You don't have to look far to find high-performing tech stocks in 2014 -- there have been plenty of stellar performers. But as 2014 finds its way into the rearview mirror, this year's results mean little as investors begin setting their sights on 2015. We asked a few of our Motley Fool contributors to provide some insight into a few tech stocks that are poised to lead the way next year, including Google (GOOG 0.20%) (GOOGL 0.57%), Apple (AAPL +0.11%), and Facebook (FB 0.82%).
Tim Brugger (Google): Though 2014 has been a strong year for many tech stocks, Google isn't one of them. The search king's poor stock performance -- it's down about 4% year-to-date -- really took a hit after Q3 earnings were released. The day before Google announced Q3 results in October, it was trading at nearly $541 a share. Two days later? $522.97 a share.
Google's woeful stock price isn't because of poor fundamentals, those remain strong, and that equates to an opportunity. At a mere 17 times next year's earnings, Google's undervalued share price is one reason 2015 will prove to be a good one for shareholders.
In addition to Google hovering at the low-end of its 52-week stock price range, there are several growth opportunities heading into 2015. Naturally, search and online ads, especially video, will continue to lead the way, but Google has a couple other revenue tricks up its sleeve. By 2018, Google is expected to overtake Apple not only in the number of app downloads -- Google already wears that crown -- but in all-important revenues, jumping to about $9 billion a quarter.
There's also Google's clear leadership position in the fast-growing Internet of Things, or IoT, market, especially the area of IoT expected to lead the way: smart homes. The acquisition of "smart" thermostat manufacturer Nest, followed by deals for Dropcam and Revolv, have quickly put Google in the smart home driver's seat. According to some pundits, the smart home sector could grow to a $490 billion business by 2019. Undervalued, with a strong base of ad revenue and growth drivers in the works, will propel Google to a stellar 2015.
Andrés Cardenal (Apple): Apple is having an amazing year in 2014, the stock is up by almost 50% over the last 12 months. But that doesn't mean the best is over for investors in Apple stock. On the contrary, I believe the company has the potential to deliver another year of impressive gains in 2015.
The new iPhone 6 and iPhone 6 Plus are off to a great start, global unit sell-through growth was 26% during the September quarter. Apple will most likely announce earnings for the December quarter in January of 2015 and, judging by recent trends, there are valid reasons to expect substantial growth from the company during the much important holiday period.
However, the new iPhone models are only part of the story when it comes to Apple in 2015. The company will introduce innovations in new categories such as digital payments and smart watches with Apple Pay and Apple Watch, respectively.
It's hard to tell what kind of financial impact these new products will have and it's not easy to move the needle much when you are a massive juggernaut like Apple. However, this will be the first time that Apple enters new product categories without Steve Jobs, so 2015 could be a key year for the company in terms of market perception about its ability to continue innovating and disrupting different industries.
If Apple proves to investors that it still has what it takes to enter new industries and redefine the rules of the game, the stock could deliver substantial gains in 2015.
Joe Tenebruso (Facebook): When I think about stocks that can rise substantially in the year ahead, I focus on those that are poised to benefit from major secular trends. One such trend is the global shift in advertising dollars from traditional media (such as television and radio) to the Internet. And no one stands to benefit more from this long-term trend than Facebook.
Facebook's massive user base is now more than 1.3 billion, and still growing. With audacious projects to help billions more people gain access to the Internet, I believe it's likely that Facebook's user base will continue to grow larger and faster than many investors currently expect. But even at its current size, Facebook's user base has tremendous potential for greater monetization. That's because the rich data Facebook collects on its users allows advertisers to better target their ads, increasing their usefulness to users and therefore their value to marketers. Which, in turn, leads to greater revenue and cash flows for Facebook, which it can then reinvest in improving its services and acquiring new technologies.
It's a virtual cycle that, when combined with Facebook's powerful network effects, helps form a wide moat that will insulate the social media titan's profits from the clutches of its competitors. But Facebook's empire expands beyond its namesake app -- it also includes Instagram, Messenger, and WhatsApp, each with hundreds of millions of users of their own.
Facebook has barely begun to monetize these assets, but one thing is certain: Advertisers follow audience, and so I expect that when Facebook fully opens these properties to marketers, there will be high demand for access. That's why I believe Facebook's stock is not only poised to soar in 2015, but for many years to come.
