Choosing a strategy for investing can include buying strong companies when they are trending higher or have pulled back due to external factors.
The stock market and economy have seen a significant amount of volatility in 2020, which has provided opportunities for this type of strategy.
The State of the Market and Economy in 2020
Most investors had no idea what 2020 had in store for them. In March, when the pandemic hit and people had to start isolating and change their daily habits quickly, it reduced the steady stream of customers to many small businesses. The economic numbers since then have reflected this sudden change. Unemployment has risen fast and restaurants, gyms and other companies in the service industry have had to close their doors. Meanwhile, the stock market is hitting all-time highs, which is being fueled by the strength of many large companies. The price action in these stocks may not be surprising as several individuals have flocked to the internet to do their shopping.
What Are Some Strong Companies to Buy?
Companies like Alibaba, Microsoft, Amazon and Apple have fared well despite the pandemic and poor economic statistics. Choosing these companies to place in a portfolio may be profitable.
- Alibaba – BABA: The price of Alibaba stock has hit all-time highs in 2020. The company is a major online player in the retail space with a significantly large customer base. When individuals began to coop up in their homes in East Asian countries, they still needed to buy certain products to use in their daily lives. Alibaba became one of the main resources for these individuals. According to the experts at Money Morning, “And when it comes to Alibaba’s cloud computing, there’s actually been an increase in demand with so many organizations suddenly having to move services and work online. With unknowns around how long services will need to remain primarily online, Alibaba’s cloud services should continue to see a boost.” Their footprint in the cloud should also help create stability and more income as companies transfer their internal processes online.
- Microsoft – MSFT: This tech company was the golden child in the 80s and 90s until Apple took its place. Like many other businesses in the tech world, it has changed the way people access the company’s core products by switching them to cloud-based subscription services. Microsoft is also moving into the virtual reality space by offering virtual reality gaming systems. This area is still developing and will likely offer several opportunities in the future, especially with the promise of mixed reality technology.
- Amazon – AMZN: While Alibaba stock benefited in price from Asian buyers, Amazon’s stock price shot up as well. This e-commerce behemoth was in a prime position to receive orders from people who may have normally shopped at brick-and-mortar businesses. The company is also actively involved in other areas, such as offering voice recognition devices, which utilizes AI.
- Apple – AAPL: Apple has been a leader in smartphone technology, which is led by its flagship product, the iPhone. The share price of AAPL may benefit in the future by its involvement in AI. It has a roadmap created, which will move it towards combining AI with the personal data of its customers. This will help provide a customized experience when people make decisions in their everyday lives.
Adding the stocks of leading companies to a portfolio should increase the odds of producing a higher value due to both the stability and potential for higher income and profits.