I believe that tech shares are some of the best stocks to buy now for my portfolio. If 2020 taught me that the world could be brought to its knees by a virus and pandemic, it also taught me that without the capabilities of technology, the world would be a much tougher place to navigate.
When the pandemic was at its height, many stocks struggled but not tech stocks. These were some of the safest investments. Many others struggled and lost investor confidence, share price value, and market capitalisation as well as millions in revenue and profit.
With reopening in full swing, I have identified three tech stocks to add to my portfolio.
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Booking travel easily
Trainline (LSE:TRN) is Europe’s leading train and coach app. It allows consumers to book train and coach travel wherever, whenever, using a mobile device. It gathers routes, prices, and travel times from over 270 rail and coach operations in 45 countries. This offers its users a one-stop shop to easily book tickets.
As I write, shares in Trainline are trading for 300p, which I think is cheap. I am excited when my best stocks to buy now are cheaper than anticipated. But why is Trainline cheap?
In May, the government announced a plan to overhaul the railway sector. Named the Williams-Shapps plan, it outlines a new state-owned railways body to be named Great British Railways. This new organisation will be in charge of development and maintenance of infrastructure. It will also operate the rail network and set its own fares. The issue for Trainline is that it will also host its own online platform to sell tickets.
Since the news broke, Trainline shares have slumped from over 480p per share in May to current levels. At this time last year, shares were trading for 273p, which means as I write today, shares are still up by 9% in a year.
Despite this credible threat, I am not worried about Trainline’s fate now or over the longer term. First, the new government-backed enterprise may have spooked investors but these things take time and rarely go smoothly. Case in point is the HS2 project, which is over budget and behind schedule. Next, Trainline has a good international profile away from the UK too which could see it remain as one of the biggest and best ticket sellers. Finally, prior to the pandemic, Trainline performed consistently well. I understand past performance is not a guarantee of the future. I use it as a gauge nevertheless. Most of my best stocks to buy now have a good track record of performance.
Overall, despite the potential threat of the William-Shapps plan, I do think Trainline has the brand recognition, profile, reach, and offering as well as historical success, for it to offer me a positive return for the long term.
The best stocks to buy now have a competitive edge
Auto Trader (LSE:AUTO) is a UK-based online vehicle marketplace. Both commercial dealerships and private sellers use the platform, reaching many millions of car buyers across the UK. Auto Trader charges for sale listings on its platform, which is its primary source of income.
I often refer to a stock’s sector and review its place in the market. Auto Trader resonates with most people when you think of buying and selling cars. More recent entrants to the market have tried to eat up market share but Auto Trader seems to be the go to platform. I believe the best stocks to buy now have a competitive edge in their respective market and Auto Trader ticks this box for me with its brand power and history of success.
As I write, the Auto Trader share price is trading for 600p per share. A year ago, shares were trading for 594p per share. The recent demand for second-hand cars due to the lack of new cars being manufactured related to the pandemic could be the cause for the lack of share price movement. I believe this hike in demand could already be baked into the Auto Trader share price.
Like all stocks, Auto Trader does have its risks. The pandemic is not over and further restrictions could hinder progress for the app as traffic levels dropped substantially with previous restrictions and consumers tightened the purse strings when it came to buying a new car. Competition in tech stocks is rife but Auto Trader is way ahead of any of its competitors right now.
Overall, Auto Trader could be a great addition to my portfolio. It is a market leader in its sector and has an excellent historic track record to back it up. It offers consistently high returns on capital and juicy high operating margins. Auto Trader is also debt free which is always a bonus. These aspects could keep the Auto Trader brand flying high for years to come and provide a nice return for me too.
Safe as houses
Rightmove (LSE:RMV) is the largest online property portal in the UK. What I like about Rightmove is that it has advantages in its respective market, like Auto Trader. Right Move is the top property site visited in the UK. Property seekers and estate agents use Rightmove as the go to platform. This level of traffic means it can set its own pricing. Rightmove also has low expenses and it offers some of the best profit margins on the FTSE 100 index!
As I write, shares in Rightmove are trading for 700p. A year ago, shares were trading for 652p, which is a steady return of 7%.
As much as I like Rightmove, I must also consider risks associated with it. Rightmove is in a saturated market and competition is rife. There are other players in the market looking to take away its market share and offer a better experience at cheaper prices. The rising interest rates in the UK could mean the housing market may cool down from its recent activity levels.
Overall, Rightmove would be a good addition to my portfolio for the long term. It has a competitive edge compared to its counterparts and like my other two picks has a good historic track record to back it up. The current housing demand and market overall means it should continue being a well used tool for buyers and sellers. I would expect to see favourable returns for the long term if I added it to my portfolio.
