3 Top Tech Stocks To Buy For 2021
Tech stocks have been among the top gainers on the stock market in 2020. This was simply due to the coronavirus pandemic forcing virtually all companies to focus on digital acceleration. In fact, a large percentage of corporations have moved their businesses to the cloud, giving another boost to cloud stocks. With companies focusing on digital acceleration, cloud data storage has become a vital infrastructure to have. Being able to conveniently store and access company data is paramount as companies are still pushing their projects and innovations amidst these troubled times. Investors and companies seem to be aware of these trends. As a result, investors have turned to the top tech stocks in the stock market today to ride on the best growth opportunities.
To some degree, you could say that some of the top tech stocks of 2020 were paramount in helping us through the pandemic. For example, cloud computing company Cloudflare (NYSE: NET) helps to keep our online activities safe. Amazon.com (NASDAQ: AMZN) keeps the flow of goods. Even streaming giant Netflix (NASDAQ: NFLX), which keeps us thoroughly entertained in our free time, relies on cloud computing services. On a side note, Netflix is also releasing its earnings this week. Even as we begin to see the light at the end of the tunnel, the pandemic is still far from being over. In the meanwhile, the tech space is expected to continue growing and innovating. Whether tech stocks could still continue to bring gains of equal magnitude from 2020 is a question many would want to have answers to.
It is no wonder that investors have flocked to this industry. With the increasing need for cloud computing, it could appear to some as a profitable endeavor. However, there is no such thing as easy gains. Even the most seasoned investors would have a challenge sorting the wheat from the chaff in this ever-growing industry. To help with that issue, here is a list of top tech stocks to buy according to analysts.
Top Tech Stocks To Buy According To Analysts
Adobe is the brains behind some of the best document management and creativity software in the world. Be it an engineer, designer, or content creator, chances are you have used Adobe software. Despite a massive run-up in its share price in 2020, analyst John Freeman of CFRA upgraded the stock in December. He said it’s not too late for investors to add Adobe stock to their portfolios. From his analysis, he concluded that the stock is currently trading at an attractive valuation. What’s more, he’s projecting a three-year compound annual growth rate of 19%. CFRA also has a “strong-buy” rating and a $601 price target on Adobe stock.
Adobe has shown resilience as it overcame the odds in a stock market that was badly hit by the pandemic. In its fourth-quarter report, it’s adjusted revenues jumped 14% year over year to $3.42 billion. This upside was driven by strong demand for the company’s digital and creative software tools. Within that, its subscription revenues came in at $3.1 billion (accounting for 91% of its total revenues), up 20.8% on a year-over-year basis. The company also ended the fourth quarter with a strong balance sheet, showing the company’s exceptional strength.
Much of the company’s success is for converting its products into a Software as a Service (SaaS) model. By utilizing a SaaS model, it allows users to pay a monthly subscription to have access to Adobe’s wide range of software. With Adobe’s strong performance, will you consider adding ADBE stocks into your portfolio?
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Coming up next, we have software giant Salesforce.com with a market capitalization of nearly $200 billion. The SaaS leader in cloud-based customer relationship management software is one cloud stock to watch. The company has recently been in limelight due to its acquisition of Slack Technologies (NYSE: WORK). Like with Adobe, Freeman also upgraded the stock. He said Salesforce remains one of the most disruptive names in the entire software space. CFRA also has a “strong-buy” rating and a $309 price target for CRM stock. This implies a 45% potential upside of CRM stock.
Correspondingly, its third-quarter fiscal paints a clearer picture of its impressive growth. In it, the company reported total revenue of $5.42 billion for the quarter. On top of that, it also ended the quarter with $3.72 billion in cash on hand. CEO Marc Benioff said, “We had another record quarter, and now we’re raising our FY21 revenue guidance to $21.11 billion at the high end and initiating FY22 guidance of $25.5 billion. No other major enterprise software company is growing at this rate.” Salesforce appears to be confident about its ability to deliver strong results moving forward. As a result, I would expect investors to be wondering what the company plans to do to achieve its growth goals.
Admittedly, Salesforce is one of the older names in the SaaS business. Some investors might not consider it a high-growth stock. But it still has a lot to offer. Its strong recurring business makes it a safe bet in the enterprise software market. With solid financial prospects and ever-growing international influence, do you think CRM stock will continue to rise in 2021?
Twilio is a cloud communications platform as a service (CPaaS) company that is based in California. The Twilio platform allows software developers to perform communication functions like texting and phone calls via its web service application programming interface (API). In short, it provides a means for companies to engage with customers virtually. This business is invaluable for companies looking for customer experience solutions amidst the coronavirus pandemic. Stifel analyst J. Parker Lane initiated coverage of Twilio with a Buy rating and $425 price target. That implies a potential upside of 9.3%. Lane believes that the company should be able to sustain 30% growth in the longer term, given its position in a big and fast-growing market like cloud computing.
“We believe Twilio commands a premium multiple in the software space given its clear leadership and category-defining position in its core market, its ability to grow >30% organically in the mid-term, and the potential for Segment to drive further adoption of the platform.” – J. Parker Lane
The company reported rather positive results in its third-quarter fiscal posted in October. Twilio saw a 51% rise in total revenue year-over-year. That was partly a result of the 21% year-over-year increase in active customer accounts. Correspondingly, it ended the quarter with 240% more cash on hand compared to the same time last year. In a time where digital engagement has become increasingly vital to companies, Twilio appears to be fulfilling that demand. With over $3 billion in cash and marketable securities sitting on its balance sheet, the company is able to invest in growth initiatives. Considering all these, do you think TWLO stock is a top tech stock worth buying?