The technology sector contributes around $1.9 trillion, or 10% of the total US economy.
Technology stocks have already given a high alpha last year, and investors are speculating how much more they could rise from these levels. Gains in Apple, Amazon, and Microsoft alone accounted for almost half of S&P 500’s 16.6% total return as of December 2020.
Tech stocks had a short downfall since February 2021, as hopes of a vaccine-led economic recovery fueled a rally in energy, financials, small caps, and other less-glittery parts of the market. The Russell 1000 value index climbed only 10% since breakthrough vaccine data was announced in early November 2020, compared to a 45% gain within the Russell growth index, which is broadly populated by tech stocks.
Following are some hydro stocks that you can add to your portfolio.
Taiwan Semiconductor Manufacturing
Taiwan Semiconductor (NYSE: TSM) is the largest microcircuit manufacturer in the world. TSMC was a superb long-term growth opportunity heading into 2021, as multiple bullish catalysts have been predicted by analysts.
Citigroup recently estimated that for each $2 billion in additional processors Taiwan Semiconductor produces for Intel, TSMC will gain a further $560 million in sales. Currently, there is a global shortage of semiconductors, which is a great margin opportunity for the Taiwan-based chipmaker.
In the long run, the company is perfectly positioned to maximize secular growth trends in AI, data analytics, and high-performance computing applications.
Salesforce.com (NYSE: CRM) is the market leader in SaaS customer relationship management. The company’s shares enjoyed a great bull run in 2020, with the economic shutdown forcing companies to digitize their businesses.
The San Francisco-based software company’s shares have struggled since it announced a $27.7 billion buyout of workplace communications software company Slack back in December. Salesforce shares are now down about 14% since December 2020.
Salesforce’s leadership position within the CRM market has helped it grow revenue quickly. In the recent earnings call, the CEO predicted that the company will reach $50 billion in annual revenue faster than the other enterprise software companies.
The company has $2.7 billion in long-term debt, but that figure pales as compared to its $12 billion in cash and marketable securities. The strong balance sheet gives more reason to consider its stock.
ServiceNow (NYSE: NOW) provides SaaS applications and automates business processes and workflows. Following its stock rally last year, ServiceNow shares are down 7% since the beginning of 2021. However, analysts recommend hoarding the stock during the dip.
The rampant shift to the digitization of businesses has proved beneficial to ServiceNow, which reported about 30% revenue growth in each of the last two quarters. The Santa Clara-based software company’s EPS went from $0.22 to $3.65 in just one year, indicating the possibility of strong growth ahead.