The market may seem highly uncertain right now, but as I look back at my forecast columns for the past few years, something jumps out at me that’s always the same.
No matter what was in the headlines – bad jobs reports, stock market corrections, slowing economic growth – tech was the place to be.
You don’t have to take my word for it. I have the empirical data to back it all up.
Just look at the returns of the tech-centric Nasdaq over the last five years. It’s up 183%. That beats the S&P 500 over the period by 74%.
I mention that because once again, I’m telling investors that tech will lead the market this year.
Yes, I know that fears of recession and possible new Covid economic restrictions have lots of investors worried.
That’s why I’m focusing this year’s forecast on three tech sectors that will offer investors outsize gains in the year ahead.
Today, I want to show you the three picks you should focus on for 2022…
The Challenge of The Market
Now then, please don’t think I’m being naive here. I understand all too well that lots of us are worried about the impact of the new Covid variant.
We’re also concerned about the rise of inflation just as the economy was turning the corner last year.
But it’s times like these that I tell investors to stick to the prime objective – find a great tech leader and invest for the long haul so you can really build your wealth.
And I’ve identified three great ways to do just that. Take a look:
Tech Wealth Builder No. 1 – Fintech
I’ve literally been keeping a close eye on financial technology for more than 45 years.
It’s one of the reasons why I became an early adopter of bitcoin as a hedge on the US dollar and the rise of digital money.
I first began recommending the world’s most valuable crypto in June 2013. As incredible as it sounds, back then it was trading at $80.
In those Wild West days, investors wanted to know of a safe place to trade and store Bitcoin. After meeting CEO Brian Armstrong that summer, I wholeheartedly recommended Coinbase. That cryptocurrency app offered a level of security, transparency, and liquidity that few others could match.
I have been a customer now for more than eight years. Now that the stock has been trading for more than six months, I’m also recommending the stock, Coinbase Global Inc. (COIN), as a great fintech play for 2022.
See, Coinbase is more than just an app for buying cryptocurrencies. There’s plenty of those around. But few give you the opportunity to also earn interest off your crypto, or participate in the blockchain directly by “staking” your holdings in return for rewards.
It’s quickly becoming a central player in America’s crypto market, providing storage and custody services as well as retail trading. This, combined with it being the only crypto platform that took the time to go through the regulatory process properly, makes it a great buy for 2022.
Its last quarterly result didn’t disappoint either, as Coinbase smashed with an earnings increase of 295%.
Tech Wealth Builder No. 2 – The Cloud
Let’s clear up one big thing right off the bat; The Cloud is an unstoppable phenomenon, but stock selection will be critical this year.
See, some of the darlings of the cloud from during the worst of the pandemic were overbought and have gotten slaughtered since.
Sure, they have recovered a bit of late.
But Docusign Inc. (DOCU) is down more than 50% from its recent high. Things look pretty much the same for Zoom Video Communications Inc. (ZM), which is down by about the same amount from its recent high.
So, I believe for 2022 it will pay to focus on a leader with a very long track record of success.
And that’s where Salesforce.com inc. (CRM) comes into play. Now, I know most investors think of Salesforce only for its customer relationship management (CRM) tools.
And they’re right. Cloud-based CRM is where Salesforce has made its name, as the company’s stock ticker suggests. It’s also the area where the company pioneered the whole cloud field.
And its history as a cloud-based firm has certainly come in handy during the Covid shutdowns with millions of folks working from home.
But there’s so much more than that to this aggressive leader.
See, understanding data is central to running a good business and doing a great job for your clients. Salesforce provides a bevy of Big Data tools to customers.
In short, Salesforce is a great long-term play that is growing earnings per share by an average of 32% a year.
Tech Wealth Builder No. 3 – Ecommerce
I recently had a chance to speak with a good friend, Harry Kaufman, recently. The two of us are collectors, and we got to talking about guitars.
Since I’m a former semipro player, Harry asked me the best place for him to sell a collection of guitars.
Without a moment’s hesitation, I told him of my go-to place for buying and selling vintage gear.
It’s a company that cut its eCommerce teeth way back in September 1995. Today, eBay Inc. (EBAY) is a flea market, auction house, online hub for big and small retailers, and a place for digital yard sales, all rolled into one.
Because users can rate both buyers and sellers they’ve interacted with, much of the risk of sending money or goods to strangers online is reduced.
Of course, eBay also handles escrow accounts to reduce as much as possible cases of sellers not getting their money.
My experience of having used eBay a lot back when I was a musician recently came in very handy when I was looking for a very specialized type of water-based varnish that was not available on Amazon or any other site.
I ended up finding it through an Australian dealer of all places. That goes to show that eBay is a great place to find all manner of goods – from rare varnishes and broken laser pointers to new or used smartphones, computers, clothing, and anything else you can think of.
And eBay trades at just 2% of Amazon’s price while having beaten its return this year by over 1,000%.
Of course, after such a banner year in 2021, we’re not likely to see the same level of returns this year.
But by focusing on best-of-breed stocks in this growth fields you are far more likely to beat the market in 2022 with these stocks that are also great for the long haul.
Cheers and good investing,
— Michael A. Robinson
Source: Strategic Tech Investor