The Nasdaq has been off to a bit of rocky start in 2021 after enduring a contentious presidential inauguration, the emergence of new virus strains and Reddit-fueled market madness.
As holiday-season earnings reports continue to roll in, hopes are high that the tech sector can continue its rally deeper into the new year.
Just because there’s a new number on the calendar doesn’t mean the trends we saw in 2020 have concluded. The five companies below will continue to profit from the growth of online education, the importance of working from home and a hot semiconductor market. These top tech stocks all enjoyed an excellent 2020, and they are all well-positioned for big gains this month:
— Salesforce.com (ticker: CRM)
— Microsoft Corp. (MSFT)
— Twilio (TWLO)
— Chegg (CHGG)
— Skyworks Solutions (SWKS)
Keeping tabs on customers through the cloud, gaining insight into consumer trends and automating sales were powerful drivers of Salesforce’s impressive growth last year — propelling shares up more than 50% between January and August 2020.
Since then, there has been a sell-off, providing investors who missed the boat an opportunity to jump in before Salesforce reports earnings for its fiscal 2021 fourth quarter in late February. The sell-off was fueled by news that Salesforce is buying Slack Technologies ( WORK) for $27.7 billion and doubts that Salesforce can incorporate its acquisition as easily as management expects.
The Salesforce team is confident that contributions from Slack will push the company to 21% revenue growth in fiscal 2022, and given Salesforce’s past performance and current position at the top of the cloud market, investors should be confident that Salesforce can live up to shareholders’ expectations.
Microsoft Corp. (MSFT)
Microsoft may not be the hottest, trendiest tech company on the planet, but just because the company has old-school products like Windows doesn’t mean it can’t change with the times.
For instance, the company’s Azure cloud product has been growing exponentially over the past few months, with Azure revenue growing 50% year over year in the last quarter. And just because people aren’t logging in to work from their offices doesn’t mean Windows isn’t the cash cow it has always been — revenue from Office commercial products and cloud services rose 11% in the second quarter, while Office consumer products and cloud services jumped 7%.
When you throw in other growth drivers like sales of the new Xbox Series X and Series S consoles, it’s clear Microsoft deserves a place on any list of top tech stocks and in your portfolio.
Twilio’s cloud communication platform keeps companies connected to their customers, something that’s more important (and more profitable) than ever.
From package delivery notifications via text message to more standard customer service options, Twilio provides businesses with all the tools they need to keep customers happy — and shareholders should be happy about the stock’s 228% increase over the course of 2020. With a 21% year-over-year increase in active customer accounts in the third quarter came a 52% boost to Twilio’s revenue, while the company’s dollar-based net expansion rate rose from 132% to 137%.
Perhaps even more impressive is that management is confident Twilio can deliver 30% organic annual revenue growth for the next four years, meaning that Twilio is just getting started.
As schools around the country struggled to provide an education for their students over the last few months, companies like Chegg have benefited.
Chegg’s online direct-to-student learning portal has found a huge audience this past year, with Chegg Services subscribers growing to 3.7 million in the third quarter — that’s a 69% increase year over year. In fact, more paying subscribers, more content viewings, and more questions asked and answered on Chegg’s website all helped push Chegg’s total revenue up 64% in the third quarter.
Now the company is focused on capitalizing on its recent success by investing in Thinkful, its skills-based courses, as well as Mathway, Chegg’s latest acquisition. Chegg is at the forefront of a new era in education, and if it can hold on to even a portion of its recent gains, the company will continue to be an excellent investment.
Skyworks Solutions (SWKS)
Many analysts expect demand for semiconductors to continue to grow as phones transition to 5G, self-driving cars become more widely accepted and the global economy comes back online.
While there are many semiconductor stocks poised to profit from this trend, one in particular seems extremely well-positioned: Skyworks Solutions. Skyworks’ biggest customer is tech giant Apple ( AAPL), which just reported an outstanding quarter thanks largely to impressive iPhone 12 sales — and considering that in fiscal 2020 Apple contributed 56% of Skywork’s revenue, great news for Apple is great news for Skyworks.
Skyworks announced record first-quarter results last week, including a 69% year over year increase in sales and a 103% increase in earnings per share. As more iPhone users switch over to 5G phones in the years to come, Skyworks will continue to profit — and so will its shareholders.
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Update 02/02/21: This story was published at an earlier date and has been updated with new information.