These 3 technical stocks are created for a Monster 2021

The stock market has made very impressive gains this year and part of its success has come from technology stocks. Technology companies in general did well in 2020, as investors looked for stocks that could thrive during blockages and social distancing.

With more coronavirus vaccines on the horizon and hoping the pandemic will end in 2021, some investors are looking ahead and trying to decide what technological action will be the best bets for next year. To help you find some of them, I asked those who contributed to Motley Fool shares that I believe are ready for further growth in 2021. They returned with Year (NASDAQ: ROKU), Square (NYSE: SQ), and Appian (NASDAQ: APPN). Here’s why.

Roku: Going for streaming

Danny Vena (Roku): Video streaming has already become a thing of the past before the pandemic, when blockages and home stay orders made it a must for home entertainment. The number of streaming video subscribers has surpassed cable TV for the first time in 2018, and cable cutting is accelerating, so it simply cannot return. As the main aggregator of streaming video channels, Year (NASDAQ: ROKU) has the most to gain from this trend and is preparing for a monster year in 2021.

Roku provides access to all high-profile streaming services, including Netflix, AmazonThe first video and Walt Disneythe eponymous service, Disney +, but it doesn’t stop there. The platform offers over 10,000 streaming applications and hundreds of live TV channels. As a result, Roku offers more streaming options than any other platform.

The streaming pioneer receives a percentage of the advertising displayed on all supported advertising channels on its platform, as well as a reduction in monthly subscriptions from paid services when customers sign up using Roku. The company also receives all the advertising from its own streaming offer, The Roku Channel.

One of the most underrated weapons in its arsenal is the Roku smart TV operating system (OS). The company has built a dedicated operating system from the ground up, rather than settling for a reused mobile app, the solution used by many rivals. Ease of use and intuitive user interface have made the choice of a growing number of licensed TV manufacturers. As a result, the Roku operating system was found in one of three connected TVs sold in the US last year and one in four in Canada. This gives the company an unparalleled installed base of devices.

Advertising, the Roku channel and the licensing of the operating system create a trifect of revenues in the platform segment, which determines the growth similar to the Roku fire. In the third quarter, revenues increased by 73% year-on-year, led by the platforms segment, which rose by 78%. At the same time, its active users increased by 43% and the average revenue per user (ARPU) increased by 20%. User involvement continues to grow, as viewers watched an average of about 3.5 hours a day. This led to a total of 14.8 billion viewing hours, an increase of 54%.

Roku has made several announcements in recent weeks consolidating its leading position in streaming. The company has launched a Roku SE streaming player worth $ 17 in time for the holidays. Roku also made the long-awaited announcement that it had finally reached an agreement AT & T to run its pilot service, HBO Max. Roku used the cache of 46 million viewers to benefit from a more favorable deal with HBO on the eve of the launch of The Wonderful Woman 1984.

There is no doubt that 2020 was an important year for Roku, but given the momentum and trajectory of the company, 2021 could be an absolute monster.

Square: all (eco) systems work

Brian Withers (Square): Square started with a simple concept of allowing small businesses to make credit card payments in person with a small square device attached to a merchant’s cell phone. Over time, the company has expanded its vendor services across an entire ecosystem of applications to enable companies large and small to operate. In recent years, the company has added the Cash application. This growing business segment focuses on providing individual consumers and the digital banking and brokerage ecosystem. In the last year, these two ecosystems have been on different paths.

Coronavirus has accelerated the popularity of the Cash application. More customers turn to tools and adopt more services and make more transactions. This caused the gross profits of this segment to reach records. Growth in three-digit gross profit has accelerated in the last two quarters. Keep in mind that Square uses gross profit as a key value to compare its segments, because the revenue from its bitcoin sales can distort the trends of the underlying business segments.

Data source: square revenue launches. YOY = in a year.

On the other hand, the coronavirus adversely affected sellers. Small businesses struggled with store closures and reduced spending on brick units. The company tried to help sellers by launching new platform capabilities, such as online ordering and boarding. This helped, but growth rates slowed significantly compared to pre-coronavirus growth levels.

Data source: square revenue launches. YOY = in a year.

As a result, the seller’s ecosystem decreased from 75% of total gross profits in the third quarter of 2019 to 52% in the most recent quarter. But there are signs that things are starting to get better for Square sellers. In the most recent quarter, the seller’s gross profits rose sequentially by 29% to a record $ 409 million. This was the first trimester since it hit the coronavirus in which this segment recorded a positive sequential increase. This increase was primarily driven by a 50% increase in online sales, strong international sales and a steady level of new customers coming on board in the last two quarters.

Looking to the future, things should only improve for both segments. As coronavirus vaccines are distributed, consumers should be able to do more comfortably, which should allow sales from small businesses to grow at a faster rate. In a year, I would not be surprised to see again the increase of the gross margin of the seller in the range of 20% -plus. As for the Cash app, its three-digit growth rates will most likely slow down, but its record-breaking trend and gross profit trend will continue.

As the seller’s ecosystem grows healthier, the company’s overall level of gross profit will also reach record levels. With both ecosystems set to reach new highs in 2021, investors should be able to participate in success.

Touching the application arm

Chris Neiger (Appian): When AppleThe App Store debuted in 2008, with only 500 apps. Now, the App Store has 1.96 million apps, and the Google Play Store has 2.9 million. As the demand for applications continues to grow, Appian makes it easier for companies to build their own at any time.

Appian’s low-code software development platform helps companies of all sizes build their own applications without the need for code-writing expertise. This makes application building more accessible to companies and reduces the barrier to creating new applications quickly. And the application business is booming.

Appian’s sales rose 17 percent in the most recent quarter, driven by a 40 percent jump in the company’s cloud subscription revenue. The company expects sales of cloud subscriptions to continue to grow and complete the full year 2020 by 34% compared to the quarter a year ago.

Although the company has had good results this year – increasing the share price by 297% so far – the company believes that the same trends that accelerated in 2020 will continue next year. Appian CEO Matt Calkins said in the company’s third-quarter earnings call: “I expect strong workflow or process management, if you prefer, to be a key differentiated feature in both core, low-cost markets. and automation, in 2021 and Appian is well positioned to benefit from this trend. ”

The mobile app market continues to grow, expanding from a $ 106.2 billion market in 2018 to an estimated $ 407.3 billion by 2026. Appian is still in its infancy to enter the trend of Developing low-coded applications and investors looking for a growing technology company to invest in 2021 (and beyond) would be wise to take a closer look at this company.