When we talk about stocks, the tech sector is way more popular than other traditional sectors like financial services, industrial, energy, and so on. The technology sector stood strong in stocks since the launch of personal computers by Apple and IBM decades ago. It was a rage during the 80s and 90s, the dot-com bubble, and even today during the COVID-19 pandemic recession.
If you look at the top ten companies by market capitalization in the US, with the exception of Berkshire Hathaway, they all are related to tech. Furthermore, only four companies have over $1 trillion market cap which are Apple, Microsoft, Amazon and Alphabet. Online shopping and technology are impacting our everyday lives more and more. Amazon’s business has grown 38% last year.
Financially speaking, NASDAQ 100 - a more technology-driven index - has outperformed S&P 500 11 times in the last 13 years. Technology weighs 55% in the NASDAQ 100 index, more than any other major index.
In this article, we will discuss the most popular tech stocks of 2021.
Disclaimer: I am not a financial expert. This article is for informational purposes only. We are not trying to convince anyone to invest in the following listed companies. Nothing in this article constitutes professional investment advice. Please do your own thorough research before making an investment decision.
Who does not know Warren Buffet? The Oracle of Omaha and one of the greatest investors alive. Initially, like many other stock investors, he hesitated to buy any tech stocks. It was only in 2016 that Berkshire Hathaway first invested in any tech stock. Buffet’s company invested heavily in the Cupertino giant and since March of this year Berkshire Hathaway has made over $100 billion just from Apple stocks.
Berkshire Hathway, after having a great year, sold 36 million shares in Nov 2020. However, Warren Buffet called selling stocks a mistake because in his opinion he undervalued AAPL. He now plans to buy more of it. Goldman Sachs also recently admitted they were wrong about Apple for giving it a ‘sell’ rating.
Apple now makes 42% of the whole investment portfolio of Berkshire Hathaway, the largest investment company.
Apple is predicted to be a winning stock and will bring great profits in 2021. The company has been growing steadily in the last decade and reached a market cap of over $2 trillion last year. AAPL is the most traded stock by volume with a price of over $100 this year. Its Simple Mean Average for Volume stands at over 99 million.
Apple stock pays well too. With a long dividend history, Apple tops our list of most traded stocks in 2021.
The PE Ratio stands around $28.6 as of May 2021 for a share at $127. Since April 2020, Apple has yielded a PE Ratio of above 20 which gives one a good reason to admit the company is over-performing.
The Tesla stocks story is a fairytale. In May 2020, a TSLA share was pricing around $150 but at the start of 2021 it was flying high around $880. That was over 5.5x of your investment if you just bought the dips and sold it at the start of the year. This unexpected growth made Elon Musk the richest person in the world.
Since the start of 2021, Tesla stocks are one of the worst-performing. TSLA hit $891 on January 26, but then kept crashing and is trading around $500 to $600 nowadays. The company has pivoted itself from just an electric car manufacturer to an AI and robotics company. So the growing competition between Tesla and other electric automakers should not be a decisive factor for investors. The great innovations like one of the most advanced self-driving capabilities, over the air updates, making cars talk, and car-to-car communication under research that can help cars to prevent collisions, managing a traffic jam, and much more are the reason that tech investors still believe that Tesla may become the next Apple.
It was one of the most traded stocks last and this year. Even today, as of May 17, TSLA is the only stock valuing over $250 in the list of most active stocks. It has been traded for 33 million times a day this year on average.
But long-term investors and those who go buy the textbook usually consider PE ratio as a major factor to make the decision. As of today, TSLA has a PE ratio of 577 which is huge and such values are considered an extreme bubble, so be careful and have a critical eye on the real-time stats of such booming tech stocks.
Intel is one of the best-performing tech stocks this year.
It is a well-established company with fairly priced EP Ratio.
The company stocks made a reasonable comeback after hitting as low as $44 per share in the last quarter of 2020. The shares went as high as $64 in 2021 Q1, and INTC became the talk of the financial town.
From a technical person's point of view, the Intel processors business growth is predicted to be slow due to the growing competition from Apple Silicon and the 2nm chipset launch by IBM, so Intel needs to up the game to regain the lost grounds. If Intel cannot beat its competitors with its product, the semiconductor maker will struggle to compete in the stock market.
Intel in their financial report of 2021 Q1 mentioned that the company generated $5.5 billion in cash from operations, paid dividends of $1.4 billion, and used $2.3 billion to repurchase stock. So this could be a turn off point for stock buyers as mature corporations usually pay most of their generated cash in dividends.
Insight Enterprises is an Arizona-based IT company which hit its lowest market cap ($1.15 billion) in March 2020. Since then, the company has been on the rise slow and steady. In just one year and two months, today NSIT closed at a market cap of $3.53 billion.
The stocks are well priced at $100.24 as of May 17. Furthermore, the EP Ratio stands a little below $20 and 1 year target set at $112 which looks achievable. The volume of stocks in the early days of January 2021 was around 150,000 which has hit over 500,000 in May 2021 which is more than 5 times. It is one of the most-traded and fastest-growing tech stocks of 2021.
Square, the fintech company founded by Twitter co-founder Jack Dorsey, has shown a steady growth in the last one year. It was not until June 2020 that SQ stocks traded for $100 or above. The trend continues in 2021 and Square stocks are trading around $200 as of May. Square stocks have outperformed previous years by a huge margin. Just look at the mean curve in the graph below, SQ has performed 156% in the last year.
SQ could be considered volatile as their 52-week trading price ranges from $76.02 to $283.19. The EP Ratio at 285 could also be considered as risky. However, with the growing trend in online shopping and e-commerce, if we look at it from a technical point of view, Square is a winner and will likely perform well in the long run. Unfortunately, SQ does not pay dividends.
Microsoft has been making a consistent comeback under Satya Nadella for the last few years now. From 2017 to 2020, Microsoft added a whopping $800 billion to its market capitalization. Particularly its cloud computing business ‘Azure’ is booming.
Microsoft won large contracts from the Pentagon including $10 billion JEDI and $21.8 billion HoloLens, which made the company a clear winner in the cloud and augmented reality business.
With consistent growth and such contracts in their portfolio, businesses are attracted to solutions provided by Microsoft now more than ever. Microsoft made, on average, 12% profit for the last three years and this is the reason its stocks are winning in 2021 as well. Under the leadership of Satya Nadella Microsoft could be a safe bet for the future.
Microsoft has a decade-long history of almost a linear increase in paying dividends to its shareholders. With a share pricing of around $246 in May 2021, MSFT is the only share with a mean volume of 28 million shares traded every day, making it one of the most traded stocks in 2021.
Futu is a popular app in China and Hong Kong for investment and wealth management. Investing apps are a growing global trend and FUTU has grown over 300 percent since the beginning of 2021.
The graph explains all, Futu has made more gains in 2021 than any other year since its inception in 2007. The fintech company employs over 500 full-time resources. The operational income of the company has grown up from a mere $35 million to $213 million, and revenue increased from $135 to $426 million making it the talk of every investor eyeing fintechs. Headquartered in Hong Kong, the PE Ratio stands high at around $97 and market cap at $16.7 billion. The stock is priced at around $125.
Twilio, a company based in San Francisco, was one of the few companies whose business grew during the COVID-19 pandemic. The company provides APIs through which different apps can integrate Twilio to make voice/video calls (VoIP) and send text messages. Cloud voice platforms were rising lately and so the Twilio stocks were in high demand.
TWLO was trading at $80 on March 23, 2020, and riding with the tide investors started investing in similar cloud platforms including Ring and Zoom. The stocks were trading over 50 million times a day. TWLO was trading at $313 at the end of 2020.
Twilio is now trading around $300 in May, but the Earnings per Share have dropped in negative numbers which means the company is losing some money.
The Motley Fool mentioned Twilio, along with Salesforce, as one of the two tech stocks to buy even if the market crashes, as Twilio was the first-mover in the market. The analyst believes the company has a long history of investing in itself and would make the company profitable in near future.
Twilio has had a hard year so far in 2021.
For the June quarter, it is projecting a loss between 13 and 16 cents a share, wider than consensus forecast for a loss of 5 cents. It does not pay dividends and we cannot calculate its PE ratio unless they give an earning to shareholders.
It may look good for long-term investors who believe that COVID has changed the way we communicate. As a tech person, it looks difficult for Twilio to make a strong comeback as the competition is ever-growing and winners are emerging in cloud communication services providers.
Alphabet, the parent company of Google, has a market cap of $1.5 trillion. Its stock price started at $1,728 this year, GOOG is now trading at $2,300.The company’s ad revenue has bounced back. As COVID-19 restrictions are easing and more businesses have shifted online, the ad revenue for Google increased, resulting in a 78% stock improvement in the last year.
Alphabet released 2021 Q1 earnings on April 27, where we see the company stocks have improved more than 25%, much more than expected. The Wall Street analysts polled by Refinitiv expected an earning of $15.82 per share whereas Alphabet reported $26.29 per share. Alphabet cloud revenue jumped 46% to $4 billion, and YouTube jumped from $4 billion to $6 billion. Alphabet, like Square, does not pay dividends to its shareholders.
AT&T was one of the best stocks for a long time with high dividend payouts, today it's not a winner or a loser. The company is a Dividend Aristocrat -- meaning that “it has raised its dividend annually for at least 25 consecutive years -- and currently yields 6.8%.”
Due to complex management decisions and mergers, the telecom giant stocks went down gradually in the last few years and AT&T started 2021 with $29.83 per stock. T has a stable year so far as the stocks are still around $29. But due to the dividend history of the company one can bulk buy its stocks to have a decent quarterly cash payment. The annualized dividend paid by AT&T is $2.08 per share paid in quarterly instalments.
Here is the forecast for some of the top tech companies in 2021, according to Yahoo! Finance:
There are many other high-performing companies which we did not mention above but their stocks performed amazingly well last year. You need to check them out as well, like Shopify which opened last year at $517 but reached over $1,650 in December. Even though these companies could not perform up to the mark during their first quarter in 2021, you never know what the rest of the year will bring.
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Disclaimer: The author of this article is not a financial expert. This article is for informational purposes only. We are not trying to convince anyone to invest in the companies above. Nothing in this article constitutes professional investment advice. Please do your own thorough research before making an investment decision.