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3 Tech Stocks to Buy for 2021 Not Named Apple or Amazon

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Benjamin Rains
·8 min read
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Stocks climbed on Tuesday for familiar reasons, as the market tries to end 2020 on a high note that began in early November. The market has been driven by stimulus talks and vaccine news for roughly six weeks now.

Doses of Pfizer’s Covid-19 vaccine began being administered in the U.S. on Monday, about a week after the vaccine started its slow rollout in the UK. Clearly, Wall Street is hoping that the vaccine will help the economy return to something closer to normal and see the hardest-hit industries such as travel and leisure start to rebound.

Investors should note that Federal officials expect that around 100 million American will receive the Covid-19 vaccine by February or March. The initial and basic plan is to put people in the healthcare industry at the top of the priority list, with residents of nursing homes and other long-term care facilities next up.

The positivity on the vaccine front was a key catalyst for the market’s far more expansive rally in November that saw over 450 S&P 500 stocks jump for the month. This represented by far the biggest share for any period since April, according to the Wall Street Journal, and it crushed October’s 212 total and September’s 153.

Along with the vaccine and another probable round of stimulus, the other core market movers, earnings and interest rates, are flashing some solid bullish signals as we head into 2021. For instance, Q3 earnings results came in far better than projected and the outlook continues to improve. Meanwhile, the Fed plans to keep its interest rate near zero through at least 2023. This should provide a boost to stocks as investors clamor for returns.

Despite the more robust rally in November and calls for strength within more cyclical spaces, it might not be the best idea to pour into stocks that are counting on a vaccine to help things return to normal, i.e., crowded hotels, packed planes, and full live events like sports and concerts.

Furthermore, it’s hard to imagine a world where tech stocks don’t continue to climb in 2021 and in the long run, given the growth and broad-based impact on the entire economy.

Tech dominates today and it likely will in the future. So, let’s explore three large-cap tech stocks not named Apple AAPL, Amazon AMZN, and Microsoft MSFT, or any of the other FAANG stocks that investors might want to buy for 2021 and beyond…

CrowdStrike CRWD

CrowdStrike is a cloud-focused cybersecurity firm that utilizes machine learning and artificial intelligence to protect endpoints and cloud workloads. This is vital in the cloud age that’s full of rapidly expanding endpoints, which include laptops, desktops, smartphones, IoT devices, and more. Remote work and schooling helped push this sector of the ever-growing cybersecurity space to the forefront.

CRWD crushed our Q3 estimates at the start of December, with sales up 86% and it added nearly 1,200 net new subscription customers. CRWD executives also raised their outlook.

Zacks estimates call for CRWD to swing from an adjusted loss of -$0.02 a share in the year-ago period to +$0.08 in Q4 on 64% stronger revenue. The firm is also projected to swing all the from a full-year loss of -$0.42 a share to +$0.22 in FY21, with FY22 expected to climb 50% higher to $0.32.

CrowdStrike’s revenue is projected to jump 78% this year to hit $859 million and then pop 40% higher to reach $1.21 billion in FY22. These estimates would come on top of FY20’s 93% growth for the firm that went public in June 2019.

CRWD stock found early success and began its resurgence when the market started its comeback in March. The cybersecurity stock has surged 250% in 2020 to easily double its industry’s average. More recently, CRWD has jumped 33% in the last month, which includes a big post-release climb. At around $175 a share, the stock rests just off its recent highs.

CrowdStrike’s longer-term earnings outlook has improved significantly to help it grab a Zacks Rank #2 (Buy). The stock has also destroyed our bottom-line estimates over the trailing four quarters and it holds “A” grades for Growth and Momentum in our Style Scores system.

Furthermore, 12 of the 17 brokerage ratings Zacks has for CRWD come in at a “Strong Buy” with two more at a “Buy.” Therefore, investors might want to consider CrowdStrike as growth-focused play and a secular bet on cybersecurity.

Garmin GRMN

Garmin’s popular in-car GPS devices, smartwatches, and fitness trackers that compete against the likes of Apple and Fitbit helped it rise to prominence with the average consumer. The company’s car-focused devices have become less of a hit in the smartphone age. Luckily, GRMN is a diverse firm, with an expansive portfolio of devices that includes fish finders, advanced radars for aviation and boating, and many other higher-end offerings and more commercial focused tech products.

Garmin topped our Q3 estimates at the end of October, with sales up 19% to $1.1 billion. Its top-line growth was driven by serious expansion in its marine (+54%), fitness (+34%), and outdoor (+30%) units. Peeking ahead, Zacks estimates call for Garmin’s sales to climb nearly 7% in FY20 to $4 billion, with FY21 projected to pop another 7%.

These estimates would come on top of FY19’s 12% growth and match FY18’s sales growth. GRMN’s adjusted earnings outlook appears similar over this stretch and its longer-term EPS outlook has improved since its Q3 report.

Garmin’s bottom-line positivity helps the stock grab a Zacks Rank #2 (Buy) at the moment. It’s worth noting that the firm has consistently topped our EPS estimates, including a 56% beat last quarter and a 140% thumping in Q2. GRMN is part of an industry that rests in the top 25% of our over 250 Zacks industries. Plus, its 2.1% dividend yield tops the 30-year U.S. Treasury and the S&P 500’s average (both at roughly 1.6%).

The company’s dividend yield appears even more impressive when we consider that’s not artificially inflated by a falling stock price. In fact, GRMN stock has surged 225% in the last five years to crush the broader tech sector’s 130%. This run includes a 22% jump in 2020. Garmin also trades at a discount against the tech sector and it closed Q3 with around $2.7 billion in cash and marketable securities.

The Trade Desk TTD

The Trade Desk is an advertising company built for the digital era. TTD enables its clients to utilize its cloud-based platform to create, manage, and optimize data-driven digital ad campaigns across a range of channels and devices to reach people on websites, streaming TV services, audio apps, and nearly everywhere else. This is key as people disconnect from various forms of legacy entrainment in favor of a nearly endless array of digital focused offerings from Spotify SPOT to Netflix NFLX.

Digital ad spending surpassed traditional media buying in 2019. On top of that, the digital ad market is projected to reach $225 billion by 2024 in the U.S. alone, up from around $150 billion this year. This gives TTD plenty of room to expand, and marketers need to reach consumers beyond Google GOOGL and Facebook FB. Let’s also not forget that both tech giants are under heavy government scrutiny.

Trade Desk beat our Q3 estimates in early November, with sales up 32%. This marked a strong return to growth after the global ad space tumbled in Q2 amid coronavirus spending cuts. Zacks estimates call for TTD’s Q4 sales to jump 35% to help lift its adjusted EPS by 27%. Peeking further ahead, TTD’s overall revenue is projected to jump 22% this year and another 34% in FY21 to hit $1.1 billion. Meanwhile, its adjusted EPS figures are expected to climb by 20% and 3%, respectively.

All of this positivity has helped the stock soar to new highs, which it hit again on Tuesday. The stock has jumped 25% in the last month as part of a 110% run during the past three months. TTD is now up 260% in 2020 and has soared since its 2016 IPO. Meanwhile, Trade Desk’s strong bottom-line revisions help it earn a Zacks Rank #1 (Strong Buy), alongside its “B” grade for Growth. And investors might want to consider high-flying TTD stock as a bet on the ever-growing digital age that requires more ingenuity to reach consumers.

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The Trade Desk Inc. (TTD) : Free Stock Analysis Report
 
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