Robin Geffen, Global Equity Team for Liontrust
Technology will again be a critical feature in stock markets in 2021. Those companies that fail to use technology could become casualties and those that benefit from incorporating technology may become stock market heroes.
In the UK, the high street has seen a substantial casualty recently in the form of Arcadia, with brands like Top Shop, Dorothy Perkins and Burton. The company’s failure to develop online led to ASOS and Boohoo taking market share.
The FAAMGs (Facebook, Apple, Amazon, Microsoft and Google) have performed very strongly in 2020 and look well set for 2021. Microsoft and Apple pay good and fast-growing dividends and in time we believe the others will pay dividends as they mature. Not all technology companies’ shares have performed well at the same time, however. It is interesting to note that, while many technology companies’ shares saw profit-taking after the positive vaccine news, both Visa and Mastercard rose on investors’ expectations that holiday, hotel and airfare spending could return to normal.
2021 offers great opportunities in technology whether you are looking for mature companies, such as Apple, Microsoft, Visa and Mastercard to provide reliable, growing dividends; mid cap technology stocks growing far faster than the market like Twilio, whose share price is up 225% in the year to end November (three years ago its share price was US$26 against US$320 at the end of November); or small caps to find the next FAAMGs. On 16 May 1997, you could have bought Amazon shares for US$1.73, while today they trade at over US$3,100, an extraordinary rise of nearly 180,000%. 323 Amazon shares would make you a dollar millionaire today at a cost of just US$559 in 1997. The next FAAMGS are out there just waiting to be found.