The tech bull market is expected to continue in 2020, driven by the advent of 5G networks that are expected to push chipmakers and smartphone manufacturers to new heights. Below are three tech stocks you should pay attention to in 2020.
Elastic: An Internet of Things Tech Stock
ESTC is the ticker for Elastic N.V, an internet of things stock which trades on the New York Stock Exchange (NYSE). It is a tech stock that has seen its price go up with the recent favoritism shown toward technology stocks and the growing internet of things industry. Market movers are found in technology and internet sectors within companies providing unique value opportunities. Major players in technology services like Microsoft and Google have found that, and Amazon did too. Elastic is following in their footsteps, so to speak, with technology that connects devices and servers at magnitudes and speeds that power the modern internet. For those looking ahead at trends, this is one way of investing in an internet of things iot company.
Internet of things iot is a fairly recent term that has to do with connecting systems that build off of each other algorithmically. With internet of things emerging technologies int the global market, iot stocks to watch have become a popular analyst write-up. Elastic is usually in there as a prominent iot stock and tech stock to buy. As with all things, before bying any stock—tech stock, iot stock, or virtual stock, you need to do your own research.
Let’s get back to Elastic and its prominence as an iot stock. There are other iot stock choices on the market, but few that have built up revenue like Elastic. The others are giants like Amazon and Microsoft which have iot products in the dozens.
This analyst describes Elastic’s iot solutions and business models as, “The Elastic Stack consists of four products, including Kibana, Elasticsearch, Beats, and Logstash. Elasticsearch is a real-time search and analytics engine. Kibana provides the user interface and visualization layer for data stored by Elasticsearch.” Elasticsearch is a keystone tool for startups, emerging markets and players, and is one of the most successful iot products in recent history.
ESTC shares, as a tech stock, had a fairly good ride in first half of 2019 but has since seen its stock price depreciate rapidly, in the face of growing concerns that the company may have breached federal securities laws. Sometimes, with emerging technologies, companies will scrape against laws of this type. This may be the case as these companies move into new countries and emerging markets.
As this analyst points out, “First, Elastic is hands-down one of the fastest-growing companies in the software sector. It’s no longer all that small, either – at a ~$400 million annual revenue run rate, a >60% y/y top-line growth rate is impressive.”
As you see, from a tech stock, in the software sector, its year over year growth is remarkable and its grown to take in a large yearly revenue from supplying dynamic technology search on various iot offering and internet protocols.
Silently, the company has been refreshing its main product line as it prepares for the Internet of Things (IoT). Cisco acquired Leaba Semiconductor in 2016, and the company has developed Cisco Silicon 1, which is crucial in the IoT world.
The silicon 1 is at the heart of a pluggable optical router which can move 10.8 terabytes of data per second. The chip will connect with “OpenRoaming,” a new standard that can log devices to Wi-Fi services automatically.
Cisco also recently bought Exablaze, making it its sixth acquisition this year. Exablaze low-latency routers are built with field programmable gate arrays.
The latter has been performing quite well in the stock market.
Even though naysays are quick to compare Cisco (NASDAQ: CSCO) with the likes of Oracle (NYSE: ORCL), IBM, and Intel (NASDAQ: INTC) which all missed the mobile revolution, the company’s recent product announcements show it’s taking the lead in the networking arena.
Given its wide array of software and hardware products, Cisco has a pivotal role to play in determining how fast the 5G wireless market takes off.
The future of 5G and edge computing lies in IoT, drones, autonomous vehicles, augmented reality phone apps, and remote health care, some of the areas Cisco has well covered. No wonder CSCO stock right now makes excellent 5G stocks to buy.
Another thing set to bolster CSCO stocks is the opportunity Cisco has to upgrade data centers. If you didn’t know, “internet cloud” is made up of data centers the size of warehouses.
Upgrading of 400G technology is expected to start by mid next year. In July this year, Cisco acquired Acacia Communications, who happens to be the maker of 400G devices. Also, earlier this year, Cisco bought Luxtera an optics device maker.
According to analysts, the company is well-positioned as corporate buyers shift to software-defined wide-area networking (SD-WAN).
When we look at the financials, since the new CEO took office in 2015, the company has been managed for income instead of big capital gains.
Cisco’s dividend has almost doubled. Over the past three years, the tech stock has been averaging 15% gain per year, which is in line with other S&P 500 stocks.
PRLB – A 3D Printing Tech Stock
In 2017, the global 3D printing market was valued at $8.08 billion, according to research conducted by Verified Market Research. The figure is projected to reach $49.74 billion by 2025.
Lately, the 3D market has slowed down, negatively affecting companies like 3D Systems and Stratasys that put so much money into research and development of new 3D-printing devices as well as carrying out several acquisitions when the market for 3D printers failed to match the high expectations leaving the companies sitting on loads of inventory.
With so many investors losing money in the 3D-printing space, it’s hard to find anyone who has any tolerance for high valuations in the industry.
However, one company stands out in the space; Proto Labs, Inc (NYSE: PRLB), rather than developing 3D printers, the company uses a mix of prototyping equipment including 3D printers and traditional molding and machining equipment.
This allows the company to operate as something like the FedEx office for businesses.
By not having to sit on inventory and also leaning on the high margins that are associated with offering unique services, Protolabs can turn around metal and plastic prototypes in less than 24 hours, saving customers time instead of them having to wait for weeks.
The quick turnover has been attractive, playing a pivotal role as the company has almost tripled the number of unique product developers it has assisted in the past six years.