Credit: Shutterstock photoWith the Nasdaq Composite Index closing in record territory Tuesday, finding value and knowing where to place your hard-earned cash in 2017 will be difficult. But depending on your risk tolerance and the patience you're willing to apply, making money doesn't have to be a challenging endeavor.
The tech sector, which has delivered 14% returns in 2016, should sustain the rally, thanks (in part) to the pro-business policies of President-elect Donald Trump. Not to mention, whether from a business perspective or personal, the tech sector's top-performers are flowing more and more into our everyday lives, affirming our reliance on their products and service. In that vein, these three 2016 winners -- not in any particular order -- should be stashed in your portfolio for 2017.
Facebook (FB) - $118.01, up 12.76% in 2016 - 12-month target $160
Fake news might have dominated the last three months of Facebook's 2016 campaign, but there's nothing fake about the company's profits. The results of its fiscal third quarter, where it posted adjusted earnings of $1.09 per share on revenue of $7.01 billion, was the perfect example. Not only did both measures crush Wall Street estimates for 97 cents per share on $6.92 billion, it marked year-over-year growth of 91% and 56%, respectively.
Facebook's dominant advertising prowess, thanks to almost 2 billion global users on its platform, is matched only by Alphabet's (GOOGL) strong search business. Plus, with the company now boasting more than 1 billion active mobile users, while Q3 average revenue per user rose to $4.01, Facebook's financial power will come into play in 2017. And with the stock down more than 8% in three months, my price 2017 target of $160 is good for 35.5% returns.
Amazon (AMZN) - $771.40, up 14.06% in 2016 - 12-month target $950
As with Facebook, Amazon shares have lost some steam, falling 5.5% in three months. But the e-commerce behemoth, led by billionaire CEO Jeff Bezos, is coming off the all-important holiday quarter, where Amazon has already announced record shipments. From its interest in drone deliveries, its new grocery store concept, long-haul freight trucks, its fleet of airplanes, and a host of other endeavors, Amazon continues to strike fear in the hearts of any market leaders who believes their businesses can't be disrupted.
And we haven't even mentioned the dominance of its cloud computing arm Amazon Web Services, which continued to rake in the big bucks. For the full year, ending December, Amazon is expected to earn $4.76 per share on revenue of $137 billion, marking year-over-year increases of 96% and 28%, respectively. I expect both figures to beat consensus and for Amazon to raise full-year 2017 guidance. Accordingly, AMZN stock, which I expect to reach $950 in 2017, should deliver 23% gains.
Microsoft (MSFT) - $63.28, up 14.13% in 2016 - 12-month target $76
In 2017 Microsoft CEO Satya Nadella will affirm his place as one of the best leaders in the tech industry. While he may never earn the level of respect or perceived a genius in the realm of CEO/founders Mark Zuckerberg or Bezos, Nadella has done something many thought was impossible: Detach Microsoft from the dying PC-dependent business it has been and turning it into a respected cloud juggernaut.
Just as important, because of Nadella, the market has now forgotten how much it hated Microsoft under former CEO Steve Ballmer, who was blamed for missing the mobile trend, which cost Microsoft hundreds of billions of dollars. In 2017 Nadella's biggest job will be to integrate LinkedIn. Are you willing to bet against him? I'm not. MSFT stock will hit $76 in 2017, delivering 20% returns.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
