The technology sector has been on a solid run this year. The COVID-19 pandemic has driven demand for connectivity, remote financial transactions, collaborations, and cybersecurity-related services. Consequently, the tech-heavy Nasdaq has risen 31.8% so far this year. However, after leading the market higher since its March lows, tech stocks took a backseat after a promising vaccine news from Pfizer, Inc. (PFE) and BioNTech SE (BNTX) last week.
A coronavirus vaccine is looking like a real possibility next year. However, it will take time for a vaccine to practically contain the spread of the virus considering manufacturing and distribution challenges. With a new wave hitting the country after taking effect in European countries, the United States might further need to implement restrictions and stay-home orders. Hence, this tech sell-off is expected to be short lived and the sector is likely to recover quickly.
The work and learning from home culture are here to stay and could keep increasing dependence on digital platforms. Here are four tech stocks that should continue to soar next year because of strong fundamentals and a favorable backdrop: PayPal Holdings, Inc. (PYPL), Square, Inc. (SQ), CrowdStrike Holdings, Inc. (CRWD) and Okta, Inc. (OKTA).
PayPal Holdings, Inc. (PYPL)
PYPL is one of the most popular digital payment operating technology platforms that enables digital and mobile payments on behalf of consumers and merchants worldwide. It has over 361 million active users globally and is available in more than 200 markets around the world, enabling consumers and merchants to receive money in more than 100 currencies.
In line with the spike in the crypto rates and popularity in recent years, PYPL has launched a new service enabling its customers to trade cryptocurrencies directly from their PayPal account. Moreover, it rolled out a QR code touchless payment system into its point-of-sale systems and e-commerce rewards to boast digital payments amid the pandemic.
PYPL added more than 15.2 million new accounts in the third quarter of 2020 and witnessed a total payment volume (TPV) of $247 billion, growing 38% from the year-ago quarter. Merchant Services volume surged 40%, and represented 93% of TPV. Revenue increased 25% year-over-year to $5.46 billion. EPS for the quarter came in at $0.86, rising 121% year-over-year.
The shift to digital payments is one of the major trends that should only accelerate over the next couple of decades. Hence, analysts expect PYPL’s EPS to grow 19.5% next year. The stock closed Friday’s trading session at $188.62, gaining 74.4% year-to-date. It is presently trading 12.6% below its 52-week high of $215.83.
How does PYPL stack up for the POWR Ratings?
B for Trade Grade
B for Buy & Hold Grade
B for Industry Rank
B for Overall POWR Rating.
It is ranked #8 out of 46 stocks in the Consumer Financial Services industry.
Square, Inc. (SQ)
SQ develops and provides payment and point-of-sale solutions in the United States and internationally. It provides Square Register, a point-of-sale system that takes care of digital receipts, inventory, and sales reports, as well as provides analytics and feedback.
SQ is the fastest-growing fintech company in terms of digital wallet usage in the US. The company has recently expanded into banking by getting FDIC approval to offer small business loans and consumer financial products on its Cash App platform. The company strongly believes in cryptocurrency as an instrument of economic empowerment and has put 1% of its total assets, worth nearly $50 million, in bitcoin.
In the third quarter, SQ’s net revenue…
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