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How do you choose the best tech stocks? It’s important to consider a tech company’s revenue growth, cash flow and innovative nature and how it competes in the current market. No small feat, right?
Benzinga can help you break it down. Here’s our carefully researched list of tech stocks you might want to choose for your portfolio.
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Overview: Tech Stocks
From 2007 to 2017, the tech industry zoomed from $65.2 billion to $263.6 billion. However, this phenomenal growth in the tech sector doesn’t come without risks. Innovations constantly cause disruptions within the market. For example, in 2007, the introduction of the iPhone created many new businesses and ruined others. It caused the tech industry to evolve into what it is today.
This sector offers more than just sturdy mega-cap stocks and household brands like Amazon. The tech sector niche includes companies of all sizes, including start-ups. You must do your research to successfully invest in tech stocks.
Best Online Brokers for Tech Stock
A good online broker can make investing and trading tech stocks more efficient and can help you be more successful. Here are some great online brokers you should consider.
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Features to Look for in Tech Stocks
- Profitability: Hands down, the best way to determine whether you should buy a particular stock is to get a firm grasp on whether it can turn a profit. Look at its profitability ratios to find out how it stacks up.
- Total addressable market (TAM): The total addressable market (TAM) reveals the maximum amount of money a company can earn in a select market — provided a company has 100% of the market share.
When a company is in the process of releasing a new product, a new customer segment or plans to cross-sell an existing product to customers, you want to evaluate the company’s potential growth capacity.
- Revenue: Look at a company’s operating revenue and nonoperating revenue and what tech companies make from their core business (operating revenue) and one-time business activities (nonoperating revenue). You’ll want to carefully consider both before you pull the trigger on a tech stock.
Putting Tech Stocks in Perspective
The technology sector can attract you with its stability and growth potential. Investigate tech stocks’ potential to expose you to lucrative returns.
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