With the new year now under way, the stock market is off to a fast start. Washington reached a deal in the eleventh hour to avoid the fiscal cliff -- news that sent stocks soaring. The tech sector looked particularly strong, with the Nasdaq closing at its highest levels in nearly three months. As we look to the year ahead, the question on many investors' minds is: Which stocks will deliver the best returns in 2013?
The media is full of market forecasts this time of year. However, rather than wasting your time with short-term predictions, I'll instead highlight two tech stocks that investors can buy and hold into 2014. After all, at the Motley Fool we believe in investing for the long haul.
Growth where you least expect it
Slowing economic growth in China may have scared some investors out of this name, but current shareholders of China's largest search engine, Baidu (NASDAQ:BIDU), still have a lot to look forward to in the year ahead. Despite recent setbacks, China remains one of the world's key markets.
Baidu's position within the Chinese market will serve shareholders well going forward as more of the population moves online. The company currently performs more than 70% of total paid search dollars in the Asian country, which has earned it a reputation as the Google (NASDAQ:GOOGL) of China.
But wait, it gets better. Baidu's customers, which include small to mid-sized Chinese businesses, are spending more and more on paid search advertising. In fact, spending per customer has increased every quarter for the past three years. Given these catalysts, I suspect Baidu will finish this year on a strong note and gallop into 2014. Of course not everyone is so optimistic.
Some investors worry that increased competition from Qihoo (UNKNOWN:QIHU.DL) will erode Baidu's market share. Though competition is inevitable, what truly matters is that a population of 1.3 billion budding Web users is large enough for more than one major player. More importantly, Qihoo's not catching up with Baidu's 80% grip on the market overnight. As far as 2013 is concerned, I believe Baidu will maintain its dominance, and thus is a must-own stock for buy-and-hold investors.
Disruptive technology at its best
The next tech stock to own in 2013 is 3D Systems (NYSE:DDD), a company that specializes in three-dimensional printing. With this name, investors are tapping into a relatively new market that has the potential to transform the global manufacturing industry.
You may be surprised to learn that three-dimensional printing isn't a new technology; despite newfangled attention. In fact, 3D Systems has been around for more than 25 years. However, advances in the technology along with cheaper materials have made this process more affordable.
Despite such improvements, widespread adoption of 3-D printing is still a few years out. But I believe this creates an opportunity for patient investors to get in ahead of the pack. The company's competitive moat comes in the form of its rich portfolio of patents. Additionally, 3D Systems' diversified products range from high-end 3-D production printers, such as those used to replicate a vintage Aston Martin in the newest Bond film, to more affordable options for personal use.
The possible applications for this technology are seemingly endless. Even better, the market for 3-D printing is on track to reach $5 billion by 2017 -- a space in which 3D Systems is the market leader. The stock had a nice run in 2012, but I think it has much more room to fly, as demand for 3-D printing should continue to grow at breakneck speeds in the years to come.
The fine print
I believe these two companies will create tremendous value for investors over the long term. This is why I plan to buy shares as soon as my holding period has expired, per the rules of the Fool's disclosure policy.
Fool contributor Tamara Rutter held no positions in the stocks mentioned above at the time this series was published. The Motley Fool owns shares of Baidu, 3D Systems, and Google and has the following options: short JAN 2014 $55.00 calls on 3D Systems and short JAN 2014 $30.00 puts on 3D Systems. Motley Fool newsletter services recommend Baidu, 3D Systems, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.