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
When the experts at Next Investors have a stock pick, it may pay to listen.
The Next Investors have been investing in ASX small cap stocks for years, with their best small cap picks yielding returns of 1,200%, 1,120%, 900% and 678%.
They have just revealed their hand-picked, FY2021 stock portfolio of high conviction long-term investments.
Click the link below to see what they are currently investing in.
S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.
Conflict of Interest Notice
S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.
The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.