Top 10 Global Technology Stocks to Buy in 2021 and Beyond
Author: Tim Phillips
January 5, 2021
The Covid-19 pandemic has upended the global economy and changed the way we work and live.
However, as investors, we also need to have the foresight to see where the future lies for the best companies.
Even though many technology stocks have had a phenomenal 2020, it doesn’t mean that they won’t continue to reward investors over the long term.
That’s true of both the US and China – arguably the only two countries that are home to multiple “world class” technology companies.
Yet given US-China tensions aren’t likely to subside (even with a new US president), we should diversify accordingly when investing.
That means buying both US-focused and China-focused technology stocks. With that in mind, here are five US plus five Chinese technology stocks that investors can buy and hold in 2021 and beyond.
Microsoft Corporation (NASDAQ: MSFT) is a giant in the office productivity software and cloud computing space.
Its Windows operating system is ubiquitous and, as we hope to exit the Covid-19 pandemic this year, Teams is also firmly embedded in many workplaces.
However, what many people may not know as well is that the company is actually a huge player in the cloud computing space with its Azure product only second to Amazon Web Services (AWS) in terms of global market share.
The company will likely continue growing this segment while also benefitting from fast-growing sectors such as e-sports.
2. Teladoc Health
Teladoc Health Inc (NYSE: TDOC) is one of the world’s biggest telehealth companies by market capitalisation – coming in at around US$29 billion.
Its shares rose 140% in 2020 as investors rightly assumed it would see revenues rise on the back of “social distancing” amid the Covid-19 pandemic.
However, Teladoc is just scratching the surface of a huge potential market in the healthcare sector. In fact, the telehealth market in the US is expected to grow at a compound annual growth rate (CAGR) of 29% between 2020-2025.
With the acquisition of connected-health management provider Livongo, Teladoc this year hopes to further strengthen its offering – and improve patient outcomes – in both the US and internationally (where it continues to expand quickly).
Why bother with pen and paper for forms when we live in 2020 and not 1920? Saving paper and helping firms become more efficient is what DocuSign Inc (NASDAQ: DOCU) does.
DocuSign is the big player in the global e-signature market, a total addressable market (TAM) that is worth around US$25 billion.
Add in the contract lifecycle management (CLM) market that DocuSign is entering and you’re looking at another US$25 billion in TAM – so a combined TAM of US$50 billion for the company.
With its acquisition of AI specialist Seal Software, the company is set to continue meeting the growing needs of the whole agreement cycle as firms digitise.
As people realise how inefficient and costly paper-based signing is, more and more companies will start shifting to DocuSign’s easy-to-use product suite.
Customer relationship management software specialist Salesforce.com Inc (NYSE: CRM) will only go from strength to strength amid the Covid-19 pandemic.
The company is a giant in the customer relationship and data management space and its fiscal third-quarter 2021 results showed that – it grew revenue by 20% year-on-year to US$5.42 billion versus the same period in the year before.
With a special focus on growing its suite of AI tools, and the recent US$27 billion acquisition of messaging giant Slack Technologies Inc (NYSE: WORK) to incorporate, this company is set to keep winning over the long term.
Finally, we have Twilio Inc (NYSE: TWLO), the cloud Communications-Platform-as-a-Service platform provider.
The company is disrupting the digital communications space through its wide API offerings across text, voice calls and e-mail.
It continues to successfully grow into new areas with acquisitions, as it showed with a deal for Segment (a customer data firm) that was worth US$3.2 billion.
Led by its charismatic CEO Jeff Lawson, Twilio was able to notch up third-quarter revenue growth of a sprightly 52% year-on-year while its number of active customers jumped to 208,000, from 172,000 in the same period the year before.
Tencent Holdings Ltd (SEHK: 700) is the world’s largest online games company and also owner and operator of China’s number one “super-app”, WeChat.
Tencent has absolutely dominated the online gaming space and also owns stakes in a host of international games publishers such as Activision Blizzard Inc (NASDAQ: ATVI) and Riot Games.
Longer term, the company is set to benefit from the fast-growing e-sports segment as well as social advertising on WeChat and its growing position in digital payments.
JD.com Inc (NASDAQ: JD) (SEHK: 9618) is probably the lesser-known e-commerce giant in China – behind behemoth Alibaba Group Holding Ltd (NYSE: BABA) (SEHK: 9988).
Yet JD.com is one of the best in the business in terms of first-party sales in China. The company grew net revenues in its latest quarter to an impressive RMB 174.2 billion (US$27 billion), up 29% year-on-year.
With a market cap that sits at around US$135 billion, and fast-growing logistics and healthtech arms, JD.com should continue to prosper alongside China’s e-commerce market.
8. Meituan Dianping
Meituan Dianping (SEHK: 3690) is a well-known food delivery player in China but it’s also so much more. The company is also involved in helping people book movie tickets as well as holidays through its fast-growing travel division.
Now, it’s moving into the grocery delivery space and going head to head with large players like Alibaba. With Meituan’s impressive track record of growth and the only other tech firm in China with an ecosystem that rivals that of Tencent’s and Alibaba’s, it’s already in the big leagues.
9. Ping An Good Doctor
Ping An Healthcare and Technology Co Ltd (SEHK: 1833), better known as Ping An Good Doctor, had a sizzling 2020.
Its shares were up over 65% last year given its focus on delivering online GP consultations and a comprehensive online healthcare experience for patients.
However, longer term, this company is set to keep growing. That’s because its relatively low market cap of around HK$100 billion (US$14.1 billion) means it has the potential to grow faster in a nascent but exciting market – telehealth.
In addition, making healthcare more efficient, affordable and accessible in China (which Ping An Good Doctor does well) is something that the Chinese government will no doubt support.
Online gaming firm NetEase Inc (NASDAQ: NTES) (SEHK: 9999) was actually one of the first Chinese stocks to list on a US exchange, back in 2000.
If you had held its US-listed shares from IPO until now (so just over two decades), you’d be sitting on a gain of over 15,700%.
However, last June NetEase also listed shares in Hong Kong. The company has shown incredible growth over the years and what’s even better, it pays a dividend – which is rare for technology firms.
With its fast-growing games division riding on the back of the e-sports craze, and having a burgeoning online education business as well, shareholders will likely see continued growth into the future.
Disclaimer: ProsperUs Head of Content Tim Phillips owns shares of Tencent Holdings Ltd, Ping An Healthcare and Technology Co Ltd, Microsoft Corporation, Teladoc Health Inc, DocuSign Inc and Twilio Inc.
Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth.
He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be.
In his spare time, Tim enjoys running after his two year-old son, playing football and practicing yoga.