Forget Silicon Valley, Aussie Tech Stocks Outperform US FAANG stocks
There is a new kid on the tech block, so move over FAANG stocks you’re old news. Silicon Valley has long held the title of the technology capital of the world, but they are now being challenged by Australian tech companies. And it’s no secret that the tech stock sector is known for high growth, and spectacular failures.
Much like FAANG stocks in the US, Australian tech stocks have their own, albeit much less known, abbreviation called WAAAX stocks.
So who are they?
The list comprises WiseTech Global, Afterpay Touch, Altium, Appen and Xero.
FAANG stocks in the US are up an average of 25% year-to-date with the stand outs being Netflix, up 40% and Facebook%. WAAAX stocks, on the other hand, are up an average of 52% from 1 January with the standouts being Appen up 82% and Afterpay Touch up 67%.
As of this year Information Technology (XIJ) has been our top performing sector up 22% followed by Energy up nearly 17% and Materials up 14%. If we look over the past six years, Healthcare has been our best performer rising 281% while Technology has been the second highest at 160%. Compared to the Financial sector, which is up only 51% and the Materials sector, which is only up 21.25%, you can see how well the Healthcare and Technology sectors have been performing. The Australian market has long been dominated by Financials and Materials, with around half the top 20 stocks in those sectors. So are we seeing a changing of the guard from the older more traditional stocks dominating to new stocks becoming more prevalent in the future?
With an aging population and constant new technologies emerging along with decreasing manufacturing and other industries, it is hard to ignore that both Healthcare and Technology stocks will be moving up the list in the next ten years to be some of our biggest companies.
So what do we expect in the market?
After a much anticipated week down on the All Ordinaries Index, it has continued to surprise me with its resilience. In the days from the high on 7 March, the market fell just over 2% and closed lower on many of those days, yet in 50% of the cases it actually traded higher than the previous day. This indicates that our market is quite strong, and investors are more bullish. That said, I still think the market has a little further to fall before the next uptrend unfolds with my target below 6,132 points.
Taking a look at the sectors, Materials, Information Technology and Consumer Discretionary were the top gainers, while Financials and Healthcare where down. Right now, I see the best opportunities coming from Materials, Energy and Healthcare.
Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also author of Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in book stores and online at www.wealthwithin.com.au