Tech stocks with rich valuations are taking another hit this week. To certain investors, the sell-off in recent trading sessions could be an attractive buying opportunity. While the increasing Treasury yields may pose some concerns, investors should note that the growth among top tech stocks hasn’t stopped. Here’s why.
Entrepreneurs and visionaries are constantly trying to push forward on groundbreaking ideas. That said, things are looking great for the future of technology-based companies as demand for their solutions continues to soar. According to the International Data Corporation (IDC), companies are looking to spend more than $1.8 trillion on digital transformation in 2022. Such a large figure represents an urgent need for change and adaptability to be more agile in the midst of the COVID-19 pandemic. This also presents an opportunity for investors to grow their fortune as companies replace obsolete products while new ones are looking to empower their operations.
Continued buybacks from some of the best tech stocks in the market are also an indication that their value will continue to increase throughout 2021. Such activities led by tech giants like Apple (NASDAQ: AAPL) with a total buyback of $81.5 billion last year create a catalyst for tech companies to thrive. Typically, share buybacks can be a way of boosting stock prices. Or perhaps it could be because companies feel their stock is undervalued. Either way, many analysts take this as a good sign. With all that being said, many investors are taking the opportunity to buy these top tech stocks at discounts in the stock market today.Top Tech Stocks to Buy [Or Sell] This Week
- Zoom Video Communications Inc. (NASDAQ: ZM)
- Square Inc. (NYSE: SQ)
- Roku Inc. (NASDAQ: ROKU)
- Sea Ltd. (NYSE: SE)
Since the beginning of the COVID-19 pandemic, corporations, government entities, and schools alike are reliant on Internet-based video communications as they adapt to working and learning remotely. This created the meteoric rise of Zoom as a provider of such solutions, powering both corporate meetings and learning sessions. The video communications provider recorded a fourth-quarter net income of $260.4 million, or 86 cents a share. Even with a post-adjusting for stock compensations, Zoom reported earnings of $1.22 a share, up 15 cents a share compared to last year.
If that is not impressive enough, Zoom reported an adjusted profit of nearly $1 billion. That was an exponential jump compared with its meager earnings of $100 million the year before. With restrictions in both movement and travel continuing worldwide, this only means that users will renew Zoom’s subscription and continue their services. According to Chief Executive Eric Yuan, “Customers have come to us because of trust as the product is easy to use and reliable.”
Zoom is expected to have continued growth in 2021, albeit it would not be as fast as 2020. The company is forecasted to make between $3.76 billion to $3.78 billion with adjusted earnings between $3.59 to $3.65 a share. Considering that, would you say that ZM stock remains a safe choice for investors?
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Shares of fintech company Square have been under pressure over the last 2 weeks along with the broader market. But it is easy to forget that SQ stock has risen by over 500% since its lows back in March 2020. That compares favorably with fellow fintech giant PayPal (NASDAQ: PYPL) which saw its stock doubling in the same period.
Going beyond Point-of-Sale Systems (POS), Square has its eyes set upon wider horizons as it grows other forms of revenues. Its Cash App, for example, has seen at least 12 million new users in 2020 alone. The company benefits from such a wide connection of user networks. That’s because it creates an ever-expanding ecosystem where its services are used constantly. Usage will only continue to soar as Cash App also adopted stock and cryptocurrency trading, generating more users and transaction activities.
The company also announced that its industrial bank has started operations, calling it Square Financial Services. Offering business loans and deposit products, Square plans to operate under an agile, asset-light business model by selling the loans to third-party investors in an attempt to minimize its balance-sheet impact. This continues to solidify Square Inc as a financial solution stop for both millennials and Gen Zs. Will SQ stock continue its momentum for the rest of the year?Roku Inc. (ROKU)
You cannot just look at Roku Inc. in a one-dimensional view. It doesn’t only make the most popular digital media players in the country. But with over 51.2 million accounts created, this opens up to various different avenues for the company. Furthermore, it is looking forward to seeing one in two American households to have Roku media players by 2024.
Access to such a large user base allows Roku to possess a literal goldmine in advertising revenue. As the company has sealed the deal to acquire Neilsen’s video advertising business, Louqman Parampath, Vice President of Roku stated that “With the combination of Neisen’s AVA technology and Roku’s ad tech and scale it will enable us to deliver the benefits of TV streaming to traditional TV.“
The company has seen strong revenue growth over the past years. Revenue grew from $0.8 billion in 2018 to $1.8 billion dollars last year. Considering all these, can ROKU stock continue to grow throughout 2021?Sea Ltd. (SE)
With an expectation to double its e-commerce value in 2021 via online shopping, Sea Ltd. continues to progress as South East Asia’s leading e-commerce platform. While the company posted an almost doubled loss of $523.6, from $283.8 million, revenues rose to $1.6 billion in the last quarter compared to $777.2 million the previous year. This shows that it can compensate for its deficit with substantial revenue.
Backed by Tencent Holdings, SE stock is one of the best-performing stocks worldwide over the past year. The ongoing pandemic also seemed to benefit the company. This came as physical purchases are greatly reduced due to restricted movement in countries of Southeast Asia. Becoming the middlemen of consumers and entrepreneurs, the company “will use technology to better serve consumers and small businesses”, according to David Ma, Sea Ltd’s Chief Investment Officer.
The company also seems to progress well in its other business entities. Its popular mobile battle royale game Freefire is propelling Sea Ltd’s gaming platform, Garena. Moreover, its e-wallet service is widely adopted, with over $7.8 billion in transactions last year. With such positive performance, Sea Ltd. could be on track to become a corporate powerhouse in the years to come.