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Tech stocks have taken the cake as the market outperformers in 2020. This global pandemic has taken the economy online, and innovative technology companies are driving this move. We are able to digitally access almost anything we need, whether it’s for work, communication, entertainment, or shopping through cloud-computing, streaming, and other digital platforms. This pandemic is further conditioning society to rely on technology for all our needs.
The pandemic caused a highly correlated fear-driven market crash. Over the past month, rationality has reentered the equity market, and the strong correlations between sectors disappeared. The market is now separating the winners and the losers of the post-pandemic world.
Some of the notable tech winners of 2020 include Zoom (ZM - Free Report) , Tesla (TSLA - Free Report) , CrowdStrike CRWD, Sea Limited (SE - Free Report) , Netflix (NFLX - Free Report) , Amazon (AMZN - Free Report) , AMD (AMD - Free Report) , and Nvidia (NVDA - Free Report) . These 8 innovation driving stocks have all returned investors over 20% so far this year. Each of them dominates a vital space amid this pandemic and could be significant drivers in the post-pandemic economy. Below I will break down the top 3 stocks and discuss their long-term potential.
Zoom has become the go-to video communication tool over the past couple of months. This peer-to-peer cloud platform has been integral in telecommuting, education, and social interactions, keeping the sanity of those who have lacked social interaction for weeks. The firm’s user base surged from only 10 million in December to 200 million in March (a 2,000% increase in users in just 3 months), and its share price has surged almost 120% since the beginning of the year.
Privacy and security of the Zoom platform remains a significant concern among enterprises like Google (GOOGL - Free Report) , NASA, and Elon Musk’s SpaceX, who have banned this video-conferencing application. Other companies have warned their employees against using Zoom for anything confidential. If this video platform cannot be trusted by commercial enterprises, then I don’t see the stock having long-term potential.
This video conferencing may be a pandemic fad. Zoom’s user growth is likely going to fall off once economies start opening up, and people are able to interact face to face. I see this stock as highly risky and overvalued at its current price levels.
Tesla is an enigma to the market as investors try to figure out if it is an automotive company or a tech company. Its level of radical innovation in the automotive world is what makes Tesla a tech company in my eyes. Elon Musk has started keeping his promises, and TSLA’s share price has reflected this.
TSLA is up 75% so far this year, appearing to defy logic. The global pandemic has hammered the broader automotive industry but leaving Tesla relatively unscathed. Ford (F - Free Report) , Fiat , and GM (GM - Free Report) are suffering from significant supply chain issues and a demand halt.
Demand for Tesla vehicles remains strong amid the global pandemic. In Q1, Tesla was able to produce 100,000 vehicles and delivered 88,400. These figures were substantially above expectations and added fuel to TLSA’s recent rally.
The Shanghai Gigafactory is operating ahead of expectations. Tesla vehicle registration in China jumped 450% between February and March.
Its direct-to-consumer business model gives the company more flexibility amid this pandemic. Tesla is shifting the automotive world to an industry driven by technology. TSLA is well on its way to becoming the largest publicly traded automaker (by market cap) with only one more company to pass: Toyota (TM - Free Report) .
Despite the stocks long-term potential, these shares are highly volatile and are subject to rapid price changes. Price targets for this stock are all over the board from $250 to more than $1,000. I think this stock is a safe long-term buy at $500 or less.
CrowdStrike (CRWD)
With the world working remotely, security threats are taking centerstage for IT teams across the globe. CrowdStrike is a category-defining cloud player in security. 49 of the Fortune 100 companies have adapted this cloud security software already.
CrowdStrike is a modern cloud-based solution for the escalating security threats that the internet age has brought. This company leverages AI, cloud computing, and graph databases for its security software. CrowdStrike’s security AI is perpetually improving as it advances from crowdsourcing and economies of scale. CRWD’s cloud-based Falcon platform is an intelligent and evolving digital protector that detects and stops breaches in real-time.
This firm is growing fast, with the past twelve months exhibiting 116% subscription growth. The subscription-based model allows for reliable revenue streams, and its best-in-class innovative product offering is driving consistent growth. CrowdStrike has a growing addressable market with endpoint uses extending to everything from smartphones to internet of things (IoT) devices. Its cloud-based product gives it an enormous amount of user flexibility for any device that requires digital protection.
CRWD was down over (33%) year-to-date on the initial market crash, but these shares violently recovered 107% since its low as investors and traders see the value of this technology moving forward. I believe that CRWD’s rally still has legs. CrowdStrike’s cloud-based AI security platform is well-positioned to be the dominate player in the evolving cybersecurity market.
Take Away
Tech is becoming the king of our digitalizing economy, and the global pandemic is forcing the world to adapt rapidly. These 3 outperforming tech stocks give us a glimpse of how the pandemic is changing consumption patterns. As investors, we can take advantage of this consumer shift toward technology. We need to ensure that we are choosing winners: companies with savvy management, healthy liquidity, and a compelling product offering that is not only a necessity but isn’t easily imitated.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
Tech Innovators Driving The 2020 Equity Market
Tech stocks have taken the cake as the market outperformers in 2020. This global pandemic has taken the economy online, and innovative technology companies are driving this move. We are able to digitally access almost anything we need, whether it’s for work, communication, entertainment, or shopping through cloud-computing, streaming, and other digital platforms. This pandemic is further conditioning society to rely on technology for all our needs.
The pandemic caused a highly correlated fear-driven market crash. Over the past month, rationality has reentered the equity market, and the strong correlations between sectors disappeared. The market is now separating the winners and the losers of the post-pandemic world.
Some of the notable tech winners of 2020 include Zoom (ZM - Free Report) , Tesla (TSLA - Free Report) , CrowdStrike CRWD, Sea Limited (SE - Free Report) , Netflix (NFLX - Free Report) , Amazon (AMZN - Free Report) , AMD (AMD - Free Report) , and Nvidia (NVDA - Free Report) . These 8 innovation driving stocks have all returned investors over 20% so far this year. Each of them dominates a vital space amid this pandemic and could be significant drivers in the post-pandemic economy. Below I will break down the top 3 stocks and discuss their long-term potential.
Zoom (ZM - Free Report)
Zoom has become the go-to video communication tool over the past couple of months. This peer-to-peer cloud platform has been integral in telecommuting, education, and social interactions, keeping the sanity of those who have lacked social interaction for weeks. The firm’s user base surged from only 10 million in December to 200 million in March (a 2,000% increase in users in just 3 months), and its share price has surged almost 120% since the beginning of the year.
Privacy and security of the Zoom platform remains a significant concern among enterprises like Google (GOOGL - Free Report) , NASA, and Elon Musk’s SpaceX, who have banned this video-conferencing application. Other companies have warned their employees against using Zoom for anything confidential. If this video platform cannot be trusted by commercial enterprises, then I don’t see the stock having long-term potential.
This video conferencing may be a pandemic fad. Zoom’s user growth is likely going to fall off once economies start opening up, and people are able to interact face to face. I see this stock as highly risky and overvalued at its current price levels.
Tesla (TSLA - Free Report)
Tesla is an enigma to the market as investors try to figure out if it is an automotive company or a tech company. Its level of radical innovation in the automotive world is what makes Tesla a tech company in my eyes. Elon Musk has started keeping his promises, and TSLA’s share price has reflected this.
TSLA is up 75% so far this year, appearing to defy logic. The global pandemic has hammered the broader automotive industry but leaving Tesla relatively unscathed. Ford (F - Free Report) , Fiat , and GM (GM - Free Report) are suffering from significant supply chain issues and a demand halt.
Demand for Tesla vehicles remains strong amid the global pandemic. In Q1, Tesla was able to produce 100,000 vehicles and delivered 88,400. These figures were substantially above expectations and added fuel to TLSA’s recent rally.
The Shanghai Gigafactory is operating ahead of expectations. Tesla vehicle registration in China jumped 450% between February and March.
Its direct-to-consumer business model gives the company more flexibility amid this pandemic. Tesla is shifting the automotive world to an industry driven by technology. TSLA is well on its way to becoming the largest publicly traded automaker (by market cap) with only one more company to pass: Toyota (TM - Free Report) .
Despite the stocks long-term potential, these shares are highly volatile and are subject to rapid price changes. Price targets for this stock are all over the board from $250 to more than $1,000. I think this stock is a safe long-term buy at $500 or less.
CrowdStrike (CRWD)
With the world working remotely, security threats are taking centerstage for IT teams across the globe. CrowdStrike is a category-defining cloud player in security. 49 of the Fortune 100 companies have adapted this cloud security software already.
CrowdStrike is a modern cloud-based solution for the escalating security threats that the internet age has brought. This company leverages AI, cloud computing, and graph databases for its security software. CrowdStrike’s security AI is perpetually improving as it advances from crowdsourcing and economies of scale. CRWD’s cloud-based Falcon platform is an intelligent and evolving digital protector that detects and stops breaches in real-time.
This firm is growing fast, with the past twelve months exhibiting 116% subscription growth. The subscription-based model allows for reliable revenue streams, and its best-in-class innovative product offering is driving consistent growth. CrowdStrike has a growing addressable market with endpoint uses extending to everything from smartphones to internet of things (IoT) devices. Its cloud-based product gives it an enormous amount of user flexibility for any device that requires digital protection.
CRWD was down over (33%) year-to-date on the initial market crash, but these shares violently recovered 107% since its low as investors and traders see the value of this technology moving forward. I believe that CRWD’s rally still has legs. CrowdStrike’s cloud-based AI security platform is well-positioned to be the dominate player in the evolving cybersecurity market.
Take Away
Tech is becoming the king of our digitalizing economy, and the global pandemic is forcing the world to adapt rapidly. These 3 outperforming tech stocks give us a glimpse of how the pandemic is changing consumption patterns. As investors, we can take advantage of this consumer shift toward technology. We need to ensure that we are choosing winners: companies with savvy management, healthy liquidity, and a compelling product offering that is not only a necessity but isn’t easily imitated.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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