Investing in technology stocks might be the best thing to consider especially when you intend to diversify your portfolio. Technology is the face of the future and there’s a tight competition in the market as companies continue to make ground breaking discoveries and innovations to their products and services. There are still a lot of growing companies out there but in terms of capitalization, profit and growth, only a few landed on my list. This includes Google, Facebook, Apple, Amazon and Netflix.
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Google (parent company Alphabet Inc., GOOG, GOOGL)
GOOGL has an exceptional growth and profitability over its operating years and it has been labelled as one of the most advanced and innovative companies in the world. If we look at its earnings and returns, the company has never earned an ROIC below 25% except the recession last 2009. In terms of sustainability, it has the most number of users in the web and their platform has been ingrained in people when using the internet.
The company certainly use most of its CAPEX on R&D expense and it’s said that they are working projects involving Artificial Intelligence (AI) but who knows what other surprising technological advances they may make. As long as they are earning profit for investors, it’s certainly one good stock to invest in.
Market analysts are expecting a 20.5% revenue growth this year and 17% in 2019. As for their bottom line figure, analysts also expect the growth to be at 28% this year and 17.2% in 2019.
Facebook Inc. (FB)
Even over a billion users, the company is still continually growing. There were concerns about the Cambridge Analytica scandal on data management and potential regulation but it did not significantly affect the company. The price of FB’s shares dropped but it bounced back again to its normal average price. FB provides long term sustainability since most businesses heavily rely on their exposure on the company’s platform.
Some experts forecast that out of all the tech companies, FB is expected to grow the fastest this year. Revenue growth should hit at 34% as more online marketers make the most of its ad campaign. Facebook has consistently been performing well over the years. In fact, in the Q1 of 2018, revenue grew to 49%, EPS growth of 63%and user growth of 13% to 2.2 billion. On top of that, the company has received no less than 29 buy ratings with just 1 hold and 1 sell rating on the Street. It has also been consistently on the top picks on different investing institutions.
Apple Inc. (AAPL)
APPL is always at the front seat of innovation. In fact, it has developed a long term demand from the market from its iPhone series. AAPL’s low valuation is what makes it attractive to investors in line with its industry-leading margins, exceptional brand and stable financial health. Their liquidity can be seen in the amount of cash reserves they have which is a whopping $285 billion and they plan to return over $160 billion to its shareholders. Analysts expect to earn $11.54 per share which is up by 25% from 2017. They expect earnings to grow at 15% in 2019.
AMZN is a founder-run company and even so, the founder’s leadership is exceptional; bagging in earnings for its shareholders.
AMZN’s stock price grew by 87% last year and for a five-year price summary, it has grown a total of 513%. Just like any other tech company, it invests heavily on R&D and it spent $22.6 billion on technology and content last year. Last year, it reported a 31% growth in its revenue amounting to $177.9 billion. Majority of their sales come from its online shopping platform.
The good thing about investing in the company is that, it has the willingness to engage in a wide range of industries from fashion business to retail banking.
Netflix is one of the fastest growing tech companies out there earning income not only from online video streaming but also from domestic DVDs. If we look at the balance sheet of NFLX comparing data from the Q1 of 2018 and that of the same period last year, we will have the following information: its total membership grew to 26.6% and this is from domestic and international memberships, consolidated revenue grew to an astounding 40% and for its bottom line figure, it grew by 62.8% to $290,124.
The company has reached a total of 190 countries worldwide catering around 524 million people. And this year, they will be spending between $7.5-8 billion on content which will fund for the creation of their 700 new original series and 80 feature films. The good thing is, the company is able to maintain a modest amount of its operating margin bagging in more income for its investors. Since the company is still in the early stages of its expansion project, investors should think of buying this stock.