For a moment, close your eyes, and remember the world of 2005.
The world where kids begged every night to go to Blockbuster to rent video games…
The world where families spent Friday nights at Barnes & Noble stores, perusing through books while sipping on a Starbucks’ hot cocoa…
The world where you’d go to a Sears to buy a new appliance or a J.C. Penney to buy some new clothes…
Today, that seems like an alien world – and yet, it was just 16 years ago.
Folks, the world is changing faster than ever before, thanks exclusively to the proliferation of always-improving technology platforms that have the capacity to reshape our personal and professional lives.
Netflix changed the way we consume media. Amazon changed the way we buy things. Facebook changed the way we communicate. Google changed the way we access information.
And if you think that’s the kicker, just wait for the next decade, because the reality is that you ain’t seen nothing yet.
The technologies reshaping our lives are only getting better and becoming more impactful, while consumers are more willing than ever to fully embrace these technologies, creating a situation where the global technological takeover of the 2000s and 2010s, will rapidly accelerate in the 2020s.
Getting on the right side of this seismic shift could mean the difference between you losing a lot of money – and creating generation wealth for your family.
Let’s put you on the right side of history.
To start, let’s give you a rundown of our 10 top technology stocks to buy for 2022 – each of which will give you the opportunity to capitalize on the technology takeover and turn this once-in-a-lifetime disruption into your once-in-a-lifetime opportunity.
Top Tech Stocks for 2022 #1: DraftKings (DKNG)
Believe it or not, the sports betting industry is on fire right now.
Long story short, sports betting has been illegal everywhere except for Las Vegas, Atlantic City, and a few other casinos across the country for decades now. However, that all changed in 2018, when the Supreme Court overturned PAPSA, which was a decades-old law that prevented U.S. states from engaging in the regulation and taxation of interstate gambling and sports betting.
With that law overturned, states were free to legalize sports betting.
At first, they were hesitant. But then a few brave states – like New Jersey, Delaware, and Montana – took the jump and legalized sports betting. A few years later, those states are handling enormous sports betting volume. New Jersey, for example, just crossed over $1 billion in sports betting handle in September.
And, as a result, those states are also raking in tons of sports betting tax revenue. New Jersey made more than $50 million in state tax revenue from sports betting in 2020.
Other states are taking notice.
Now, they’re all rushing to legalize sports betting for that big tax revenue, because the reality is that consumers love sports betting (they love sports, they love to compete, and they love to make money – what more could you want?).
Online sports betting was just recently legalized in Connecticut. Maryland and Louisiana are pushing forward with legalizing sports betting. Same with Florida, Wisconsin, and Minnesota.
Altogether, 28 states have legalized sports betting and have live operations. Another 4 have legalized sports betting, with live operations launching soon. That means more than half of Americans now live in a state with legal sports betting.
Those states are raking in the dough, so to speak.
Iowa’s September betting handle rose 191% year-over-year in September. Indiana’s handle rose 71%. Montana’s rose 23%. In New Jersey, you’re getting New Yorkers biking across the George Washington bridge to place NFL bets in New Jersey – and that demand is partly what’s fueling that state to a $1 billion monthly handle.
On the NFL front, NFL sports betting volume is up 122% through the first four weeks of the season. You’ll probably see a similar huge spike with NBA bets this winter.
The sports betting industry is on fire right now.
We don’t see this fire getting put out anytime soon. In fact, we think things are only going to heat up in 2022, as more states legalize sports betting, more sportsbooks adopt online sports betting capabilities, and sports make a full “Covid rebound”.
That’s why we’re super bullish on sports betting stocks as we head into 2022.
Among our top picks right now? DraftKings (DKNG). DraftKings has been one of the most durably successful SPACS that has remained elevated, even as other SPACs have tanked. This speaks to the market’s confidence in the entertainment and gaming business, and in DKNG stock.
The core growth narrative here is that everyone likes to win money and compete. Laws around the world are rapidly shifting toward legalization of sports betting.
And one day, the global online sports betting market will be huge. Everyone will be placing bets on their phones with ease. It’ll be a way of life.
And the company at the center of it all is DraftKings, because it can and will rely on durable technology advantages and network effects to remain the “top dog” in online sports betting and daily fantasy sports.
Top Tech Stocks for 2022 #2: Toast (TOST)
Most of the time, potential 10X investments are hiding in the small-cap world because it’s much easier for a company to go from a $200 million valuation to a $2 billion valuation (+$1.8 billion) than it is for a company to go from $20 billion to $200 billion (+$180 billion).
However, companies do go from $20 billion to $200 billion or more. It doesn’t happen all the time. But truly world-changing companies do it.
Shopify (SHOP) did it. Netflix (NFLX) did it. Tesla (TSLA), Amazon (AMZN), Apple (AAPL), and Microsoft (MSFT) all did it – and then some!
That’s why we sometimes venture outside of the small-cap world, to deliver you a potential 10X opportunity in the mid-cap world – but only if we see a company that we believe has truly world-changing potential.
Today, we are going to tell you about one such company. It’s a restaurant tech company that we believe will do for the restaurant industry over the next decade, what Shopify did for small merchants over the past decade. As Shopify did that, its stock rose more than 10X. The same could happen for this company.
The company we’re talking about is Toast (TOST).
Toast is the “restaurant technology company.” The company has created a robust, cloud-based, end-to-end technology platform purpose-built for the entire restaurant community.
This platform includes integrated hardware and software solutions across a restaurant, so that restaurant operators can truly manage every single facet of their operations from a single hub.
This includes payment processors and payment processing software; digital ordering and fulfillment software; marketing software; loyalty program and gift card management software; financial, loans, and banking services; payroll management software; reservation management software; supplier management software; contactless payment hardware, like QR codes; and more.
It is truly the all-in-one tech platform for restaurants.
Currently, Toast’s tech platform is operational in over 48,000 restaurants, through which it has processed over $38 billion in gross payment volume over the past 12 months.
The company just had a hugely successful IPO, and is currently valued at $26 billion.
We believe the company has several unique tailwinds at its back, including the following:
- Restaurant operations are unique. Whereas companies like Shopify and Square are designing one-size-fits-all fintech solutions to help merchants modernize their businesses, restaurants fall outside the scope of those solutions given their unique needs. To that end, we see a huge opportunity for a company to emerge as the “Shopify for Restaurants,” so to speak.
- Toast is the unrivaled leader in this space, with the biggest install base, the largest payment volume, the most talented team, and the most resources. It will be tough for anyone to compete with Toast in the long run.
- There are some network effects at play here. A healthy portion of restaurants are multi-location operations. If Toast signs one of those multi-location operators and impresses in a trial run, it is very likely the company will win a contract for all of the restaurant’s locations.
- The app has great reviews, and customers appear very happy with its functionality and value-adds.
- We view the all-in-one value prop as enormous. With so many disjointed operations, running a restaurant can be very complex – Toast makes it easy.
- The addressable market is huge. There are about 22 million restaurant locations in the world that do about $2.6 trillion in annual sales.
We can easily see TOST stock surging in value, as the 22 million restaurant locations across the globe collectively do about $2.6 trillion in annual sales.
Let’s say Toast can nab 20% of that market. That equates to $520 billion in GPV.
Toast’s revenues have historically measured just north 3% of GPV, so $260 billion in GPV should produce around $16 billion in revenue.
Application software stocks like this are trading around 12X sales. That multiple implies a near $200 billion valuation for the company in the long run.
Toast is a really high-quality enterprise software stock with an enormous first-mover advantage in a multi-trillion-dollar market. The company is a long-term winner. The only question is valuation, but if this company knocks it out of the ballpark and dominates the restaurant tech space, this is a $200-plus billion company in the making.
Top Tech Stocks for 2022 #3: Twist Biosciences (TWST)
There’s a very good fundamental reason for why we invest in innovators — because nothing that happens in the market can meaningfully affect their long-term growth narratives.
That’s because these companies are still changing the world. Their executive teams, engineers, and programmers don’t care about the sharp rise in long-term yields or the steep drop in tech stocks – they’re too busy at work building, amplifying, and commercializing breakthrough technologies that will fundamentally change how we eat, sleep, play, work, and travel.
As longtime readers know, we like to invest in innovation, because innovation is the fuel of earnings growth, and earnings growth is what drives long-term trends in stock prices.
In the world of innovation, few companies stand out as much as Twist Biosciences (TWST).
Twist Biosciences is a $5.7 billion, hyper-innovative synthetic biology company that has developed a breakthrough, proprietary technology platform to quickly and cheaply manufacture tons of high-quality synthetic DNA.
This breakthrough synthetic DNA tech platform has the potential to change the world.
To understand why, we have to understand a few things about the synthetic DNA market.
First, this market has enormous potential.
Synthetic DNA is broadly defined as DNA created on computers and inserted into organisms. The applications of synthetic DNA are infinite.
Farmers can use synthetic DNA to genetically engineer a new class of pest-resistant and disease-immune crops. Biotechnologists can use synthetic DNA to more rapidly test new medicines. Brewers can use synthetic DNA to more cost-efficiently create new beer flavors.
And, perhaps most interestingly, data-center operators can use synthetic DNA to store data, since DNA – as the information library of life – can store massive amounts of data at a density unmatched by computers.
That’s just the short list of synthetic DNA applications. DNA strands are the building blocks of life. As such, synthetic DNA has the potential to materially disrupt (and improve) everything about life.
Second, Twist Biosciences’ breakthrough technology will be the key to unlocking all this potential in the synthetic DNA market.
Synthetic DNA is not easy to make. But Twist Biosciences has developed a novel way to “write” synthetic DNA on a silicon chip, and as a result, quickly and cheaply manufacture a ton of synthetic DNA.
In essence, Twist Biosciences has leveraged semiconductor engineering principles to miniaturize the chemistry necessary for DNA synthesis. This miniaturization reduces reaction volumes and increases throughput, enabling Twist to synthesize up to 9,600 genes on a single silicon chip – versus other synthetic DNA makers who, in the same physical space, can produce just one gene.
That ultimately means that Twist Biosciences can supply tons of synthetic DNA to researchers at very low costs. Of course, the more synthetic DNA researchers can access, the closer we will inch to making scientific breakthroughs on designing pest-resistant crops, perfect-tasting beers, and medicines without side-effects.
To that end, Twist Biosciences’ core semiconductor-based synthetic DNA manufacturing process is the key to unlocking the enormous potential of the synthetic DNA market.
This truly is, then, a company that could change the world.
We believe they are going to do exactly that. Not just because Twist Biosciences has built some of the most exciting and impactful technology in the world. But also, because its CEO, Emily Leproust, is hyper-focused on using innovation to keep changing the world.
“Everything we try to do must be disruptive and best in class,” Leproust once said. “I demand that it be disruptive.”
That’s the sort of attitude which – when coupled with a breakthrough technology like Twist’s semiconductor-based synthetic DNA manufacturing process – will lead to a steady stream of world-changing innovation and significant long-term earnings growth.
Example? Twist is partnering up with Microsoft and Illumina to break ground on a new generation of DNA-based data storage centers.
Yet… this world-changing company is worth just $6.15 billion today… and despite its rise over the past month, its stock price is still down 6% year-to-date.
A buying opportunity?
We think so – and that’s why, if you have a time on your side, you should consider taking a buy-and-hold position in Twist Bioscience stock today.
Top Tech Stocks for 2022 #4: Duolingo (DUOL)
For a moment, think back to any old school spy movie… maybe a James Bond flick.
In those movies, the spy – whether male or female – is always sharply dressed, usually smart as a whip, and knows all those nifty action moves. They’re the quintessence of “cool.”
Another characteristic most of these savvy characters share? They almost always speak a foreign language. Because speaking a foreign language is worldly, and being worldly is “cool.”
It’s also very useful. Ever been lost in a foreign country? Or ever wanted to get a job that required multilanguage skills?
Speaking a foreign language is a great asset.
And yet, it’s an asset that many of us do not possess. A 2013 YouGov survey found that 75% of Americans speak only English, with no second language.
Of course, we all know why that’s case: learning a foreign language is hard – hard enough that most of us don’t even attempt it…
Foreign language books are dull and boring. And oftentimes, folks don’t get past the first few pages. Meanwhile, classes are expensive, take forever, and can conflict with our busy schedules. They can also be quite uncomfortable if you’re not a “people person.”
So, the result is that while most of us want to learn a foreign language, very few of us actually do.
That’s all changing right now…
One freshly public tech startup has figured how to make learning a new language fun, interactive, cheap, convenient, and easy. Along the way, it’s eliminated many of the barriers that have kept a majority of Americans from learning a new language.
Indeed, we believe this company’s new digital platform – which essentially gamifies foreign language learning – could dramatically expand the language learning market by many multiples… and that market is already worth $61 billion.
Best part about this company? It’s only worth $5 billion today…
That’s why we’re going to tell you all about this tiny company that is revolutionizing the language learning market right now… a company that has the opportunity to revolutionize the entire learning market in the future. We see a pathway for this company’s app to be used as widely as Snapchat or TikTok one day; and if that happens, this small stock could soar 10X or more.
Back in college, I had a roommate who – every single night – would lay in bed, open up an app on his phone, and use that app to learn French.
He was so addicted to this app that he would use it for at least an hour every night, and would laugh, smile, and make all sorts of funny noises while on it. He even invited friends over to use the app with him, and suddenly, this language learning app become the center of social gatherings.
I couldn’t believe it. In my experience, learning a foreign language had never been that fun, or engaging, or social.
So, one day, I finally asked him: “Man, what app are you using?”
His response: Duolingo (DUOL). Naturally, I downloaded the app the next day, and instantly became as hooked as he was…
So, what is Duolingo exactly?
Duolingo is a language-learning education platform that has figured out how to gamify and digitize the language learning process, so that it can be done from an app, at no cost to the user, and in a fun, engaging, social, and convenient way.
The company offers 98 total courses across nearly 40 distinct languages for English speakers. A few of which are thrown in for some pop-culture fun, including High Valyrian and Klingon, from Game of Thrones and Star Trek, respectively. This novelty aside, each course is hyperpersonalized and paced to the individual. They also include a cute little bird mascot that helps you out through games, tournaments, and friend challenges. All this runs entirely through an on-demand app, so that you learn wherever you want, whenever you want.
Trust me. Duolingo makes learning a language as fun as humanely possible. Download the app and see for yourself. There’s a reason the app has a 4.7-star rating on 1.2 million reviews in the App Store.
OK… that’s great and all… Duolingo has figured out how to make learning a language fun… but what’s the bull thesis here? Where’s the upside for the stock?
To answer that, let me give you a number: 80%.
That’s how many Duolingo users in the U.S. were not already learning a language when they began using Duolingo. These are people who were interested in learning a foreign language – but never had the time or money to do so – that downloaded the Duolingo app and got hooked. That’s actually most of the users on Duolingo.
In other words, Duolingo isn’t just taking over the $61 billion language learning market by making the process more fun and accessible… it is growing the market by 4X!
Long story short, we think Duolingo is turning the $61 billion language learning market into a ~$240 billion market. And yet, Duolingo’s market cap is just $5 billion today.
The company is presently growing at lightspeed, sports a great team and a clean balance sheet, and is fresh off a blockbuster initial public offering (IPO).
We think there’s ample evidence here to suggest that Duolingo could one day turn into a language learning app used by hundreds of millions of people across the globe (its monthly average user base stands at just about 37 million people today).
If that happens, this will easily be a $50-plus billion ed-tech giant in the future… and that’s why we want to put Duolingo stock on your radar today.
Top Tech Stocks for 2022 #5: Digital Ocean (DOCN)
To score 10X returns in the stock market, invest in investment megatrends oozing with growth potential.
The shift toward cloud computing is one of the most powerful, pervasive, and important investment megatrends of our time.
The leap from on-site computer storage to cloud-based storage is a trend we cannot ignore. Every document, application, image, and digital data in the world is making this jump. So that they can be eternally backed up and accessed from anywhere in the world.
It’s arguably the most important paradigm shift of the 21st Century.
Cloud computing is one of the investment megatrends you need to invest in.
Unfortunately, there are no “pure plays” on this megatrend.
Therefore, to invest in the cloud computing space, you must invest in Big Tech cloud-computing giants. This includes the likes of Amazon Web Services, Microsoft Azure, and Google Cloud.
That’s problematic for two reasons.
One, you don’t get “pure” exposure. That is, AWS could have a great few quarters, but if Amazon.com fails to move product, Amazon stock will struggle. You’ll lose even though your bullishness on AWS was right.
Two, the “big money” has already been made in those names. Amazon, Microsoft, and Google are all trillion-dollar enterprises. If even their cloud businesses do go gangbusters over the next few years, it’ll translate into good but not huge gains in the stock prices.
So, when it comes to cloud computing, investors have yet to capitalize on a once-in-a-lifetime megatrend in cloud computing.
Rather, they haven’t been able to, until recently…
For the first time ever, a high-quality, pure-play cloud computing company just hit the public markets back in March. If all goes as planned, this company could turn into the next Amazon Web Services and enable investors to score 10X gains in the cloud computing boom.
If you’ve ever used AWS, Azure, or Google Cloud before, you know they’re great platforms. They are basically all-you-can-eat software buffets for setting up, running, monitoring, and maintaining your digital operations.
But they also have their shortcomings – and those shortcomings mostly stem from the fact that they were designed to be used by large enterprises, not small businesses.
For one thing, these platforms operate on pay-as-you-go pricing models. That’s because large enterprises use tons of bandwidth, and therefore, Amazon and Microsoft can “run up the bill” on these enterprises that are doing millions of data-calls every month.
Large enterprises can foot that bill. Smaller enterprises cannot. Nor can they handle the cost unpredictability that comes with such models. They want simpler, cheaper, and more straightforward pricing plans.
Another thing is that these platforms are all-you-can-eat software buffets. On one hand, that’s great, because you can literally do everything on AWS. On the other hand, it can feel a bit overwhelming, because most small businesses don’t need all that complex functionality. They require simple-to-set-up and simple-to-use systems – which AWS and Azure are not.
Fortunately, for small businesses looking for something cheaper and simpler in the cloud computing space, there’s Digital Ocean (DOCN).
Digital Ocean is a cloud infrastructure provider like AWS and Azure. The big difference, however, is that whereas AWS and Azure were built for use by large enterprises, Digital Ocean was built for use by small businesses and individual developers, and is therefore both cheaper and simpler.
Digital Ocean offers a pay-as-you-go pricing model. But it also offers a monthly pricing model, which right off the bat is more attractive to SMBs because it offers more cost predictability. Further, Digital Ocean’s pricing is legendarily cheap in this space, with services that start at just $5 per month – which, compared to AWS, is about one-third as expensive.
Now, to be clear, Digital Ocean can offer these super-cheap prices because its platform has less functionality than an AWS or Azure. But the functionality that Digital Ocean “cut” is stuff that most SMBs have no need for anyways – and that brings us to our second big value prop of the Digital Ocean platform: It’s super simple.
Digital Ocean offers just cloud infrastructure services, and is developer-only. As such, for devs, this platform is super easy-to-use, easy-to-scale, and easy-to-maintain. It’s significantly more straightforward than AWS or Azure.
Oh, and added bonus is that some independent studies show that on comparable levels of spend, Digital Ocean’s virtual machines are actually significantly more potent than the VMs employed by AWS, Azure, and Google Cloud.
In other words, Digital Ocean has created a super-cheap, super-simple, yet still super-powerful cloud infrastructure platform specifically designed for use by SMBs. Theoretically, this platform could turn into the cloud computing backbone for the 100 million SMBs across the globe today.
Indeed, Digital Ocean appears to be on track to accomplish just that in the 2020s.
The company currently has over 570,000 customers in 185 countries. The Net Promoter Score is north 65. Net Dollar Retention Rates hover north of 100%. Revenues are growing by 20%-plus every year.
The growth numbers here look great. So do the profit numbers. Gross margins are above 50%. Adjusted EBITDA margins are above 30%. The company is already cash-flow-positive.
And the valuation looks great, too. Digital Ocean is worth less than $6 billion today. The addressable cloud infrastructure market for SMBs specifically measures north of $40 billion.
So, what you have with Digital Ocean is a hypergrowth company, in a hypergrowth industry, with a hyperprofitable business model, and a ton of room to grow.
Sound like a potential 10X pick?
You betcha’ – and that’s why you should consider buying Digital Ocean stock today.
Top Tech Stocks for 2022 #6: Marqeta (MQ)
Do you still use cash?
If you’re like most Americans, the answer is “no” or “rarely.” Today, cash – once the dominant form of payment in America – accounts for about 12% of U.S. personal consumption expenditures.
That number will fall to zero over time.
Because cash has zero advantages over modern alternative payment methods, like payment cards and digital wallets.
Cash is irreplaceable. If you lose your credit card, you can cancel it and order a new one. If you lose $20, it’s gone forever.
Cash is clunky. Bills are paper. They take up space. The more you have, the more space they take up. Cards and digital wallets, meanwhile, are space-efficient.
Cash is slow. You have to take the cash out of your wallet, hand it to the cashier, who has to open up the register, count the change, and return some cash back to you. Cards and digital wallets, meanwhile, are one-tap solutions.
And, perhaps most importantly, cash is physical. You can’t use cash to buy something on Amazon.com. You have to use a payment card or a digital wallet.
The big picture reality here, folks, is crystal clear…
Cash has enormous shortcomings. These shortcomings are insurmountable, and eventually, will result in the death of paper money. In the not-too-distant future, we will inevitably live in a world where cash is a relic of the past.
We like to call this little pivot from cash being the standard form of payment in the world, to it being obsolete, the “Cashless Revolution.”
Right now, we are still in the first few innings of this revolution. Already, we’ve seen some major winners emerge, including Square (SQ) – the cashless payments processor that has gone from industry underdog to household name over the past five years. Along the way, Square stock has scored shareholders enormous 2,680% returns.
But did you know that Square doesn’t actually make a lot of its own technology?
That’s right. Square is the brand. But the underlying tech which powers Square’s payment cards and machines is developed by a third-party tech company.
That tech company just hit the public markets – and it’s a name you need to put on you radar right now because it’s a potential 10X investment opportunity.
This is a behind-the-scenes tech company that is powering the payment processes at Square, Affirm, DoorDash, Instacart, and many, many more… and show you why its stock price could soar thousands of percent in the coming decade as the Cashless Revolution goes global.
My longtime readers know all about “picks-and-shovels” investments.
Back in 1849, during the California Gold Rush, thousands of prospectors rushed out to the West Coast in search of gold. Few found any. Most ended up broke. But the suppliers who sold picks, shovels, and other essentials to the prospectors were hugely successful.
The implication? One of the best ways to strike “gold” in a booming megatrend is to invest in the industry’s suppliers – the picks-and-shovels sellers.
In the Cashless Revolution, the top picks-and-shovels supplier is Marqeta (MQ).
Most readers have never heard of Marqeta before – but we’ve all interacted with this $15 billion company’s technology. That’s because Marqeta creates the technology which powers the payment processes on popular apps and cards like Square, Affirm, DoorDash, and Instacart.
Long story short, Marqeta has created a modern card issuing platform that leverages open APIs to help businesses develop modern, frictionless payment card experiences for consumer and commercial use cases.
What that means is that Marqeta provides the coding tools for businesses like Square to create modern payment cards that fit in with the Cashless Revolution. Marqeta-powered cards aren’t these old-school cards without chip readers, or contactless payments, or which cannot be easily uploaded into a digital wallet.
Marqeta makes it easy for businesses to create payment cards that do all of these things – and more.
It’s an elegant technology solution for a tech-powered commerce world.
No wonder so many big, forward-thinking tech companies are building on top of Marqeta tech… or that the company’s dollar-based net revenue retention was over 200% for both 2019 and 2020… or that the company grew revenues by over 100% last year.
This is a hypergrowth company at the epicenter of a hypergrowth megatrend.
Now, to be sure, Marqeta is not a small-cap company, as the market cap stands at $15 billion – which is “big” by our standards.
But the addressable market here is so huge that even at a $15 billion valuation, Marqeta stock is a potential 10X investment opportunity.
Simply consider: In 2020, the Marqeta Platform processed $60.1 billion in payment volume, which represents less than 1% of the annual $6.7 TRILLION of transaction volume conducted through U.S. issuers in 2020.
The long-term potential upside here is huge.
So big, in fact, that if you’re bullish on the Cashless Revolution, you should consider buying Marqeta stock today.
Top Tech Stocks for 2022 #7: SolarEdge (SEDG)
Solar stocks are on fire.
No pun intended.
The catalyst? A bullish note from the Wall Street bank Jefferies, which broadly stated that current polysilicon supply chain woes weighing on the industry will abate in 2022, driving solar panel install prices significantly lower and unleashing a ton of pent-up demand that was scared away by 2021’s high solar prices.
And it’s not a head-fake. The big breakout in solar stocks is a sign of the times.
Times where solar is now the cheapest energy source in the world, according to the IEA…
Where more than 200 cities and countries across the globe have a “100% clean energy” target for 2030, 2040, or 2050…
Where more than half of U.S. homeowners are considering adding solar panels to their homes…
Where solar is capable of not just fully powering homes, but also fully powering large-scale commercial properties and corporate campuses…
It’s a new world.
And in this new world, solar is king. Not coal. Not natural gas. Solar.
It’s a once-in-a-lifetime disruption… with huge global implications… and the time to invest is now.
We will show you a strong way to play this solar megatrend – not by buying another small-cap hypergrowth solar stock, but rather by buying an already large solar stock that has the potential to be absolutely enormous one day.
One of the largest and most well-known solar companies in the world is SolarEdge (SEDG).
One may assume that – given the company’s $18.5 billion market cap – the big run in SolarEdge stock has already happened.
But that’s the wrong assumption to make.
Instead of a small solar company that could one day be big, SolarEdge is a big solar company that could one day be huge – and, in that light, SolarEdge stock offers you just as much upside as some of the smaller names in this space.
Here’s the story.
Solar systems have three main parts: the modules (which produce DC power when exposed to sunlight), the inverter (which turns DC power into AC power that can be used by the electricity grid), and associated cabling, fuse boxes and mounting hardware.
Traditional solar systems were built with central inverters, or one inverter that connected all the modules in a solar system.
These systems suffer from a “weakest link” problem where – because all the modules in the system are connected by the same inverter – the whole system tends to operate at the power output of the weakest module in the system.
A breakthrough technology called power optimizers were made to fix this “weakest link” problem.
Power optimizers are basically intelligent electronic chips placed on each module, separately, to monitor, track, and adjust (where necessary) the power output of each individual module. In so doing, power optimizers separate the system from the module, and keep each module running at its unique MPP, or maximum power output.
Power optimizers are the future technology backbone of solar. Almost every solar panel at scale will be outfitted with solar optimizers to improve performance.
Who sells those power optimizers?
According to IHS Markit, SolarEdge is the top solar inverter/optimizer supplier in the world, based on revenues and wattage.
The company’s dominance isn’t slipping. According to Wood Mackenzie, SolarEdge has grown its share of the U.S. Residential Solar Inverter Market from near-zero in 2013, to over 60% in 2019 – going from the fifth-largest player in the space, to the single-largest player by a mile.
Because SolarEdge has the best microinverter and power optimizer technology in the game, and is setting the gold standard for solar panel performance across the U.S.
SolarEdge should be able to couple its first-mover’s advantage with market-leading resources – the company has over $1 billion in cash on the balance sheet, about 400 full-time employees, and a $10+ billion market-cap – to sustain its technology advantage for the foreseeable future.
If so, then SolarEdge has visibility to becoming the ubiquitous technology backbone for the solar industry, with SolarEdge inverters and optimizers being installed in most solar panels in the world.
That, of course, means that as solar takes over the energy market in the 2020s, SolarEdge will turn into a titan of the multi-trillion-dollar global energy industry.
The current titans of industry (electric utility companies) feature $70+ billion market caps.
SolarEdge could very easily get there one day…
Which means that despite its $10+ billion valuation, SolarEdge stock is worth a look as a potentially huge long-term winner in the solar revolution.
Top Tech Stocks for 2022 #8: Arrival (ARVL)
Next up we have a stock that saw a Reddit-boost earlier this year. But unlike other meme stocks, Arrival (ARVL) will stand the test of time.
Arrival’s advantage over other commercial electric vehicle (EV) companies is its monumental partnership, leading technology and unique production process.
So what exactly does this company actually do? Well, Arrival produces commercial electric vehicles, servicing the United Kingdom, United States and beyond.
In fact, Arrival is so good that it snagged a partnership originally slated for a former favorite of ours, Workhorse.
In fact, Arrival’s partnership with UPS came about after the latter tried Workhorse’s vehicles and wasn’t impressed. UPS then moved on to sign a deal with Arrival. The deal involves the parcel delivery company purchasing 10,000 EVs from Arrival through 2024, at which point they have the option to order an additional 10,000 vehicles.
Arrival’s $1.2 billion preorder contract with UPS implies the former is clearly among the top EV producers out there. Otherwise UPS would have continued its search and chosen someone else.
And Arrival will disrupt the industry even more moving forward because of its brilliant technology and production capabilities.
As far as the former goes, Arrival benefits from “vertically integrated” technology that allows it to create competitively-advantaged vans with market-leading specifications. All its tech is developed in-house, and it’s configured on top of its “skateboard” platform. Normally, auto makers combine bits and pieces from other companies. Arrival is doing it all.
This vertically integrated technology stack differentiates Arrival’s vans, and in this case, makes it better.
Relative to a Ford Transit van, Arrival’s electric vans are have 80% more payload capacity, a 3% sharper turn radius, 7% bigger unit volume and are 5% lighter.
And while competitors are bragging about their 100-mile driving range, but Arrival says their vans can drive over 200 miles per charge.
Arrival’s second significant competitive edge comes from its novel “microfactories.”
These small factories automate production in a fraction of the space of traditional auto factories, and this also makes them faster and more efficient.
Rather than aiming to produce hundreds of thousands of vehicles — Arrival’s factories have lower output — they instead aim to be as efficient, quick and cheap as possible.
Compared to big car factories, Arrival’s microfactories are 95% cheaper, take less time to get up and running (six months versus three years or so), operate faster and can deliver cars more quickly (because they can be strategically located nearly anywhere).
ARVL may have become a meme stock this year, but Arrival has the best electric vans in the market.
They can also produce and deliver those vans at breakneck speeds and can sell them at highly competitive prices. Their business model also lends itself to superior profit margins.
So, when Arrival stock falls after meme mania leaves it to do its own thing, buy the dip.
That’s why ARVL is one of my favorite growth stocks to buy today.
Top Tech Stocks for 2022 #9: Affirm (AFRM)
Believe it or not, the hottest hypergrowth industry in the world right now is one that not many folks on Wall Street are chatting about, and that’s the Buy Now, Pay Later market.
It’s basically a credit card, except BNPL services normally don’t charge interest, because BNPL service providers don’t make their money off those interest payments – rather, they make their money through a commission fee on the initial transaction.Buy Now, Pay Later – or BNPL – is a relatively new type of digital fintech product that allows folks to buy a product today, and pay for it through regularly scheduled installments in the future.
And, in a nutshell, that’s the bull thesis on the BNPL market: These products are going to eventually replace your credit card.
At the current rate, BNPL bulls have the numbers working in their favor. In 2019, U.S. payment volume through BNPL services measured just $3 billion.
In 2020, that number soared to $39 BILLION…
Yep. You read that right. BNPL payment volume in the U.S. surged 13X in just 12 months. Yet, even after that torrid, BNPL transactions still accounted for just 2.1% of e-commerce transactions worldwide in 2020.
There’s a lot of white space for this market to keep growing like wildfire over the next few years. But will it?
Big Tech and retail companies think so.
Square just acquired BNPL service provider Afterpay and intends to integrate BNPL functionality across its suite of merchant solutions, including its payment card processors.
In response, Square rival PayPal acquired its own BNPL service provider, Paidy, in a $2.7 billion, mostly cash deal.
Then there’s Mastercard, who – in response to Square and PayPal – is launching its own BNPL service, dubbed Mastercard Installments, in the U.S., Australia, and the U.K.
Meanwhile, Amazon just partnered with BNPL service giant Affirm to allow customers to break up purchases of $50 or more into smaller installments. It’s the first partnership Amazon has ever made with any installment player of any kind.
Walmart is replacing its layaway service for a BNPL program through Affirm. Macy’s has embraced BNPL services. So does Bed Bath & Beyond. Same with Nike, Best Buy, and Sephora.
BNPL is sweeping across the retail and technology worlds. And it’s really no wonder why. An independent study conducted by web analytics firm SimilarWeb of the top 50 online merchants that offer BNPL options and the top 50 that do not, found that those that offer BNPL options have a ~50% higher conversion rate.
In other words, BNPL options are better for buyers (no interest) and sellers (higher conversion rates). It’s a true win-win solution – and win-win solutions tend to dominate markets.
BNPL will be no exception to this rule.
Will BNPL completely replace your credit card? Probably not anytime soon. Credit cards have established banks behind them, with cool rewards programs, and attached saving and checking accounts.
But will BNPL steal significant market share from your credit card? Absolutely. As stated earlier, this highly efficient payment option accounts for just 2.1% of all e-commerce sales globally. That number could easily march toward 50% by 2030.
So… you’re talking about a market that could grow 25X over the next decade…
You won’t find too many markets in the world like that today. And that’s why this is an industry that all long-term investors should have exposure to in the 2020s.
The company we like best in this space is Affirm (AFRM), which provides “buy now, pay later” financing for e-commerce purchases. Helping to facilitate the sale of big ticket consumer items (think exercise equipment, home furnishings), it makes money from both sides. That is, from merchants it receives transaction fees. And, from purchasers, it charges interest on financing.
This company was thriving before the pandemic hit. But, much of its success in the past year of course can be chalked up to the overall acceleration in e-commerce thanks to the pandemic. After seeing its sales rise 93% in 2020, growth is going to slow down this year.
Yet, projected growth of around around 75% in 2022 is hardly anything to sneeze at. Even with valuation a bit rich at today’s prices, its continued success in the coming years may be more than enough to send it back toward its high water mark, and beyond.
Top Tech Stocks for 2022 #10: Stitch Fix (SFIX)
In 1995, psychologist Sheena Iygenar of Columbia University attempted to answer a very simple yet profound question: Is there really such a thing as too much?
Iyengar set up two displays of jams at a grocery store in California. One display had 24 different flavors of jams. The other had just six flavors.
Perhaps obviously, the large display attracted 50% more visitors than the small display.
Less obviously, the small display’s visitors were 10-times as likely to buy jam, and those who did buy were far more satisfied with their purchase.
These surprise findings gave birth to the Paradox of Choice. That paradox states that while people are drawn to the idea of greater choice, too much choice can ultimately cause customer anxiety and paralysis, and will lead to lower sales and satisfaction.
In other words, when it comes to shopping, less is more.
Retailers don’t seem to understand this. Many fashion brands offer thousands of different styles at the same time (ASOS, for example, has about 85,000 different products on its website right now).
Shopping, then, has one HUGE problem: There are too many options. Fortunately, a fashion technology company is solving this problem right now. Its breakthrough solution to customer choice paralysis could unlock significant value.
We will show you this small fashion tech company and explain why it could be your next big winner.
The global retail world is huge. In 2019, global retail sales measured $25 trillion.
That huge market is also ripe for disruption because it’s too complicated.
There are thousands of apparel brands in the world. Each one of those brands has hundreds, if not thousands, of unique products. Ultimately, if you want to buy a t-shirt, you have millions of options to choose from—and that’s just too many.
Insert Stitch Fix (SFIX). Stitch Fix is a $3.6 billion fashion tech company that is trying to disrupt the $25 trillion retail market by simplifying it with an on-demand, online personalized styling service.
The process is simple.
You go to Stitch Fix’s online platform. You take the “Style Quiz.” It asks you various questions about your personal style, like what size, fit and look you prefer.
Stitch Fix takes that data, and plays “data match-maker,” matching your personal style data with brand style data to produce a curated list of personalized apparel options made just for you.
Essentially, Stitch Fix leverages data to shrink each shopping trip from a few million random choices, to a few dozen relevant choices.
That’s a big deal. Academic study after academic study proves that consumers like simple. Stitch Fix makes shopping simple. Naturally, consumers will like Stitch Fix.
Of course, Stitch Fix isn’t the only player in this market. Urban Outfitters, for example, has launched a curated apparel rental service of its own.
But Stitch Fix is the biggest player in the online personalized styling market and will remain so for two big reasons.
First, independent brands like Urban Outfitters are limited to their clothes only. Stitch Fix, however, has in-house brands as well as third party brands like Madewell and Michael Kors, and therefore gives consumer broader access and better choices than independent brands.
Second, among third-party marketplaces, Stitch Fix is the biggest, and so has the most data. Longtime readers will know that we think big data equals big money.
Stitch Fix is no exception to this trend. Because the platform has more data than other services in this space, Stitch Fix will deliver better results than other platforms, and win over more customers.
Big picture: Stitch Fix has come up with a breakthrough solution to make the shopping process simpler and has rich marketplace and data advantages which should enable the company to turn this breakthrough solution into a hugely scalable business.
And yet… despite all of that… Stitch Fix still only has a $3.6 billion market cap.
That’s why long-term investors should consider taking a position in Stitch Fix stock—the upside potential over the next several years is enormous.
Editor, Hypergrowth Investing