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A "Strategic Advantage" in the Digital Transformation

04/23/2020 5:00 am EST

Focus: TECHNOLOGY

Jon Markman

Editor, Tech Trend Trader, The Power Elite, & Strategic Advantage

Amazon (AMZN) recently raced to a record new high. The online retail giant announced it will hire an additional 75,000 employees to keep pace with frantic demand, observes tech sector expert Jon Markman, editor of Strategic Advantage.

Amazon is the quintessential digital storefront because it has best-in-class customer service, a strong portfolio of products, and excellent execution. The combination is killer. Among competitors, the platform is unrivalled.

The formula is not unique. It’s actually the template for stocks we have recommended for our portfolio in the recent past and will recommend again in coming weeks and months.

The goal is to build longer-term stakes in dominant platform leaders, and they all look eerily like Amazon.com. They are beloved by customers. Products are easy to use and often indispensable. Managers execute well at every level.

Microsoft (MSFT) software underpins 90% of the world’s personal computers and its Office productivity suite is the de facto standard for word processing and spreadsheets. The company leveraged its ubiquity in the corporate world to build the fastest growing cloud computing business.

Booz Allen Hamilton (BAH) has a stranglehold on public sector cyber security software and digital transformation projects. Alphabet (GOOGL) and Facebook (FB) command 50% of online ad spend.

The Trade Desk (TTD), which we added to our portfolio this week, has the rest. Salesforce (CRM) has such a lock on customer relationship management software, its stock symbol is literally C-R-M.

Other companies that dominate important emergent niches include. ServiceNow (NOW), the leading IT workflow platform; Alteryx (AYX), which makes software so companies can easily make sense of digital information from all sorts of structured and unstructured sources.

In addition, Illumina (ILMN) claims 70% market share in DNA sequencing. Its hardware and software are prerequisites for the next generation of personalized medicines.

All of these companies essentially do the same things, but for different clients in disparate market segments. Their markets are growing as the analog world rapidly falls prey to digital transformation.

You can buy all but Amazon in the next few days at your convenience. Don’t buy all at once; try to add on pullbacks. I think that the market’s troubles are not over — not by a long shot — but these companies are still trading at reasonable valuations and will be among the first to fully recover.

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