You can tell how powerful tech is simply by looking at the trade war the U.S. is in with China. While all sorts of goods are on the tariff lists, most tech, and specially consumer tech, has been left off the table.
And it goes both ways. Most of U.S.-designed and engineered tech is assembled in China. The U.S. doesn’t have the manufacturing technology that China has built over the past couple decades. On the other hand, China doesn’t have breadth and depth of tech knowledge that most U.S. firms have, nor a system that encourages them to “move fast and break things” as Mark Zuckerberg described the startup culture.
Given this reality, and the fact that consumer spending makes up about 70% of the U.S. economy, if the consumer is spending, so are many businesses.
Below are seven of the best tech stocks to buy now, all “A”-rated by my Portfolio Grader and still great additions for any growth portfolio.
Tech Stocks to Buy: AppFolio (APPF)
AppFolio (NASDAQ:APPF) is a niche-based cloud services provider. It specializes in mid-sized businesses in the property management and legal services sector.
Basically, it handles a lot of documents that need to be stored securely and made available quickly. Traditionally, both of these are paper-intensive businesses, so moving to digital platforms is both a great help and a costly challenge.
APPF saw the opportunity to step in and help and it is now growing as more of these businesses transition into digital records or deepen their commitment to the technology.
APPF stock is up 45% in the past three years and it’s up 76% year-to-date. It’s a bit expensive relative to its price-to-earnings ratio, but in the long term, this space has plenty of growth left.
Ciena (NYSE:CIEN) is a key player in the telecommunications networking sector. That means to most consumers it’s invisible.
But CIEN has been around since 1992, which means it went through the dotcom boom and survived. Today, it has a $6.4 billion market cap and remains a key player in the optical switching, transport services and software markets as well as other complementary sectors.
This is a big deal right now as all the major U.S. mobile carriers — as well as carriers around the globe — are looking to transition their systems over to 5G. This “fifth generation” of telecom promises mobile bandwidth up to a 1,000 times greater than current 4G LTE technology.
Up 24% year-to-date, it is in prime position for massive growth as 5G makes its way into the U.S. market.
Aspen Technologies (AZPN)
Aspen Technologies (NASDAQ:AZPN) is yet another company that has its roots in ideas and people from the Massachusetts Institute of Technology. It opened its doors in 1981 and remains a force in the industry today because it’s constantly looking for the next problems to solve.
Essentially, AZPN works with enterprise-level organizations to improve their manufacturing and asset management challenges. Its software is used by major companies in the energy, chemical, construction, pharmaceutical, food and beverage and consumer packaged goods sectors.
Its fundamental goal is to make an organization’s assets work as efficiently as possible on every level. And nowadays, it has done so with subscription services as well as licensing to maximize its own recurring revenue streams.
Up 63% year-to-date and still trading with a trailing P/E around 35, this is a rock-solid growth stock that can stand the test of time.
Universal Display (OLED)
Universal Display (NASDAQ:OLED) is in a great sector and has a great reputation, but it can be a volatile stock.
For example, while OLED stock is up 124% year-to-date and 66% in the past 12 months, the stock was at its current price level in January 2018.
Because it is a leading maker of organic light-emitting diode screens, it is a leading player in this sector across the tech industry.
And now that demand is big — and still growing — it can compete on price with other previously lower-priced screen technologies. OLED screens offer significant advantages but are more expensive, so they have remained in the premium market sectors until recently.
If you can take the volatility, this is a strong long-term play.
Aerojet Rocketdyne Holdings (AJRD)
Aerojet Rocketdyne Holdings (NYSE:AJRD) is, if you can’t guess by its name, an aerospace company that has roots going back to 1915. It is one of the pioneering companies that began U.S. aerospace efforts for both exploration and defense purposes.
Aerojet Rocketdyne may not carry the cachet of the new space companies like SpaceX or Blue Origin. But it has been doing the work and pushing the boundaries of aerospace engineering long before the CEOs of these new companies were even born.
It remains a niche player in the space, still only sporting a $4 billion market cap. But that means in good times, it’s leveraged for growth far quicker than its blue-chip defense competitors. Plus, it gets a lot of their subcontracting work as well.
Up 48% year-to-date yet still trading at a trailing P/E of 25, AJRD stock is well positioned to take advantage of President Donald Trump’s new desire to get back into space. Just yesterday he announced the reestablishment of the U.S. Space Command.
Heico (NYSE:HEI) is another quiet pioneer of the U.S. aerospace community. Although in recent months, its cover has been blown as investors look for solid companies that have what it takes to grow.
HEI has been around since 1957. The company designs and manufactures aerospace, defense and electronic-related products and services. Simply put, it builds the parts that help others build and service jet engines. It also builds the parts that are at the heart of everything that flies — from jets, to rockets, to satellites.
It also services all these components.
As space becomes a new opportunity for commerce, geopolitical advantage and exploration, HEI is at the center of all that. If it flies, HEI is likely to have something to do with keeping it flying.
Up 90% year-to-date it is a rock-solid, long-term growth stock that usually doesn’t get the spotlight it’s currently under.
PayPal (NASDAQ:PYPL) has certainly launched a number of our most visible billionaire visionaries, like Elon Musk and Peter Thiel.
But since its early success, PYPL has found a way to remain relevant and expand. And now thanks to the financial technology wave, its time to shine has come again.
PayPal was of the original “neobanks” where people could keep money or transact purchases without using a credit card or direct payments. Now it is the proud owner of Venmo, the most popular peer-to-peer money service out there.
Fintech is one of the hottest sectors in the market right now. The digitalization of banking is going to be as disruptive to banking as e-commerce has been to the retail industry.
PYPL has proven that it is ready for the challenge. And with a $129 billion market cap, it may not be as shiny as its smaller competitors, but it is still a powerful force.