How to buy technology stocks this year?
Editor’s note: This article comes from Tencent Technology , by Tencent Technology Produced jointly with Futu Securities .
These big American technology stocks have come through a period of high growth. The valuation of US stocks during the period of high growth is also very expensive. At present, the core contradiction in China is that there are too few real core technology stocks, so they are given higher prices. The valuation is premium, but it is hard to say whether it is expensive or not. After all, the growth is also fast and it will slowly digest the valuation.
In 2019, global technology stocks have really enjoyed themselves. Under the leadership of the US FAMGA technology leader, especially the 90% increase of Apple Inc. has pushed the entire industry chain to a new high. Looking forward to the future, the change in 5G technology will bring a new round of technology cycles. Then, in the context of already good performance in 2019, can the 2020 technology stocks be strong and continue to bring good returns to investors? How about it?
The investment and research team of Futu Securities reviews the logic of technology stocks rising in 2019, discusses the proposition of technology stock valuation, and the investment trend of technology stocks in 2020.
1. Whose bull market is today?
From the trend in recent years, there is no doubt that it is a feast for technology leaders, and technology stocks are the main driving force for the bull market. In this technology-driven, fast-changing world, technology companies have become the focus of everyone’s attention, and technology stocks have increasingly become the only choice for investors to earn alpha and outperform the market.
Judging from the changes of the world’s highest market capitalization company in the past 20 years, there is no doubt that it is now the pinnacle of the technology industry. In 2019, 7 of the top 10 global market capitalization are technology companies-they are the top five U.S. technology giants known as “FAMGA”, Apple, Microsoft, Google, Amazon, Facebook, and China’s “AT”, Ali And Tencent.
In addition, from a yield perspective, NasdaThe G-100 index has outperformed the S & P 500, Dow Jones Industrial Index, and the CSI 300 Index in the past 10 years.
The reason behind this is precisely driven by the surge in FAMGA. At present, FAMGA accounts for 46% of the market value of NASDAQ Top100 companies. This proportion has been expanding. In 2014, its weight was only 32.4%.
Now, the Nasdaq 100 Index continues to hit new highs, with a 38% increase in 2019, an 80% increase over the past three years, and a 107% increase over the past five years.
Quote source: Futu Niu Niu
So, sometimes it’s not difficult to get excess income. Choosing the right technology leader and holding it for a long time is a shortcut. If you don’t know how to choose the technology leader, the NASDAQ 100ETF is a good choice.
Second, are American technology leaders expensive?
Every time, every time a technology stock hits a new high, the market has a voice, technology stocks are too expensive, and the voice of short selling is endless. However, the stock index and FAMGA’s stock prices have unknowingly reached new highs.
FAMGA stock price increase this year
Especially this year, Apple ’s nearly 90% increaseIt was the second highest increase in a decade. Apple’s stock price rose from US $ 13 to US $ 294 in ten years, an increase of 21 times, and its market value exceeds US $ 1.3 trillion.
Quote source: Futu Niu Niu
Apple’s valuation is also rising, and the valuation center has changed from 10X to 20X in the past 5 years.
So, does this mean that the valuation of American technology leader FAMGA is too expensive and there is already a bubble?
To answer whether FAMGA is a bubble right now, the simplest and most direct way is to look at the valuation.
Data source: Wind
Apple’s PE valuation is 24 times, Microsoft’s 29 times, Google’s 28 times, Amazon’s (PCF’s 26 times), and Facebook’s 32 times. It can be seen that although FAMGA’s valuation has improved in recent years, they are all at In the center of a reasonable long-term valuation, 30 times the valuation is up and down, and there is no tens or hundreds of times the valuation like the Internet bubble in 2000.
If we carefully compare the corresponding relationship between FAMGA stock price, valuation and profit increase, we can find some interesting phenomena.
