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At the peak of the coronavirus pandemic, the stock market, represented by the S&P 500, took a steep dive. Just as people thought we are facing the next Great Depression, the stock market went from bearish to bullish in record time. Predictably, as we transition to fintech and digital finance, the best tech stocks exhibit more resilience and growth than other stocks.
3 Top Tech Stocks that Remain Resilient
The government’s response to the coronavirus pandemic has wrecked many sectors, from tourism and entertainment to travel and small businesses. However, tech stocks are the least reliant on the state of affairs in the material realm. As a matter of fact, tech stocks thrive when people are forced to shift their habits that benefit the expansion of the digital realm.
Remote work, remote schooling, remote entertainment, web content management, virtual conferencing, cloud storage and cloud computing, cybersecurity, online stores, online payments, e-commerce software… these are just a few of the domains greatly bolstered by the government’s response to COVID-19. Accordingly, the Technology Select Sector SPDR ETF rose 34% YOY compared to S&P500’s 7.9%.
On the tail end of this social restructuring, the Federal Reserve’s policy shift to keep lending rates low represents a strong gust of wind pushing the sails of tech companies. It gives them a much-needed space to borrow at low cost and accelerate their roadmaps.
There are several top tech stocks worthy of buying right now. Yet of the digital domains listed above, consider these three rapidly growing tech stocks:
CrowdStrike Holdings (NASDAQ:CRWD)
Many cybersecurity companies tack on the cloud solution later on as an extra feature. CrowdStrike doesn’t only provide cloud-based cybersecurity natively, but its cybersecurity measures are driven by machine learning, or AI if you will. This makes CrowdStrike exceedingly agile in its response to security threats. In fact, they report intercepting over 3 trillion threats/events per week, through their Falcon platform.
Cybersecurity is an ever-growing segment, mirroring the growth of criminal miscreants eager to earn a living through hacking mobile device security vulnerabilities. Therefore, this segment is recession-proof. For the last quarter, CrowdStrike reported 91% of its cash flow coming out of good old subscriptions. Securing this type of income bodes well for the company’s future, as people tend to stick with the service they are familiar with.
Moreover, CrowdStrike compounds its income with a tiered service approach, encouraging existing clients to fortify their cybersecurity. This approach has proven to yield great returns. Currently, over half of CrowdStrike clients are subscribed to at least four cloud-driven services, compared to a meager 9% just three years ago.
According to Wall Street projections, CrowdStrike is poised to increase its sales from this year’s $481 million to $1.4 billion by 2023.
Fastly has enjoyed a favorable status among tech enthusiasts for quite some time. However, the pandemic crisis spurred it to fully push its service as an edge cloud platform.
Edge cloud computing means that you do not access data servers at particular centers. Instead, the computing is performed in the proximity of the data source.
Fastly, as a content delivery network (CDN), drives apps, websites, and streaming to run smoothly and securely for any work environment you set up. So far, Fastly has partnered with a number of prominent brands, such as The New York Times, Stripe, A&E, Shopify, Pinterest, Etsy, and Yelp. As is the case with CrowdStrike, Fastly’s business model mainly relies on existing clients to hop onto more services.
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From Q1 2020 to Q2 2020, Fastly has leaped from 133% to 137% dollar-based net expansion rate (DBNER). Just like with CrowdStrike, this means that existing clients are not only loyal but are willing to invest more in Fastly’s services.
However, Fastly is yet to reach the process of becoming profitable. Projections are looking good for patient investors, with expected sales tripling from 2019’s $200 million to 2023’s $614 million.
The brainchild of Jack Dorsey, the CEO of Twitter, and Jim McKelvey, the billionaire entrepreneur, Square is a long way from taking PayPal’s payment processing supremacy. Nonetheless, Square has accrued a solid user base thanks to its lending program and seller ecosystem, particularly in the service of small businesses.
Square’s growth is quite impressive. In seven years, from 2012 to 2019, Square has gone from $6.5 billion in GPV to $106.2 billion.
As we have noted previously, COVID-19 has been a boon for the entire online payment processing sector. However, Square is poised to do even better thanks to its shift to servicing larger businesses, which already constitute 52% of its GPV (gross payment volume).
On top of that, Square’s Cash App has massively grown in popularity, accounting for 30 million users from 7 million just over two years ago. Cash App’s merchant fees, withdrawals, and expedited transfers are generating steady income which is only likely to grow in the foreseeable future.
Wall Street pegs Square for a $12.4 billion revenue by 2023, from its 2019 revenue of $2.3 billion.
What do you think are the best tech stocks to buy right now? Let us know in the comments section below.