For anyone who doubts that high tech is now driving the American economy, I have one word for you – COVID.
Never before in our history have we seen basically the entire country go on lockdown.
Not even in the Great Depression did nearly every hotel, restaurant, factory, office building, and retail store close in a heartbeat.
No wonder Wall Street freaked out and sent the S&P 500 down 34% between February 19 and March 22.
Turns out America had an ace up its sleeve, a big one – high tech.
It drove the economy’s historic rebound with 7.4% GDP growth in the third quarter.
That puts three key enabling technologies front and center. All three crushed the market in 2020.
Make no mistake. They will boost a strong recovery in 2021, particularly in the second half of the year.
Earlier this week, I spoke with you about how to plan ahead to take maximum advantage of the opportunities that these technologies and others will create in the coming year.
Now today, I want to show you exactly why these technologies will lead the market higher next year and reveal a great way to play each one of them…
Preparing for A High-Tech Recovery
Let’s be clear. The economy’s recent rebound to a historic 7.4% GDP growth in the third quarter would never have been possible without all the tools we take for granted in the digital world.
Without a robust Web infrastructure, cellular communications, mobile apps, and laptops, we never could have shifted as many as 70 million workers to home offices.
I believe this new tech paradigm is now permanent and will only gain steam in 2021.
And remember, we have three U.S.-produced-COVID vaccines awaiting approval in the U.S. and Europe. This will be a huge catalyst for the global economy with American firms leading the way.
In the new year, the economy and investors stand to gain from three vital tech fields that will serve as key catalysts. Take a look:
Tech Catalyst No. 1 – The Cloud
One statistic says it all. At the height of the pandemic, we saw more than 300 million video chats a day.
See, every aspect of cloud computing – from wireless handsets and laptops to WiFi routers to video compression to high-speed servers are much more advanced than there were just five years ago.
It’s no wonder MarketsandMarkets says the cloud computing industry is expected to more than double from $371.4 billion today to $832.1 billion in just five years.
But those forecasts were BC – before COVID.
Now, millions of employees plan to work from home. Global Workplace Analytics says some 30% of the workforce will continue to work from home even after getting a vaccine.
And that plays to the advantage of cloud leader Salesforce.com Inc. (CRM). It was one of the first cloud-centric software firms and is mostly known for customer relationship management (CRM), hence the stock ticker.
It’s now setting itself up to be the go-to for online collaboration and communication. That’s why Salesforce recently said it will buy Slack Technologies Inc. (WORK), a pioneer in that field.
News of the deal put CRM stock under selling pressure. However, I view this as a great buying opportunity. Salesforce has a history of making savvy buyouts that ultimately add to the bottom line.
The firm is growing yearly per-share profits at 36%. At that rate, they will double in two years.
Tech Catalyst No. 2 – E-commerce
Driven by the COVID closings of retail stores, global e-commerce sales are set to reach an astonishing $4.13 trillion.
The U.S Census Bureau says consumers spent $211.5 billion through e-commerce channels just in the second quarter, the last period for full data. That was a nearly 32% increase in just three months.
In this space, I recommend Etsy Inc. (ETSY) as a very undervalued play. The firm is a leader in one-of-a-kind, handcrafted, and customized wares.
It’s built around the notion that the item you’re buying is unique.
The firm is so nimble it sold 12 million face masks for over $133 million in just the first month of masks being talked about in America.
Now, the November news that a COVID vaccine is close did cause a sell-off in Etsy stock.
It was a classic Wall Street overreaction on fears the vaccine will seriously disrupt e-commerce. To which I say bunk.
This year has marked a permanent shift in consumer behavior, one reason why Etsy crushed on third-quarter sales and earnings. Wall Street just gave you the chance to buy Etsy at a nice discount from its long-term trajectory.
Etsy is growing its earnings at 71% a year, putting them on pace to double in the next 12 months alone.
Tech Catalyst For 2021 No. 3 – Fintech
Here’s a sign of the times for you – my barber has stopped taking credit cards and has switched to mobile payments.
As for myself, I carry lots of cash but rarely use it these days. Instead, I now rely on Apple Pay or contactless credit cards.
Like millions of others, I don’t want to be touching card readers or cash that could be carrying COVID or other germs.
Sure, we’ll all use credit cards again. But most of them will also rely on hands-free readers.
Now, the contactless payment market, which includes both systems like Apple Pay as well as tap-to-pay credit cards, was worth $8.3 billion last year.
But that’s just one part of fintech. The overall sector is growing at 25% a year and will be worth $310 billion in 2022, according to the Business Research Co.
That’s where Square Inc. (SQ) comes in. The firm supplies the software and hardware for more than 64 million businesses to accept contactless credit card and smartphone payments as well as track sales, including online.
And this company hasn’t missed a beat with its contactless and chip reader. This enables people to accept chip cards, contactless cards, Apple Pay, and Google Pay anywhere.
Square also is the developer of the wildly popular Cash App for making payments or sharing payments via smartphones.
This is a stock with a lot of upside ahead. With a yearly growth rate of 50%, per-share earnings are on pace to double in 18 months.
The 2021 Outlook
Add it all up and you can see that technology is the place to be in 2021. And these three players offer investors the chance to score huge gains.
The fact of the matter is the cloud, e-commerce, and fintech were all huge trends even before 2020.
But the pandemic turbocharged them.
So, if you want to make big money in 2021, these are the three stocks you should be buying.
And if you want to take things one step further, you can subscribe to my Nova-X Report newsletter. I will tell you exactly which moves to make, including new investments to make every month.
You’ll even get access to my special 2021 tech investing forecast issue of the Nova-X Report just released earlier this week, where I break down even more investments that I see winning big in 2021.
Just can get started right away by just clicking here.
Cheers and good investing,
Michael A. Robinson