Ignore Uber: Here Are 3 Better Technology Stocks – Motley Fool
Some investors may be tempted by Uber‘s (NYSE:UBER) stock because of the company’s dominant position in the ridesharing market. But its share price is down by about 30% since its IPO, it lost $1 billion in its most recent quarter, and it faces intense battles over its policy of treating its drivers as independent contractors rather than as employees. All of these factors will make the company a wildcard investment for the foreseeable future.
So if you’d like to invest in great companies with lots of long-term growth potential — and a lot less uncertainty — forget Uber. Instead, take a look at what PayPal Holdings (NASDAQ:PYPL), Apple (NASDAQ:AAPL), and Shopify (NYSE:SHOP) are doing.
PayPal
PayPal was firing on all cylinders in the third quarter, when it added to its growth streak. Sales increased by 19% year over year to $4.38 billion, topping analysts’ consensus estimate of $4.35 billion. It also brought in non-GAAP earnings of $0.61 per share, beating analysts’ consensus estimate of $0.51.
The payment-processing company also grew its number of active accounts to 286 million at the end of the quarter, an increase of 17% from a year prior. Additionally, total payment volume (TPV) — the amount spent through the company’s platform — grew by 24%.
PayPal also just made a $4 billion acquisition of Honey Science — an online shopping rewards company — which adds to its opportunities beyond its core businesses. The company says that the purchase will give it more information about users’ online purchasing habits, and allow it to increase sales and customer engagement for its merchants.
For all of these reasons, PayPal continues to be one of the strongest plays in the digital payments market.
Apple
It’s well-known that sales of the iPhone provide more than half of Apple’s revenues, and given their recent declines, you may be wondering where the company’s next growth surge will come from. Its latest quarterly results paint a pretty clear picture.
In the fiscal fourth quarter, revenues from Apple’s services segment — which includes Apple Music, Apple TV+, the App Store and Apple Pay — increased 18% year over year to $12.5 billion. Services now account for 19% of the company’s top line, and with Apple just getting started in this space, there’s likely further strong growth on the way.
In addition, investors should take a close look at what Apple is doing in the wearable tech market, where it continues to expand and upgrade its lineup of AirPods, Beats headphones, and Apple Watches.
Revenue from Apple’s wearables, home, and accessories segment increased 54% in the fiscal fourth quarter, further showing just how strong the company’s offerings are in the niche. The great news for Apple is that wearable spending is expected to spike by 55% by 2021.
Shopify
Last but not least is e-commerce platform provider Shopify. Its sales increased by an impressive 45% in the third quarter to $390.6 million. That beat management’s revenue guidance range of $377 million to $382 million.
Both of the company’s revenue segments — merchant solutions and subscription solutions — contributed to that strong result. Merchant solutions’ revenue spiked 50%, and subscription sales were up 37%.
More than 1 million merchants worldwide now use its e-commerce platform, and Shopify is successfully attracting larger companies as well. Shopify Plus — its service for higher-end merchants with bigger budgets — brought in 27% of total sales in the third quarter, up from 24% in the year-ago quarter.
Shopify’s sales growth in the third quarter led management to increase its full-year revenue outlook from a range of $1.51 billion to $1.53 billion to a new forecast range of $1.545 billion to $1.555 billion.
Stay the course
All stocks, including the ones listed above, will experience some volatility now and again. What’s important for investors to do when those price fluctuations come along is to look back at why they bought the stock in the first place, and evaluate whether anything has fundamentally changed about the company that would require them to reconsider their investment thesis. If your original assessment of the company still holds, then sit tight, ride out the dips, and enjoy the long-term gains.