What are the best tech stocks to invest in 2021 and 2022?
This year is slowly nearing an end, and 2022 is just behind the corner. We have yet to see if 2022 will be “rearing its ugly head”, or will the world of finance and investing get a well-deserved break.
This is a good moment to look ahead at the opportunities that the stock market has to offer us when it comes to tech companies.
It is impossible to predict which companies will show a significant price increase. But you can significantly increase the chance of long-term success by being selective in which companies you invest in, based on fundamental analysis.
To start with a relatively unknown company, which in recent years has maneuvered itself into a perfect position to lead a current trend:
Best Tech Stocks to Invest in #1 – Fiverr
Fiverr has created a platform for freelancers to offer their services, in a streamlined way. You will receive the result within a few days. Think of a design such as a logo or corporate identity, a (restyled) video, audio fragment, and more. Fiverr is the market leader in this area. Personally, I have been using this platform for years.
In 2020, the ‘work from home’ economy really took off. Trend reports show that further growth is expected in the coming years. Worldwide we have become accustomed to working remotely.
Why hire an expensive design agency for a one-time job, when you can easily outsource it to one of the thousands of freelancers through Fiverr? I can absolutely imagine that this method will take off enormously in the coming years. Fiverr is perfectly pre-sorted for this.
The price has exploded in the past year. At the beginning of the year, the share price stood at $23. The share has grown stable for almost the entire year, with a total increase of 750% towards the current price of $193. As a result, you now pay 45x the annual turnover. That’s very high. Also, Fiverr is not profitable yet.
If you decide to buy shares of Fiverr now, you are betting that the freelance work-from-home economy will continue to grow strongly in the coming years. And that Fiverr will further expand its role as a market leader. That is certainly an option, but at the same time, it can also be expected that competition will increase.
#2 – Google
While Fiverr will still be an unknown company to most, that is certainly not the case with Google. This giant – which now does much more than just the search engine – it’s one of the largest tech companies in the world.
In addition to their extensive portfolio (including Android and YouTube, which also falls under Google), they are also particularly active in the technologies of the future such as AI, self-driving cars, and robotics. With this company, you get a share in your portfolio that is tech-focused but has a major role in different fields.
The company is financially strong. A solid profit is being made that continues to grow.
The margins are excellent and the macro trends also speak in favor of Google. Data-driven digital advertising is becoming increasingly important. Google (along with Facebook) is a key player in this domain. Partly because Google owns the most popular browser Chrome, they are in a good position to keep their propositions future-proof.
They determine what the landscape largely looks like.
There is, however, one major danger lurking. The European Union has already announced that it wants to take steps against the monopoly position of certain tech companies, including Google.
Under this antitrust law, they may have to divest certain parts or incorporate them into a separate company. That does not immediately mean that Google loses its value, but it can cause volatility in the price. In other words, an opportunity for long-term investors.
Compared to other tech companies, Google is quite reasonably priced, at the current price of $1,750. With a P/E of 35, you pay an average price for this share: not cheap, but not too expensive.
Also, knowing Google has a huge cash position, has little debt, and makes healthy margins, I consider this a great investment at the current price.
#3 – Amazon
The boring online bookstore of the 2000s, which has evolved over the decades into an e-commerce tech giant.
The company of the richest man in the world – Jeff Bezos – now has a worldwide presence and has been pursuing an aggressive growth strategy for many years.
Amazon is now more than an e-commerce company. They own one of the fastest-growing cloud platforms in AWS (Amazon Web Services), invest heavily in next-gen parcel delivery through drones, and are involved in self-driving taxis.
Alexa should also not be overlooked, as a virtual voice assistant that consumers are expected to embrace more in the coming years.
For the investor who looks beyond just the financial return, there are some snags to Amazon. It is not known as the most employee-friendly company. They are also so aggressive in their growth strategy that their own commercial partners notice this.
There are stories of entrepreneurs who sold their products through Amazon. Once it gains some popularity, Amazon decides to offer the product under its own banner. Even blocking the original company from their web store. It is an open secret that Amazon has a specialist team on this that identifies trends at an early stage.
Amazon is a relatively expensive stock. At its current price of $3,560, it has a P/E of 94.
Investors expect Amazon to continue to grow strongly in the coming years. However, the question is how realistic that is. They achieved a turnover of 350 billion in the past year.
Will they become ~3x as profitable in the coming years to arrive at a comparable P/E as Google?
That is the question. But that Amazon will remain a dominant player in the coming years, taking an increasingly larger role in our society, seems to be a fact. Or…
The same applies here as with Google: the antitrust law of the European Union also applies to Amazon.
They are currently being investigated. The effect on the share price is a bit of a mess, but it can absolutely have a (temporary) impact if the European Union takes drastic action.
Best Tech Stocks to Invest in – Recap
So, these 3 are the best tech stocks to invest in this year and in 2022 in my opinion.
Naturally, the market is volatile and subject to neverending changes, but there is always a good amount of probability (if not certainty) when it comes to these 3 companies.
I hope this article will help you on your way to make your dreams come true.
To your success!
S
