It is not a difficult thing to find the top-performing tech stocks to add to your portfolio. What you will probably find difficult, like I am, is deciding which to add to your portfolio.
Q3 2020 hedge fund letters, conferences and more
Listing the best stocks to invest in is not difficult as long as you know what you are looking for and what you have to look for. The top-performing tech stocks are showing many common traits.
These traits include substantial and long-term fundamental performance as well as stable and market leading price performance. While these are generic to all categories of stocks, in tech stocks, it is necessary to see how the company's' technology matches future predictions and what the company management and its funding and liquidity management are showing.
Many tech stocks are exhibiting such qualities, and we will discuss them in detail later on. The stock market dived deeply during the COVID-19 lockdown, and many stocks came and are still under severe pressure. While many growth stocks took a hit, the tech sector is among the few that showed resilience and was able to perform strongly enough to pull the weight of entire funds and drag them into profitability.
Most tech stocks are showing strong fundamentals and are, therefore, selling at premium prices. The strong performance in negative markets and strong growth prospects make the prices seem justified.
The Top-performing Tech Stocks
Selecting the Best Tech Stocks to Buy during 2020:
The stocks that we recommend buying here are not guaranteed stock market winners from a day trader's perspective. However, they possess most criteria that are required from stocks going through a price gain. This makes these recommendations worth looking at for people looking to buy stocks for short to medium-term investments.
Alphabet (GOOG, GOOGL)
Google's holding company Alphabet is one of the top-performing stocks of the Nasdaq. While investors have been going through a tough time with most stocks dipping and diving, Alphabet continues its growth momentum. It has grown about 6% year to date. Most analysts predict that long-term investors will enjoy stable growth trends. This forecast is based on the growing demand for cloud-based business demand and Google's investment in YouTube. These businesses enjoyed growth during the lockdown, keeping the projections for growth in the double figures for three years. Google has excellent leverage figures and profitability predictions, making it the go-to staple for all investors with pockets deep enough to afford the stock, which ranges around 1400 at present.
Broadcom (AVGO)
Broadcom is far less famous than Alphabet, but it is just as strong in terms of fundamentals. It is a large-cap company working in the semiconductor segment. Broadcom makes chips that are used in products used in wired telecommunications networks. Its chips are also used in wireless communication installations and are also used in storage media. According to analysts, Broadcom stock will be a significant beneficiary from the upcoming 5G mobile device upgrades. Its products will be widely used in 5G devices as well.
Broadcom's strategy of focusing on cyclical and high margin infrastructure software billing is a sound strategy that is working out for the company. The company is predicted to post revenue growth of around 5% in 2020 and pays a dividend of approximately 4.5%. With a much smaller market cap than Google, Broadcom is a company that may have a lot more room to run.
Super Micro Computer (SMCI)
Another lesser-known technology stock, Super Micro Computer, is a $1.3 billion company manufacturing server and storage solutions supplier for a globally spread-out customer base. While SMCI is not in a high growth business sector, its products are expected to stay in demand for the long term. Companies continue to need progressive and customized servers for processing cloud, artificial intelligence, edge, and 5G solutions.
SMCI's long term attractiveness is further increased due to its global customer base and long record of profitability. The company reported more than 850 direct customers alone in 2019. The company's bottom line has been in the green since its inception in 1993. The company is also focusing on sustainable energy-conserving storage solutions, which allows its customers to save money.
The stock is also affordable for smaller investors, trading at less than $50 per share.
Alibaba Group Holding Ltd (BABA)
While this may be out of many investors' comfort zone, the Chinese e-commerce behemoth has remained constant while the many US and international growth stocks came under stress during the pandemic and the lockdown dives.
The company has booked a 15% rise in Q2 profit while its sales grew 30% to $21.76 billion.
Alibaba categorizes its revenue into four segments: Core Commerce, Cloud Computing, Digital Media and Entertainment, and Innovation Initiatives. Core commerce revenue increased by 34% to $18.9 billion. Cloud revenue increased 59% to $1.75 billion.
Considering that the Chinese version of Amazon is still growing and expanding into other regions and launching new initiatives, this is a stock to retain for the long term. Its core commerce, Digital Media and Entertainment, and cloud computing revenues are poised for long term growth.
Salesforce.com, Inc (CRM)
Salesforce.com is a US cloud-based software company based in San Francisco, California. The company sells customer relationship management software. It also sells an allied group of enterprise applications that are linked to its customer service software. These applications are designed to make the marketing process more automated. It consists of customer analytics and marketing software deployment tools.
Salesforce.com was listed on the Dow Jones Industrial Average (DJIA) in 2020. It was predicted to generate profit figures of 67 cents per share and revenue of $4.9 billion. The company booked a profit of $1.44 a share, corrected post-pandemic, and $5.15 billion in earnings.
While most enterprise software stocks have come under stress during and post-pandemic, Salesforce stocks have continued to hover near its 21-day exponential moving average figures. Since the segment shows growth and the automation of marketing and customer analytics are fast-growing segments, Salesforce.com is a stock to buy since it offers the strong fundamentals and growth potential that we mentioned earlier on.
