Although the first few chapters of the story of technology stocks in 2016 appeared to be grim reading, the book of the year ended on a sweeter note. This is based on the quick recovery made by the iShares US Technology exchange-traded fund early on; its strong performance continued throughout the rest of the year. It appears that tech stocks are going to hold their upward trend in the future; this might be the ideal time to incorporate a few promising tech firms into your investment portfolio.
Interest rates on home loans have been climbing. Shortly after the presidential election that saw the selection of Donald Trump, average rates on 30-year mortgages passed four percent for the first time in two years.
Investors holding onto Ellie Mae are going to be worried that higher mortgage rates are going to put a stranglehold on the company’s business. It operates the Encompass platform, a clearinghouse that lets every sort of mortgage professional — including lenders, inspectors, assessors, and more — exchange services with one another. Business in this sector has been exceptionally strong recently thanks to the glut of homeowners trying to lock in low mortgage rates by refinancing their homes.
It’s true that higher interest rates are probably going to take a bite out of Ellie Mae’s business, but the effect is likely to be transitory. On a longer time scale, this is actually good news for Ellie Mae. It has a couple of tremendous competitive advantages — the network effect and high switching costs — that are going to work in its favor.
“High switching costs” basically means that a lot of organizations are already committed to the Encompass platform. It would be too much a pain (too expensive and too time-consuming) to retrain their employees on a new platform, so the odds are they’ll stick with Encompass.
Here’s how the network effect is working in Ellie Mae’s favor. The more professionals in the industry join the network, the easier it is to find the services you need in the Encompass system. The cross-disciplinary nature of the platform sets up a virtuous cycle where the very popularity of Encompass serves to make it even more popular.
Ellie Mae is no stranger to short-term reverses. Back in 2013, average user revenue actually dipped into the negatives. This didn’t slow the growth of the organization, though, thanks to market fragmentation. There is still so much growth potential in this field that I feel Ellie Mae makes an extremely profitable investment target. A little short-term unpopularity with investors may, if anything, make it more attractive.
eCommerce growth – Shopify is the biggest player right now.
E-commerce is a sector that’s penetrating the retail market down to the smallest scale. Shopify is a platform designed expressly to allow small business owners and entrepreneurs to jump into the online market. The company provides a range of user-friendly tools for building websites, operating web stores, collecting payments, managing inventory, and much more. Shopify is a hardware-independent service, too, meaning users can work with on desktop computers, mobile devices, and even via social media. It’s not hard to see how Shopify has already amassed a user base 325,000 strong.
In the online world, smaller, younger companies are sometimes at risk of getting gobbled up by bigger players. Shopify seems immune to this problem. A significant turning point occurred when no less a big fish than Amazon elected to end its own competing e-commerce system in favor of establishing a partnership with Shopify. Canny investors will see this as a strong endorsement.
Shopify is poised for big growth very quickly. Internal estimates peg the company’s potential market at nearly 50 million businesses. The company is currently expanding with confidence, extending its capabilities in order to attract more of those would-be customers. Though the bottom-line figure on Shopify is a loss right now, it’s a loss worth taking as it expands the top line outrageously. This is the perfect growth-oriented tech stock for your portfolio this year.
Their stellar performance in 2015 sent their stock soaring. The stock went from about $28 in 2015 to about $48 at the end of 2016.
TripAdvisor Partnered with Expedia
TripAdvisor was a terrible tech stock to hold in 2016, but that might well mean it’s ready to take off in 2017. A large percentage of the company’s recent doldrums have to do with the difficulties of making a conscious turn to operating on a mobile-first basis. There are other big changes on the horizon: TripAdvisor has just partnered up with Expedia to make it possible to book hotel rooms directly through the site. This could signal a focus shift towards reservations.
It’s impossible to forecast when TripAdvisor’s growing pains will end, but I feel very positive about its potential when they do. Given how far the company’s stock fell in 2016 (it lost almost half its value), getting on board for a potential recovery this year isn’t an expensive proposition.
President-Elect Donald Trump hasn’t taken office yet, but many of his plans for 2017 are common knowledge. Our analysts have been parsing the political data, and They’ve identified a $1.6 trillion opportunity in Trump’s proposed infrastructure improvements. Here are 11 stocks that stand to see big gains during Trumps first 100 days. Getting in early is one of the secrets to maximizing your returns; now is the time to shift your investments.
Netflix could be a viable option if you are looking to invest in stock for 2017. It is growing rapidly and the governments all over the world are cracking down on piracy, which puts Netflix in a strong position.