The technology sector of the market can be a fickle one, but we’ve done some homework to find the five tech stocks to buy in 2020.
Tech companies come and go almost quarterly. But when you choose to invest in tech companies you have to exercise caution.
Of course, you can always go with the old reliable FAANG stocks — but you have to understand the price point of which you are getting into them at.
Then you have to understand what each company caters to in terms of the tech market.
From there, you can start to pare down what companies have the potential for growth and which ones don’t.
What we’ve done for you here on Money and Markets is look at five tech stocks to buy in 2020.
These range from companies you may already know to those working behind the scenes, providing the necessary technology for business growth.
Remember, there are a ton of tech stocks in this volatile sector so before you buy, you must do your homework and make sure you understand what the company you are buying into actually does.
With that, here are our five tech stocks to buy in 2020.
1. DocuSign Inc.
Docusign Inc. (Nasdaq: DOCU) offers its e-signature platform to different sectors — including government, nonprofit, real estate, insurance and health care.
This tech company blew its earnings estimates out of the water in Q4 2019 when it posted earnings of $0.11 compared to estimates of $0.03 per share.
For the year, Docusign beat its earnings-per-share estimates two of the three quarters. It’s beaten revenue estimates in all three quarters.
While the stock has added nearly 75% since the beginning of 2019 — it’s priced at around $75 in early December — analysts are expecting bigger things from Docusign in 2020. Bank of America has maintained a neutral position on but has raised its price target to $85.
Its forward price-to-earnings ratio is currently at -19.15 with annual sales of $700 million.
Earnings for the tech company are expected to go up 100% in fiscal 2020 and another 86% in growth for 2021.
Analysts have rated Docusign Inc. as a strong buy for the last three months.
The massive growth potential makes it one of our five tech stocks to buy in 2020.
2. StoneCo Ltd.
This Brazilian-based cloud tech company specializing in commerce has its numbers in the green across the board.
After a strong earnings report in November 2019, the StoneCo Ltd. (Nasdaq: STNE) share price climbed from around $34 to more than $38 — approaching its previous high of $43 back in April.
The company has a market cap of $10.7 billion with booked annual sales of $432 million. Its annual net income is also in the green at $82 million.
This growth all comes at the same time it lagged its earnings estimate by 5.56%, but blew out its revenue estimates by 28.86%.
This tech company’s shares have exploded in 2019, adding 90.6% since the beginning of the year, compared to the S&P 500’s gain of 24%.
Analysts are projecting earnings per share of $0.24 on $154.04 million in revenues for the coming quarter.
The number of analysts recommending Stoneco Ltd. as a strong buy has gone up over the last three months, meaning they believe this is one investors should take a hard look at.
Because of its strong potential and its past growth, Stoneco Ltd. is one of our five tech stocks to buy in 2020.
3. Trade Desk Inc.
If there is a company on the cutting edge of digital advertising, Trade Desk Inc. (Nasdaq: TTD) is it.
Trade Desk is a demand-side platform for digital ad buyers and as consumers continue to migrate to digital, so will advertising. That puts Trade Desk at the center of the digital advertising world. Its platform connects agencies and brands to not only the web but also connected televisions.
In November 2019, Trade Desk’s quarterly report was a blockbuster as the company reported 38% revenue growth. A big driver of that growth was announced partnerships with Amazon, Disney and Roku.
The market has responded nicely to its strong quarterly report. After reaching a low of $109 in January, the stock has rebounded to trade around $250 presently.
It reported annual sales of $477 million with an annual income of $88 million.
This tech company will only get stronger as consumers continue to move from traditional television to web-connected TVs. In 2020, Comcast and NBCUniversal are launching Peacock, and AT&T is coming out with HBO Max — both streaming services.
Because of that growth in streaming television and digital advertising, Trade Desk Inc. is one of our five tech stocks to buy in 2020.
4. Synopsys Inc.
Synopsys Inc. (Nasdaq: SNPS) is a chip manufacturer based in Mountain View, California.
It is one of the industry leaders in terms of electronic design automation and its chip design is considered a must-have for any company branching into artificial intelligence (click here to see our Top 5 AI Stocks to Watch in 2020).
One of the biggest reasons this company is one of our top five tech stocks to buy in 2020 is because of its enormous growth potential.
In 2019, Synopsys closed the trading day of Jan. 3 at $81.11. It closed Dec. 10 at $131.61 — a massive 62% jump in share price over the year.
But analysts don’t expect that jump to stop. In fact, it’s full-year earnings jumped 10.59% in the last quarter alone.
The tech company delivered an average 42% surprise on earnings in Q3 2019, reporting $1.04 per share compared to analysts’ estimates of $0.73. Synopsis has delivered a beat in each of the last four quarters.
In terms of year-to-date returns, Synopsis has moved about 57% compared to the rest of the computer and tech sectors, which gained 30%.
Synopsis is currently priced at around $132 per share but that is still below its 52-week high of $146, leaving it plenty of room for upward trajectory.
Additionally, its yearly expected sales growth rate is around 8%
The artificial intelligence sector is expected to continue rapid growth and taking companies like Synapsis with it, that’s why SNPS is one of the five tech stocks to buy in 2020.
5. Seagate Technology PLC
One of the global leaders in hard discs, solid-state drives and solid-state hybrid drives is Seagate Technology PLC (Nasdaq: STX).
The tech company has seen steady sales of between $10.3 billion and $10.8 billion, mostly due to large data centers preferring hard disc drives from Seagate over solid-state drives.
Seagate recently reported a 34.2% increase in enterprise hard disc drive Exabyte shipments in its Q1 2020. As more data centers come on board, that demand will only grow.
In terms of earnings, Seagate has beat analysts’ estimates in each of the last four quarters. To start 2020, analysts project Seagate to report earnings per share of $1.32, more than the $1.03 it reported in the last quarter.
Its share price exploded in 2019. At close on Jan. 3, the share price was $36.52. It has jumped to more than $58 in December, a gain of 59%. It is still lower than its 52-week high of $60.56, leaving more room for growth.
It is also trading above its 200-day moving average of $50.05, and its 100-day moving average of $53.37.
Where Seagate can make a splash in 2020 is by catering to additional large data center clients with its 16-terabyte enterprise storage drives.
Because that sector could see more growth over the next year, Seagate is one of the five tech stocks to buy in 2020.
In all, we have presented five tech that have the potential to bring strong, stable growth. That could be because they have stock price room to grow or they are in a sector expecting more growth in the coming year.
If you missed it, check out our Top 5 AI Stocks to Watch in 2020.