We are in the middle of 2021, and the stock market is having a crazy start to the year. High-growth tech stocks soared in January, collapsed in February, and continued to rebound through the spring and early summer. The coronavirus and its vaccines have driven many of these wild swings, while others have sprung from the market-breaking tactics of Reddit’s r / WallStreetBets channel.
The market is more volatile than ever in mid-July. Tech stocks could see another strong rally, or the entire stock market could be headed for a dramatic downward correction, depending on how the earnings season just started.
Whether the market is rising or falling in the near future, investors can secure strong long-term returns by purchasing stocks of high-quality companies at reasonable prices. On that note, here are two tech stocks with strong growth drivers and fantastic stamina that will serve you well for years to come, whatever the direction of the market over the next few weeks.
Coronavirus health crisis has ignited a fire under media streaming veteran Spotify (NYSE: SPOT). The music and podcast service increased its Monthly Paid Users (MAU) by 27% in 2020, stopping at 345 million users by the end of the year.
Aiming to become “the world’s # 1 audio platform” in the long term, which would include beating traditional pillars such as terrestrial radio, Spotify is investing heavily in exclusive content and innovative multimedia services.
It is a global ambition. The company launched a massive expansion campaign in February, adding more than 80 new geographic markets and 36 new languages to the Spotify platform. We are also not talking about a plethora of small island nations. The service is now available in 9 of the 10 largest countries in the world, with the notable exception of China.
Spotify’s massive promise hasn’t translated into soaring stock returns so far. The stock is trading 37% below historic February highs and 9% below the past 52 weeks. The task of finding a fair price for Spotify stock is difficult as the company reinvests every available penny in growth-boosting business ideas, resulting in negative earnings and barely positive cash flow.
That’s not a problem for me, given the impressive growth in Spotify users and promising monetization ideas. The company plans to expand its profit margins over time through a mix of subscription fees, ad-supported feeds, and premium services for content creators and consumers. Meanwhile, the stock is trading at just 4.7 times the sales.
Now seems like the perfect time to grab Spotify stocks from the Wall Street bargain basket. Of course, market makers don’t see it that way yet, but it’s business as usual for high-octane growth stocks.
Digital currency exchange Global Coinbase (NASDAQ: COIN) entered the stock market near the recent spike in cryptocurrency prices and general investor interest in the space. Coinbase shares changed hands to as much as $ 346 per share on day one, but prices immediately started to drop. Today you can buy Coinbase shares for $ 225 per stub, 35% below day one highs.
And I think that’s a good idea, assuming you have some interest in cryptocurrency investments.
Coinbase is not an outright bet on any particular digital currency. Instead, it is a cryptocurrency investment with a solid future as a whole. The platform allows users to trade and hold nearly 70 different cryptocurrencies today, ranging from established leaders like Ethereum and Bitcoin to a plethora of smaller and less famous alternatives.
Based on this broad trading service, Coinbase is expanding its market share even as the cryptocurrency market itself contemplates explosive growth for many years to come. Coinbase had a 4.8% share of a global crypto market worth $ 700 billion in 2018. Today, the company serves an 11.3% share of a 1.3 market. trillion dollars.
The company had $ 1.1 billion of cash equivalents on its balance sheet at the end of 2020, with no long-term debt to speak of. Its operations are profitable and generate positive cash flow.
Together, all of these attributes make Coinbase a low-risk investment vehicle in the high-risk world of cryptocurrency assets. If Bitcoin and Ethereum fall out of favor, replaced by better-designed alternatives that don’t even exist yet, Coinbase will be there to serve traders and investors interested in the new winners.
The stock starts to look downright cheap at these lower prices.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.