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.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
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.
-
What the Employment Rights Bill means for your jobNew workplace reforms are set to give employees new rights to benefits and flexible working
-
GSK share price surges after $2.2bn Zantac drug settlementGSK has settled lawsuits in the US that alleged the drugmaker’s now-discontinued heartburn drug Zantac triggered cancer
-
LSL Property Services: a profit-machine in the property sectorLSL covers every area of the residential real estate market and should thrive after its shake-up
-
Global car shares slide amid lower demand in China – what happens now?Has the car sector run into trouble? Britain’s Aston Martin and Germany’s Volkswagen are among the key automobile brands that have issued profit warnings.
-
Qualcomm could acquire rival Intel – but securing the deal won't be easyA tie-up between Qualcomm and its semiconductor rival Intel would be a coup. But multiple regulatory and commercial hurdles lie ahead.
-
How to invest in the quiet market monthsHere's how to invest in the quiet market months, since “sell in May” hasn’t paid off this year.
-
Spire Healthcare: invest in the booming demand for private healthcareSpire Healthcare is one of the few listed companies benefiting from the growing trend in private healthcare. Should you invest?
-
Are insurance companies a good investment?Costs may be soaring but the insurance sector is currently going through one of its most profitable periods. The market has been slow to realise the opportunity here
-
Google's legal challenges – could it be broken up?Google is fending off legal challenges from both the EU and the US. But would breaking it up actually work?
-
Apple shares slide amid underwhelming demand for new iPhoneApple shares fell last week after disappointing demand for the new iPhone 16 Pro. Can Apple depend on AI to give it a boost?
