Five Tech Stocks For Portfolio Growth
Technology has been the best performing sector over the past 10 years, according to data from Bloomberg. This outperformance is attributed to superior fundamentals with tech generating the best earnings growth and profit margins 1, 2.This has translated into higher stock prices.
The coronavirus was somewhat the icing on the cake. It greatly accelerated the adoption of emerging software and hardware, such as cybersecurity and remote work. Below we look at some of the standout technology companies in recent years.
Microsoft (NASDAQ: MSFT)
One of the biggest companies on the planet, Microsoft may seem like an obvious choice. However much about Microsoft’s growth story is less than obvious. The company has seen a dramatic turnaround under the leadership of Satay Nadella. Under his guidance Microsoft shed Nokia, branched out into social media with LinkedIn, adopted the subscription model with cloud computing and embraced open source. The future also looks bright as Microsoft has invested in major growth themes. Thanks to Xbox Game Pass and its acquisition of Blizzard, it has a foothold in eSports and competitive video gaming. Thanks to Azure, Microsoft is a dominant player in cloud technology. Thanks to Teams, it is the incumbent for the work from home theme. Microsoft has a lot going for it.
Lam Research (NASDAQ: LRCX)
“Virtually every leading-edge device has been made using our equipment”, the website for Lam Research reads. And it is exactly right. Lam Research makes some of the world’s best semiconductor-making machines. Lam’s machines essentially cut microchip pieces into the right shapes—which is no simple task. As microchips are so small – just 3 nanometres – these machines must be accurate at an atomic level. There has been increased demand for semiconductors in recent years, thanks to the rise of cloud computing, electric cars, and data centres. This has translated into more demand for Lam’s machines.
Salesforce (NYSE: CRM)
As evident in its ticker, Salesforce has long been regarded as the kingpin of customer relationship management systems, with its platform used by countless businesses to manage their sales efforts. But Salesforce does not only do sales management these days. It is increasingly used in marketing thanks to its Pardot software and team collaboration tool, thanks to its acquisition of Slack. The company is also expanding in areas such as machine learning, social networks, and analytics. As a pioneer of cloud computing, Salesforce continues to see consistent revenue growth and is rated a wide moat stock by Morningstar.
Adobe (NASDAQ: ADBE)
Adobe is to multimedia design and content creation software, as Apple is to the mobile phone. (Which is perhaps a little ironic as Steve Jobs attempted to purchase Adobe for $5 million in 1982 but was refused). Now, Adobe is a software industry titan worth $175 billion, with its products virtually ubiquitous in businesses. Adobe’s products span from Adobe Acrobat, which is the staple software for managing PDFs. Include the design trio of Photoshop, Illustrator, and Indesign. And includes more expert oriented applications such as XD or Aftereffects. Much of its software is industry-leading and, to an extent, iconic.
Garmin (NYSE: GRMN)
How did a maker of GPS navigational devices strictly for planes, cars, and boats, become the industry leader of enthusiast sports and fitness wearables? For runners, bikers and other fitness enthusiast, Garmin is a brand now synonymous with the GPS smart watch, but for Garmin, building their wearables brand was a business saving decision. As Google maps and the iPhone entered the landscape in the 2000s, Garmin was forced into battle against tech behemoths to retain customers in an already increasingly competitive space. But in a surprising turn, Garmin became one of a few companies in history to fight the giants and thrive, remaining a powerhouse in software and hardware for aviation, marine and cars, while building a strong brand amongst sports fans as a must have for the fitness zealot.
TECH: For those wishing to invest in industry leading technology firms, the Global X Morningstar Global Technology ETF (TECH) provides one way of doing so. TECH invests in global technology companies, identified by Morningstar’s equity analysts as having competitive advantages and trading on fair valuations.
Click the fund name above to view the fund’s current holdings. Holdings are subject to change. Current and future holdings are subject to risk.