Best Technology Stocks to Buy: Technology is forever changing. New technologies are developed every day, followed quickly by new products and services that leverage those advancements.
It is an exciting course for consumers to follow, forever jumping on to the next big thing or fun new product. However, the playing field gets increasingly confusing for investors.
It can be difficult to quantify the benefits or products for which new technologies may provide the basis and even harder to pick a horse in the proverbial technology race.
We believe that the best investment strategy is one that is well-informed, well-researched, and well-reasoned. In this article, we have collected a list of several technology stocks we think are showing great promise. As an investor, take a look and see what you think.
Some of these picks may work in your investment horizon while others will be better suited to longer or shorter term positions – but, it is a place to start your research.
Pinterest Is In Its 1st Advertising Inning
Pinterest (PINS) is a company with one product – its namesake Pinterest. Pinterest calls itself a “productivity tool for planning your dreams.”
For the uninitiated, Pinterest is a basically a media-rich search engine or a visual recommendation site.
Users (called pinners) search for inspiration related to daily activities from losing weight to planning a wedding, throwing a baby shower to taking a vacation, running a marathon to designing a wardrobe.
The site then offers recommendations (i.e., pins) based on that “pinner’s” interests and tastes. Each one links back to a useful resource, like an article or a place to buy the item.
Pinners organize those recommendations into Boards for easy reference. Over time, the site learns from individual users and offers more and more refined results.
People like Pinterest. The visual recommendations resonate well with many people who may have a hard time describing what they want.
It also makes it easy to get ideas and turn them into reality – and it shows in the numbers.
Pinterest has 450+ million users (roughly two-thirds identify as female). Collectively, they have saved hundreds of billion of pins.
This audience is extremely valuable.
Pinterest is used by 47% of Internet users in the US and 80% of moms. It is also popular amongst millennials – more than half of those aged 18-34 use Pinterest.
Taking into this demographic can be lucrative, but the nature of Pinterest means that advertisers can publish Pins instead of ads, provide value instead of broadcasting a message, and still get the Pinner to link to their site.
Plus, that Pin is not just used by the Pinner but shared throughout that Pinner’s network. It is organic advertising.
Roughly two-thirds of Pinterest’s revenue comes from these Pin-ad hybrids, but the real value of Pinterest is not just in the ads it posts.
The company also collects a ton of data that can help it analyze consumer behavior and predict trends. The company has only begun to scratch the surface as to what is possible by leveraging this information.
There are risks to the Pinterest business model.
After all, the company’s Pins are only as good as the third-party content that produces them. If Pinners see too much of the same stuff, they could become frustrated and go elsewhere. Further, there is the risk that another visual social channel, like Facebook’s Instagram or a visual shopping search, like Amazon recommendations could unseat Pinterest.
However, where Pinterest shines is that it has a DIY element that those other resources lack. It also lets Pinners search for very specific topics and delivers a range of personalized results which users may not get elsewhere. Altogether, the company has a unique value proposition that could be worth investment.
Qorvo Powers The 5G Revolution
The company works in the mobile device and smartphone industry as well as the aerospace, defense, cellular stations, Wi-Fi equipment, and smart technologies industries.
The products it develops range from high-power solutions to ultra-low-power devices and everywhere in between.
Mobile devices are its largest market with Apple accounting for approximately one-third of the company’s revenue for the past three years.
However, Qorvo’s business is much more diverse than that. The company buys its own raw materials and manufactures a number of its products.
In this sense, Qorvo is extremely vertically integrated and relies on its intellectual property quite a bit.
Competition is fierce in the arenas where Qorvo operates.
Technology is advancing rapidly in many of the areas where the company competes. Short product life cycles combined with an increasing consumer willingness to upgrade means that new entrants to the field can pop up at any time and device manufacturers can switch suppliers readily.
There is no guarantee that a company will use Qorvo’s products in the next generation of an item – and that’s a real problem when so much of the company’s business is centered on a single company.
Further, even if Qorvo maintains a good relationship with a device company, there is no guarantee that the consumer device that company makes will be successful enough to allow Qorvo to recoup the money it spent on developing the specific technology leveraged in the device.
There could be a new product that comes along, a different product that fulfills the same needs, a new technology, or simply a sharp economic downturn amongst would-be end users.
Broadcom Is A Tech Behemoth
Its products include storage systems, networking, switches, fiber optics, LED displays, optical sensors, and mainframes as well as cybersecurity.
The company counts some big entities as clients, including government agencies and Fortune 500 corporations.
In November 2019, Broadcom bought Symantec (otherwise known as NortonLifeLock) for $10.7 billion.
This purchase helped Broadcom expand its infrastructure-focused software offerings and improve its overall product mix, particularly with regard toward the prevention of data loss, endpoint protection, network security, cloud application security, and email security.
The strategic acquisition is only the latest one. Broadcom bought CA for $18.8 billion in cash around November 2018.
After the Symantec acquisition, Broadcom reorganized into three segments: infrastructure software, IP licensing, and semiconductor solutions. However, its reportable segments will further shrink, starting in the next fiscal year, when IP licensing falls off as a reportable segment. It will instead become absorbed by the semiconductor segment.
Broadcom’s overall strategy is to deliver best-of-breed technology with a platform for an entire suite of infrastructure products – hardware on one side, software on the other, and a happy customer overall.
Right now, Broadcom’s biggest risk is that it has a relatively small number of customers that make up its overall sales.
Its top five customers across all channels brought in more than 30% of the company’s revenue in FY2019. This much size gives those customers a lot of negotiating power and it does impact Broadcom’s margins.
However, that issue is ebbing off. FY2019 was a major improvement from FY2018 when the same five customers accounted for over 40% of sales.
TravelSky Technology Powers Travel In China
Its products serve airlines and airports as well as travel agencies, cargo shippers, and regular travelers. Per its annual report, “The year 2019 marks the Seventieth Anniversary of the founding of the People’s Republic of China.
It is the key year to build a well-off society in an all-round way and achieve the goals of the first century. It provides valuable historical development opportunities for the Group to further consolidate its market position, expand its business, and give full play to its industry experience and technological advantages.”
However, TravelSky does face certain challenges, such as economic slowdown and overall instability. At the same time, aviation has been faced with new requirements pertaining to safety and the environment, changes which increase the company’s operating costs.
Qiwi Is Russia’s Payment Service
Qiwi (QIWI) is payment services company. Its next-gen solutions have powered more than 22.3 million virtual wallets throughout Russia and the CIS.
In addition, Qiwi has more than 136,000 terminals and kiosks. Collectively, over 117 billion RUB pass through the company’s 43 million strong customer network every month.
The company has a robust ecosystem that serves users, merchants, and banks. Qiwi’s product portfolio includes prepaid mobile cards, push payments, self-service kiosks, a QIWI Visa card, SOVEST Visa, Tochka MasterCard, card-to-card payments, and money remittance, as well as Rocketbank and FinTech.
Qiwi has issued over 700,000 SOVEST cards and counts more than 300,000 Rocketbank clients.
Cognizant Revenues Are Highly Diversified
Some of these are native to Cognizant and proprietary while others are licensed from third parties. Where Cognizant shines is in putting all of these different offerings together into cost-effective packages tailored to its customers’ unique needs.
These modern, tech-forward solutions fall into four business segments: financial services, healthcare, products and resources, and communications, media, and technology. Each one has its own challenges.
For instance, financial services is dominated by cost optimization while healthcare focuses on more on compliance and integrated health management.
Products and resources is a very diverse segment. It includes manufacturers as well as retail, hospitality and travel services, and utility companies.
Customers in this segment may seem very different but they generally want the same thing – to integrate mobile platforms and digital technology to improve efficiency in their operations.
Cognizant’s communications, media, and technology business encompasses media companies and communications firms.
These businesses leverage Cognizant to better manage their digital content.
Revenue derived from these segments is as follows: financial services 36.2%, healthcare 28.9%, products and resources 21.2%, and communication, media, and technology 13.6%.
Cognizant is working to grow its business through a few different strategies. On the one hand, there is definitely an ecosystem-approach happening here.
It divides its segments into three practice areas. They include:
- Digital Business,
- Digital Operations, and
- Digital Systems.
Together, they are supported by the overarching Cognizant Consulting, which is meant to accelerate adoption amongst practice areas.
However, Cognizant is much more than an ecosystem-based digital services company trying to sell people on its way of doing things.
The company is also strategic in its acquisitions and alliances. In 2018 alone, the company purchased five entities, including Bolder Healthcare, Hedera Consulting, Softvision, ATG, and SaaSfocus.
Time will tell how these strategies play out. After all, there is intense competition in this industry, but Cognizant is being very strategic in its approach and it may be worth a closer look.
Best Technology Stocks To Buy
Technology stocks can have a big payoff when you choose well, but the days of a life-changing investment popping off and making you independently wealthy from of a $100 investment are long past.
Take your time researching these tech stocks and see if you think one will be a good fit for your investment portfolio.
The right stock for one person may be very different than that of another, but if you do your due diligence, you may be able to make a smart investment that offers ample return for your risk.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.