Tech Stocks In Focus
The next Internet boom is on the horizon, and it could happen in emerging markets such as India and China for Tech Stocks.
One of the first things to grasp in stock trading and investing is whether to focus on value investing or growth investing. Younger investors normally go for growth.
Look to Asia and Emerging Markets for Growth Tech Stocks
When it comes to tech stocks offering massive growth opportunities, investors usually focus on a few giants such as Amazon ($AMZN), Apple ($AAPL) and Facebook ($FB). However, as a revolutionary belief, some investors such as Kevin T. Carter, fund manager – as reported by Barron’s – believe that the next major growth opportunity, or what can be called an Internet boom, will be fuelled by stocks not from Silicon Valley, but by tech companies from India, China and other markets serving the needs of 85% of global consumers.
Carter’s Emerging Markets Internet & Ecommerce ETF ($EMQQ) has delivered a 57% total return for the year-to-date, as Morningstar reports. That also translates to over double the total 27% return on the benchmark ETF which is the iShares MSCI Emerging Markets ETF ($EEM).
Carter recommends the following Chinese companies:
- Alibaba ($BABA), the ecommerce merchant that’s considered the Chinese equivalent to Amazon
- com ($JD), another ecommerce company
- Tencent Holdings ($TCEHY), the online entertainment, payments and social networking provider
- com ($WUBA), the online business listings and classified ads platform
Beyond the Chinese stocks Carter also zeroed in on two Indian companies:
- Info Edge (53277.Bombay), the online classified ads listing company, and
- MakeMyTrip ($MMYT), the travel reservation company
Naspers (NPN.South Africa), the South African Internet and video entertainment and publishing company, and the Argentinian-based but South American-operating e-commerce platform MercadoLibre ($MELI) were also recommended by Carter.
Emerging Markets Present Opportunities for Boom
These are all stocks from emerging countries, and that’s what Carter’s fund focuses on. These are nations developing fast, with rising Internet usage as a result of the increasing availability of WiFi and smartphones from the cheapest ones to the most expensive iPhones. Accounting for 85% of the global population, Carter quotes McKinsey & Co. saying that these nations present “the greatest growth opportunity in the history of capitalism”. This is where the Internet boom will happen, and investors wouldn’t want to miss out on it.
Value Investing with a Growth Perspective
Carter considers himself a value investor. So what’s the average P/E ratio for the portfolio he’s suggested? It’s a costly 38! However, he’s quick to point out that the growth experienced by these companies is a scorching compound annual rate of 40%. That makes the overall P/E to growth rate (PEG) of this portfolio under 1, which he considers quite favourable and attractive. He believes the high growth of revenue and expanded profit margins will bring about even higher valuations.
There’s a golden lining to this portfolio as well, in that these companies in emerging nations do have the backing of investors in the developed nations, and these investors have mapped out their investment for a significantly long period of time. To take advantge of these trends in a cost effective way, check out TradeZero, the online broker that provides free trading and 6 to 1 intraday levereage.