Meltdown-Resistant Tech Stocks

Big Tech reached record highs after the March lows. But the wheel of fortune keeps turning, and tech has been mostly rangebound for the last month. However, even if trading range continues there are stocks that are companies more insulated than others and should be bought regardless of the stock's performance.  

Amazon

Bank of America recently reported that the online retailer's seller ecosystem contributes as much as 44% to total online sales in the U.S. But we all know that Amazon.com Inc AMZN is much more than an e-commerce emperor. 

Amazon Web Services (AWS) is Amazon's much greater cash cow, as companies are increasingly shifting to cloud frameworks. Revenue of this segment grew by 29% over the last reported quarter with full-year revenues exceeding $43 billion. Its margins are way more attractive than retail or ad-based margins. Strong double-digit growth in AWS is fueling Amazon's operating cash flow, and this is expected to remain the case in the near future.

Last Thursday, Amazon revealed the upgraded and lower version of its Fire TV Stick that hosts the content of Netflix NFLX, Walt Disney Co's DIS Hulu and Disney+, and other streaming providers. With an improved user experience, Amazon aims to gain a competitive edge over Roku ROKU and Apple Inc's AAPL Apple TV by including Dolby Laboratories, Inc DLB Dolby Atmos and offering video calling. To put it simply, Amazon is everywhere, and its business model is built to capitalize on worthwhile trends.

Fastly

The value of cloud computing services provider Fastly Inc FSLY cannot be reduced. It enables companies to deliver their content to users as quickly and securely as possible. The importance of this capacity has only grown in emphasis with the pandemic, as offices were forced to move to home mode and perform their operations in an entirely digital framework.

During its most recently reported quarter, Fastly enjoyed greater demand from its existing clients willing to spend more and also from new clients that came on board since its IPO. Fastly's operating margin is expanded by existing clients increasing their spending. The only downside is that company still has a way to go to reach profitability.

Palo Alto Networks and Datadog

Cybersecurity offers perhaps the greatest safety net of the tech bunch because hackers will exist regardless of the pandemic. Protecting a company's network has become a basic need with Palo Alto Networks PANW and Datadog DDOG set to benefit from this trend.

Palo Alto has aggressively expanded its security solutions portfolio through acquisitions. These investments have made it appealing to small and mid-size companies which will in turn allow the company to maintain double-digit growth over the long-term.

As for Datadog, its shares have been on fire since the beginning of the year, gaining more than 100%. Consequently, expectations are high for the company's upcoming earnings report. The only downside is competition remains strong from companies like Amazon, International Business Machines Corporation IBM, Microsoft Corporation MSFT, Cisco Systems CSCO, and Alphabet Inc (NASDAQ: GOOG) as well as younger start-ups, including Splunk Inc SPLK, Elastic, New Relic Inc NEWR, and Sumo Logic SUMO.

Facebook

When it comes to social media, Facebook FB dominates the field with 2.7 billion monthly active users. This figure becomes 3.14 billion if you add Instagram and WhatsApp. Along with Facebook Messenger, these four platforms are among the seven most-visited social platforms across the globe. Therefore, advertisers know they cannot afford to skip Facebook. More importantly, there is so much growth potential ahead. Besides monetizing Instagram and Whatsapp, the social media giant is also moving beyond advertising revenue with Facebook Pay service and Virtual Reality where it is in for a first-mover advantage.

Although unprecedented, 2020 is just like any crisis in the sense that it forced some companies to fight for existence whereas those that caught the right wave at the right time will emerge out of it even stronger. Each story has its winners and losers. Social media, online retail, cyber-security and the speed in which offerings are delivered will remain relevant in any doomsday scenario, positioning the above companies even beyond the COVID-19 era and insulating them from any further tech meltdown.

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