, stupid.
Almost everybody invested in the stock market in 2020 is excited with the returns the market produced. Nonetheless, the 2020 page is almost closed and the next page, 2021, has opened.
Now is the morning after the party. It is about time seasoned and beginner stock market investors reorganize/strategize their portfolios for 2021.
Many analysts and investors are shouting out loud that a stock market crash in 2021 is imminent. They think that the market is currently overvalued and we should expect massive ‘corrections’.
So should we all be scared, save our 2020 fortune and avoid the market entirely in 2021?
Not a chance.
Not even in my dreams, in my wildest imagination.
When has the market not been overvalued? The market is almost always overvalued. Besides, you don’t sit at home and not go to work because its cold outside. You get a long coat, warm gloves, and an infinity scarf, and get out to work.
There are definitely a lot of uncertainties, and reasons to be cautious about this year. Take the rising interest rates or the global chip shortage for instance.
Nonetheless, one of the best ways to protect yourself from the cold is investing in what you know and understand. The more you know about a sector, the less uncertain you are. The more uncertain you are, the better you chance of picking winners, because there are always winners that beat every market, bear or bull.
Technology stocks are my bread and butter. I love them, I understand them and I stick to them.
If you are interested in technology stocks, here are the 10 best tech stocks to invest in that will collectively outperform the broader market:
Adobe Inc. operates as a diversified software company worldwide. It provides tools and solutions that enable individuals, small and medium businesses, and enterprises to create, publish, promote, and monetize their digital content.
Its flagship product is Creative Cloud, a subscription service that allows customer to download and access the latest versions of its creative products. Adobe also provides analytics, social marketing, targeting, media optimization, digital experience management, cross-channel campaign management, marketing automation, audience management, and video delivery and monetization solutions to digital marketers, advertisers, publishers, merchandisers, Web analysts, chief marketing officers, chief information officers, and chief revenue officers.
It doesn’t matter if people work from home or at the conventional offices, creators will always create, and those that are hocked to Adobe creative solutions will always pay their subscription fees.
In 2020 Adobe delivered a very strong performance. It’s a household name and yet, the company is still undervalued. Quarter after quarter, the company continues beating expectations, growing revenue and net income. The company is mind-blowing valuable for a tech stock.
It generated a revenue of $3.4 billion in Q4 2020, guess what was its net profit margin?
And guess how much was its cost of revenue for that quarter?
Adobe is a rare gem: growth and value packed in one. If the market is correcting in 2021, Adobe won’t be.
Broadcom Inc. designs, develops, and supplies a range of semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products worldwide.
In addition, it provides mainframe and enterprise software solution and cybersecurity solutions.
The company produces a wide range of semiconductors for various industries and sells its chips to the wireless, broadband, networking, data center, and industrial markets, all of which are expected to grow significantly next year as a result of the rolling out of 5G technology.
Its products are used in various applications, including enterprise and data center networking, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays.
Broadcom also offers a 3.4% dividend and is even planning on increasing its dividend payout by around 10% to 15%.
QUALCOMM Incorporated designs, develops, manufactures, and markets digital communication products worldwide.
The company develops and supplies integrated circuits and system software for use in wireless voice and data communications, networking, application processing, multimedia, and global positioning system products. It grants licenses or provides rights to use portions of its intellectual property portfolio, a key part of its revenue generation.
Qualcomm also invests in early-stage companies in various industries, including artificial intelligence, automotive, digital healthcare, enterprise software and solutions, mobile and networking, voice and data communications, and new industry segments.
Next year will be a bullish year for the 5G space, and Qualcomm have 5g chips ready to be shipped out on demand. They have chips like the Snapdragon 865+ 5G Mobile Platform for Smartphones, Snapdragon 8cx Gen 2 5G Compute Platform for PCs, and the Snapdragon Automotive 5G Platform, its first automotive-grade 5G platform.
Of course, for Qualcomm in 2021, its bread will still be buttered majorly from the 5g smartphone market, where it has existing customers like Samsung, Xiaomi, OPPO, ASUS, OnePlus, Nokia, Motorola, ZTE, Nubia, Lenovo, LG, and Sony; all of which are using Qualcomm’s Snapdragon 5g chip for their 5g phones.
And there’s more to Qualcomm in the 5g space other than its strong position in the chip market, if you take a long-term view (beyond 2021). Particularly is its drive in the potentially huge 5g Open RAN market.
Square, Inc. provides, together with its subsidiaries, payment and point-of-sale solutions in the United States and internationally.
It provides hardware products, including Magstripe reader, which enables swiped transactions of magnetic stripe cards; Contactless and chip reader that accepts Europay, MasterCard, and Visa (EMV) chip cards and Near Field Communication payments; Square Stand, which enables an iPad to be used as a payment terminal or full point of sale solution; Square Register that combines its hardware, point-of-sale software, and payments technology; Square Terminal, a portable payments device that replaces keypad terminals, which accepts various payment types, such as tap, dip, and swipe, as well as prints receipts; and managed payments solutions.
According to ResearchAndMarkets.com, “the Global Fintech Market is anticipated to grow at a CAGR of around 20% from 2020 to 2025. The market is expected to witness progressive growth and reach the market value of around $ 305 billion by 2025”.
The financial technology market is a fast growing market, and Square is one of the few companies dominating the space. Square and its likes are leading the charge to a cashless society
Ericsson provides information and communications technology solutions for service providers. It provides hardware, software, and related services for radio access and transport
It also provides networks and IT managed, network design and optimization, and application development and maintenance services to network operators.
Ericsson is the clear leader in the 5G infrastructure market, thanks to the US government putting pressure on Huawei and limiting the Chinese company’s ability to participate competitively in the global 5g infrastructure market, a pressure the Street is betting that Biden’s administration will continue putting, at least in 2021.
The company has secured over 111 5g commercial agreement and has publicly announced 60 contracts, all of which will translate to more revenue from equipment sales in 2021 for Ericsson.
Tesla currently has the most sought after self-driving and electric cars. It is the leader in the electric car market and a leader in the self-driving car race. As a company, Tesla epitomizes the future of cars.
The company has had a wildly successful year in the market in 2020, and closing the year with inclusion in the S&P 500 after five straight profitable quarter, a feat no other electric car company has achieved.
Telsa is widely overvalued, and if there’s going to be a serious market correction, the company should ‘ideally’ be first in line.
However, Tesla as a company is doing almost everything right, and it’s only normal that investors and customers reward them with loyalty. And there’s little suggesting a potential Tesla crash come 2021 as long as it keeps doing what it is doing and better. With the experienced and incredible management team Tesla has, I reckon they will continue doing better and 2021 will be a much better success stock for the EV maker.
I’ve never seen a stock frantically backed by investors, both institutional and individual, as Tesla. The company is literally defying the odds in the market, its resilience is incomparable.
Moreover, Electric Vehicles (EVs) and autonomous vehicles (AVs) are the future of vehicles and at the moment, Tesla seems to be a carmaker from the future. And if you are interested in investing in the EV and self-driving market long-term, Tesla is a stock for you.
NVIDIA Corporation operates as a visual computing company worldwide. It offers processors for PC gaining and mainstream PCs, cloud-based gaming, creative applications, artificial intelligence, accelerated computing, edge computing, cloud computing, and robotics.
It chips are used in gaming, professional visualization, datacenter, and automotive markets. NVIDIA Corporation sells its products to original equipment manufacturers, original device manufacturers, system builders, add-in board manufacturers, retailers/distributors, Internet and cloud service providers, automotive manufacturers and tier-1 automotive suppliers, mapping companies, start-ups, and other ecosystem participants.
NVidia has proven that it’s a stock for the long-term, despite the deep fall in 2018 (which it has recovered from). The company is beating competitors in the GPU space and gaining more market share, quarter after quarter.
The company recently signed a new manufacturing deal with Samsung for 8nm processors that power their RTX 30-series GPUs. The deal is a huge one, one that’s very likely a multibillion-dollar contract.
On the impending $556.67 billion self-driving car market, NVidia got its hands all over it. NVidia is venturing into the development of self-driving car technoloogy, while also selling chips to other companies developing self-driving cars. Its chips are powering nearly every major breakthrough in artificial intelligence.
The company has had an excellent run in 2020 and has enough in its tanks to keep trending north in 2021.
Apple Inc. designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide, all of which are expected to grow in demand in 2021.
The company offers iPhone, a line of smartphones; Mac, a line of personal computers; iPad, a line of multi-purpose tablets; and wearables, home, and accessories comprising AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch, and other Apple-branded and third-party accessories.
Its 5G iPhone (the iPhone 12) sales is expected to drive revenue growth next year, as its new iPhones always do. However, other 5G related products are also expected to grow in demand significantly in 2021.
It also provides digital content stores and streaming services; AppleCare support services; and iCloud, a cloud service, which stores music, photos, contacts, calendars, mail, documents, and others.
In addition, the company offers various service, such as Apple Arcade, a game subscription service; Apple Card, a co-branded credit card; Apple News+, a subscription news and magazine service; and Apple Pay, a cashless payment service, as well as licenses its intellectual property, and provides other related services.
Apple is as safe a safe bet in the technology space can be.
PayPal Holdings, Inc. operates as a technology platform and digital payments company that enables digital and mobile payments on behalf of consumers and merchants worldwide. Its payment solutions include PayPal, PayPal Credit, Braintree, Venmo, Xoom, and iZettle products.
The company’s payments platform allows consumers to send and receive payments, withdraw funds to their bank accounts, and hold balances in their PayPal accounts in various currencies.
It also offers gateway services that enable merchants to accept payments online with credit or debit cards, as well as digital wallets.
The Fintech company is a leader in its fast-growing market and has benefitted from its market position in 2020. It’s the runaway leader in digital payments, it has had a good run in 2020, and, it still has a long way to run and is well-positioned to run impressively in 2021.
Aptiv is a global technology company that develops safer, greener, and more connected solutions enabling the future of mobility. The company is focused on developing and commercializing autonomous vehicles and systems through its joint venture with Hyundai, Motional.
They are already providing autonomous ride-hailing services in Las Vegas, with over 100,000 public passenger rides, and have received a 5-out-of-5 star self-driving experience rating from 98% of its passengers. Aptiv was the first company to develop a commercial, autonomous ride-hailing service based in Las Vegas.
Aptiv is in the self-driving business of today, the company is currently selling hardware and software solutions used in semi-autonomous self-driving cars to some of the world largest Automakers.
The company provides electrical, electronic, and safety technology solutions to the automotive and commercial vehicle markets.
Aptiv’s 10 largest customers include General Motors Company, Volkswagen Group, Fiat Chrysler Automobiles N.V., Ford Motor Company, SAIC General Motors Corporation Limited, PSA Peugeot Citroën, Geely Automobile Holdings Limited, Daimler AG, Toyota Motor Corporation, and Tata Motors Limited.
Henry John is a Stock Portfolio Manager that focuses on companies developing cutting-edge technologies.
Keeping track of cutting-edge techs, companies and stocks is what I do almost everyday. And I love it. Whether it’s artificial intelligence, 5g, or autonomous vehicles; I’m all in.
I’m a self-made millionaire who made most of his money investing in technology companies while working in finance.
Yes! I owe it all to tech and finance.