As the world remains gripped by the pandemic and the presidential election draws near, many investors are struggling to see beyond immediate economic and political uncertainty. Nevertheless, the fundamental long-term outlook for high-quality US large-cap stocks remains positive.
Many of the themes that dominated the US market before the pandemic remain evident today: growth is still outperforming value, tech is rallying and financials are being left behind. As stockpickers, we continue to focus on individual quality companies that we think can weather the economic storm, however long it may last.
That means looking beyond immediate market noise and having conviction in firms with good management who are committed to strong balance sheets, while also finding opportunities that are out of favour in the current climate.
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Qualcomm: mobile chips look tasty
Next-generation technology has been one of the biggest stories in US markets for 2020. Over the last six months, we have added to our holding in technology firm Qualcomm (Nasdaq: QCOM), which specialises in intellectual property, semiconductors, software and wireless technology services.
Not only are Qualcomm’s fundamentals strong, but we also see a promising long-term outlook as we move towards 5G infrastructure globally. The semiconductor company is often overlooked owing to its historical dependence on mobile-handset growth. But the initial deployment of 5G networks has started to show through in Qualcomm’s results this year and this is a trend we believe is in the early innings. So, we think the best is yet to come at the world’s largest mobile chipmaker.
Amazon: the clear leader in online retail
Online sales comprised just 1% of overall retail sales in 2000. By 2019, this figure had reached 11%, with e-commerce outpacing the overall market by 15% over the past five years. The pandemic has accelerated the trend: Mastercard’s data shows us that since the outbreak of Covid-19, e-commerce has come to comprise 22% of retail sales.
Yet in the US market, the top-ten online retailers account for 60% of sales. We continue to trust in Amazon (Nasdaq: AMZN), which remains the clear leader in this sector. It is seven times larger than its nearest competitor, Walmart, and has built a strong distribution system. Furthermore, the business is seeing huge growth in its cloud business, both through its own systems and thanks to providing cloud technology to other big tech names, such as Netflix.
PayPal : the preferred payment processor
While the US financials have been out of the limelight this year, we believe there are huge opportunities here, particularly beyond the core banks. While many financial-services firms are struggling in the low interest-rate environment, technology-enabled companies, such as those in the payments sector, are set to grow strongly. PayPal Holdings (Nasdaq: PYPL) is at the intersection of e-commerce and digital payments.
For many of us, our first awareness of PayPal is when we are purchasing items on eBay, but today PayPal has leveraged its first-mover advantage to become the preferred and trusted payment-processor for e-commerce. It is accepted by over 20 million merchants and has 300 million active users. The company delivers robust organic growth.
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Ben Cohen: The Ben & Jerry’s co-founder who wants to break away from UnileverBen Cohen of Ben & Jerry’s ice cream is seeking to break away from Unilever, the conglomerate he sold out to in 2000. It’s a battle for the soul of the brand synonymous with corporate do-gooding.
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Trump wants to colonise Mars – will it happen?Donald Trump wants to plant the US flag on Mars. Could humans really live there?
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The star small and mid-cap stocks income investors have overlookedOpinion Thomas Moore, senior investment director, Aberdeen, highlights three company stocks as he shares where he would put his money
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Falling revenues and mounting debt spell trouble for Jumia TechnologiesStruggling African e-commerce platform Jumia Technologies looks headed for the exit, says Dr Matthew Partridge.
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Chemring Group: an explosive investment opportunity in defenceEuropean states are raising their military spending, and Chemring Group looks well placed to profit
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Next reports £1 billion in annual profits for the first time – what's next for the retailer?Clothing retailer Next has become only the fourth member of its sector to surpass £1 billion in annual profits. What does this mean for the company's future?
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Best of British bargains: cash in on undervalued companies in the UK stock marketOpinion Michael Field, Chief Equity Market Strategist, EMEA, Morningstar, selects three attractive UK stocks where he'd put his money
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Building firm Keller presents low debt and ample scope for growthGeotechnical contractor Keller, which supports vital global infrastructure, boasts rising profits and a cheap valuation
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PZ Cussons share price down 75% in last decade – why it's one to watchOpinion Once-strong consumer-goods business PZ Cussons is out of favour with the market. That spells opportunity for investors, says Jamie Ward
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Cash in on the biotech sector with specialist trust BioPharmaOpinion BioPharma has an attractive niche in lending to asset-rich biotechnology companies
