Tech stocks shot straight to the moon in 2020.
Early 2021 has been bullish, too, with the Nasdaq up about 4% in the first two months of the year as inflation concerns and rising Treasury yields compete with economic stimulus and high vaccination rates to drive investor sentiment.
So far, investors still seem bullish on tech, and with impressive earnings reports from some of the biggest names in the industry, that view will likely continue for a while. That said, how do investors ride this wave of positivity? Simple: find companies that will capitalize on the biggest trends in tech.
[Sign up for stock news with our Invested newsletter.]The five companies below should continue to profit from the growth of streaming television, the expansion of telehealth and a global semiconductor shortage. These tech stocks all enjoyed an excellent 2020, and they are all well-positioned for big gains in March 2021.
Here are five of the best tech stocks to buy for March:
— Snap (ticker: SNAP)
— Twitter (TWTR)
— Roku (ROKU)
— Teladoc Health (TDOC)
— Micron Technology (MU)
Snap (SNAP)
Snap recently wowed shareholders during its virtual investor day with big plans for ways the company can evolve. Most of Snap’s revenue comes from advertisements shown alongside user Stories, and that business has been booming of late, with revenue up 64% year over year in the fourth quarter. But Snap plans to generate more revenue from new products like the Snap Map, as well as continuing to invest in features like Lenses, to drive future growth.
With an incredible 90% of Generation Z on Snapchat, the company has a huge opportunity in front of it, and the announcement of plans for ways to capitalize on its user base was enough to drive Snap shares to an all-time high last week. That might make investors think Snap stock is overpriced, but if management is correct and the company enjoys 50% annual sales growth over the next few years, there’s still plenty of room for shares to run.
Twitter (TWTR)
Snap wasn’t the only social media company whose shares recently soared thanks to investor day announcements. Twitter shares hit new highs last week after Jack Dorsey helmed the company’s first analyst day in four years, with management promising some startling growth ahead. Twitter’s growth goals include increasing its daily active users from today’s 200 million to 315 million, as well as doubling revenue from $3.72 billion to $7.5 billion, all by 2023.
To do that, Twitter is rolling out new features such as Super Follows, where users can pay a subscription to view exclusive content from their favorite accounts, as well as allowing users to pay tips to content creators. With a 28% increase in revenue year over year and a 26% increase in daily active users in the fourth quarter, Twitter is well on its way to achieving its goals.
Roku (ROKU)
The broad market sell-off in late February did a lot of damage to tech stocks, and Roku was unable to avoid the carnage — but that just means that investors have the opportunity to buy shares of this impressive investment for cheap. And Roku has indeed been impressive, with fourth-quarter revenue of $649.9 million beating analyst expectations of $619 million, while an unexpected profit of $0.49 per share far surpassed estimates of a $0.05 loss.
These figures illustrate just how excellent 2020 was for Roku, as Roku’s ubiquity allowed it to profit no matter what streaming service a customer chooses. Recent deals with HBO Max and Peacock will make sure that Roku remains the streaming platform of choice, and even as lockdowns end the company believes its momentum will continue well into 2021.
Teladoc Health (TDOC)
Just as Roku has benefited from a virus-related boost to its business, Teladoc Health had a record-setting 2020. As people stayed at home and away from doctor’s offices, the telehealth company saw the total number of doctor’s visits provided by its service skyrocket 156% to 10.6 million during fiscal 2020, leading to a 98% increase in full-year revenue. Teladoc increased its total number of members by 15.1 million in 2020, but the company expects the number of new members to diminish drastically in 2021 — in fact, Teladoc management believes it will barely increase at all. That announcement in late February combined with a broader market shake-up to send shares spiraling downward, providing investors with the perfect entry point.
Even with no new membership growth, Teladoc’s financials are solid, the recent acquisition of Livongo was a smart move and the normalization of telehealth means good things ahead for the leader in this growing market.
Micron Technology (MU)
The global semiconductor shortage will have a major impact on numerous industries, from automobiles to mobile phones, for years to come. But with this shortage comes an opportunity for investors to find value in semiconductor stocks, as they try to find companies well positioned for future profits. Micron Technology, which makes memory chips for 5G devices, electric vehicles and cloud computing components, will absolutely benefit from the rising price of chips in light of the semiconductor shortage, as pricing power shifts to chip manufacturers like Micron.
While its fellow semiconductor stocks have sky-high valuations, Micron’s forward price-earnings ratio of 12 looks downright cheap in comparison, even as the company’s sales rose 12% in the first quarter while earnings were up more than 63% year over year. For investors looking for a smart way to play the semiconductor shortage, look no further than Micron Technology.
