Looking for a new flame this weekend? Growing tech stocks have a lot to offer in an investment relationship. The world is going digital, so there’s no shortage of growth in the decade ahead, and technology is highly profitable, too. Three Fool.com contributors think PayPal Holdings (NASDAQ:PYPL), Universal Display (NASDAQ:OLED), and Microchip Technology (NASDAQ:MCHP) are worth your attention right now.
The intersection of banking and technology
Nicholas Rossolillo (PayPal Holdings): Digital payments aren’t new, but PayPal has done a ton of work to make them more mobile and touchless. Since the digital wallet company was spun off from former parent eBay back in 2015, shares are up over 670% as the app has become a modern household name.
But PayPal’s run is far from over. The fintech company sits at an increasingly important intersection of banking and technology. In a world that has been pushed further down the digital road, flexible options to send money and make purchases is a must for consumers and businesses alike. PayPal and its subsidiaries (mobile money movement app Venmo chief among them) are providing the needed tools, enabling e-commerce, touchless payments in stores, flexible payment terms (its interest-free “Pay in 4” buy now pay later option), and a growing ecosystem of related services.
During the final quarter of 2020, payment volume using a PayPal service increased 39% to $277 billion, active accounts increased 24% to 377 million, and revenue was up 23% from a year ago. But what’s really powerful about PayPal’s business is its rapidly expanding profit margins. With its payments technology infrastructure largely paid for, new revenue is mostly profit. As a result, free cash flow boomed 50% higher. With an average of over $1 billion in cash flowing into its business every quarter, PayPal has the ability to invest heavily in new features on its apps and make acquisitions (like its purchase of e-commerce shopping tool Honey last year).
For investors looking for a stock they can love for a long time (at least a few years, but the longer the better), PayPal checks all the right boxes. Fintech will only grow in importance for the foreseeable future, and PayPal is a top name in next-gen financial services and e-commerce tools.
Anders Bylund (Universal Display): You already love this company’s products, even if you didn’t know you were using them. It’s high time to fall in love with Universal Display as an investment, too.
You know that high-end smartphone you’re using? Whether it’s an Android or an iPhone, it probably sports an organic light-emitting diode (OLED) screen. Traditional LCD screens shine a light through a grid of colored pixels. In OLED screens, the pixels themselves light up with no need for a separate light source. This gives OLED screens perfect blacks, strong contrast ratios, and low consumption of battery power. OLED elements are great for smartphones and tablets, they’re making their way into big-screen television sets, and will eventually become power-sipping light panels for everyday lighting purposes.
As the patent-holding developer of many key innovations within the OLED technology envelope, Universal Display collects royalties and resells the necessary chemicals whenever these screens or lighting panels are manufactured. Moving up from small-screen portable devices to living room centerpieces is good news for this company’s revenue streams. Read from source….