The COVID-19 pandemic cast a shadow over many people’s lives, but the mandates to stay indoors and work from home benefited many of the technology companies that supply the tools to work, socialize, and entertain ourselves virtually.
Digitally disruptive companies could enjoy another good fiscal year in 2021, so investors might consider holding onto tech stocks or accumulating more in a tech-heavy portfolio.
Where Can I Trade Tech Stocks?
Buying tech stocks couldn’t be easier, and online brokers make it very easy for investors to trade via stock exchanges around the world. But not all brokers are the same when it comes to trading fees and minimum account deposits (and much else besides), so you need to choose wisely. We have done some of the hard work for you by identifying some of the best brokers.
What Are Tech Stocks?
Put simply, tech stocks are shares in technology companies.
In recent years, tech companies have recorded hypergrowth, which is understandable because technology powers almost every aspect of our lives. The growth has translated into good stock performance, making tech stocks the top dogs in most financial markets at the start of this decade.
Some of the most popular tech stocks are firms with long histories and solid foundations. Some are startups setting out to disrupt their industries.
How to Trade and Invest in Tech Stocks?
Open an Account for Free
Gone are the days when you had to physically visit a stockbroker or even telephone one to buy and sell shares. You can now open an online brokerage account in a matter of minutes, subject to some checks on your identity.
Make a Deposit
Next, you need to decide how much money to deposit into your trading account. Remember that investing can be risky, so only invest money you can genuinely afford to lose.
Now you can find stocks in the broker’s categorised lists and buy them with a couple of clicks. Don’t go mad, though, because you need to reduce your risk by buying the right stocks at the right time, and by diversifying across several stock holdings.
Top 10 Tech Stocks to Trade
Conventional valuation methods of analyzing a company’s growth rate, earnings-per-share, asset pricing formulas, and price-to-earnings ratio are useful when considering what stocks to trade. However, it is also important to remember that a tech company doesn’t have to be profitable from its first day to be an attractive investment. Technology companies usually have to channel their earnings into research and development to remain relevant and ahead of the competition.
Put simply, it sometimes makes sense to invest money in a fledgling company that is not profitable now but could have a promising future.
Here is our list of the top ten tech companies to consider this year.
- Uber Technologies Inc.
- Tyler Technologies Inc.
- Baidu Inc.
- Match Group Inc.
- Workday Inc.
- Amazon.com, Inc.
- Oracle Corporation
- Pinterest Inc.
Now, let’s look at each one.
1. Uber Technologies Inc. (NYSE: UBER)
Getting around town has become easy, efficient, and convenient thanks to ride-hailing companies like Uber. However, the COVID-18 lockdowns led to a staggering $6.8 billion in losses.
Uber may still make a good investment post-pandemic. Uber Eats is positioned for greater growth as world economies open up, and the company will also benefit considerably from its leadership position in the industry along with its growing network of users.
2. Tyler Technologies Inc. (NYSE: TYL)
Most end-to-end communications in the US public sector are powered by solutions from TylerTech. The company has over 27,000 installations in local, state, and federal government entities across all 50 states.
Given that the government has taken lots of its business online, and continues to do so in 2021, it’s expected that TylerTech will be busy. This should mean profitable business and subsequent good stock performance.
3. Baidu Inc. (NASDAQ: BIDU)
This Chinese firm has been posting impressive results that are well above expectations in its most recent quarters. It is believed that the success will only grow given the uptick in demand for artificial intelligence (A.I.) and cloud services plus a post-Covid recovery in advertising.
Baidu is also making headway into the automotive space, particularly in the production of electric and autonomous vehicles.
4. Match Group Inc. (NASDAQ: MTCH)
Many people may be looking for love as they’re allowed to get together again. Match Group’s flagship is Tinder, but it also owns an extensive portfolio of other online dating services.
The last quarter results left most investors largely unenthused. However, more and more people have been meeting up virtually. And with Match group’s recent acquisitions, this might turn out to be an attractive stock to trade this year.
5. Workday Inc. (NASDAQ: WDAY)
This $54.5 billion market cap company deals with financial and human capital management (HCM). Its HCM offerings have been gaining ground as more and more companies shift their core human resource management functions to the cloud.
Since the company became publicly listed in 2012, it has experienced growth year over year and is just recently coming from yet another great quarter. 2021 doesn’t look any different; the company anticipates good returns, and thus its stock is an attractive instrument to trade right now.
Expert Tip on Investing in Tech Stocks“ Tech stocks tend to be volatile, and their share prices can fall precipitously. Some protection is available in the form of “stop orders” (which exit your investment when the price falls to a predetermined level) and diversification (which ensures that no single stock fall can wipe you out). Managing your money and risk with these techniques is arguably the most important aspect of trading and investment. ”- Jim Mwangi
Why Invest in Tech Stocks?
Some seasoned investors such as Peter Lynch believe that you should invest in companies whose products you know, use, and like. The coronavirus pandemic has made us all more aware of the tech companies. We know them, we use them, and some of us even like them.
It’s never too soon to start your investing journey. Investing early in the best tech stocks means you will be in the market longer and your returns will be higher.
Frequently Asked Questions
When buying stock consider the company’s revenue status, its current place in the industry, and what the future holds for it. Based on these three factors, don’t look for a single best stock but a variety of excellent stocks for your trading portfolio.
With proper research and smart investing, it is possible to ride the wave for both bullish and bearish tech stocks this year. You don’t want to be caught on the wrong side of price movements, though, so strategize before you trade.
Fortunes only come to investors who are disciplined when buying and selling stocks. Therefore, instead of focusing too much on financial strength, it’s wiser to keep a keen eye on the market opportunities and capture them when they arise.
Almost any adult can sign up for an online trading or brokerage account, often in a matter of minutes. To trade tech stocks successfully, you need to understand the risks and have ways of managing them.
The volatile nature of tech stocks means that a beginner could get very lucky or very unlucky in a short space of time. Whether investing in tech stocks or any other stocks, beginners should think first about how to limit their losses by using diversification, stop orders, and other risk management strategies.
Tech is everywhere, and it was tech that made it possible to communicate with friends, colleagues, and customers during the COVID-19 pandemic lockdowns. Video games are big, cloud computing is big, and we’d all be lost without our multi-purpose mobile phones.
Tech stocks can be traded during market hours on weekdays, but because of time differences, there are always some stocks you can trade. For example, you can trade UK stocks for half a day before the US markets open, then continue trading US stocks when the UK markets have closed for the day.