Investors who are still considering investing in the technology sector can look at specific pockets. The technology sector, in general, has had a strong run through most of 2020. Companies like Zoom, Netflix, and Microsoft have all seen their stocks go up significantly. However, it may not be too late to still invest. IT services is an area worth looking at. One of the leaders in IT services is Cognizant Technology Solutions Corporation. The company has two lines of business, outsourcing as well as consulting and technology services. The outsourcing division mainly deals with business process services, infrastructure, and application maintenance. The consulting and technology services division deals with enterprise consulting as well as software and application testing, application development, and system integration.
Competitive Advantages for Cognizant
Cognizant’s application maintenance and infrastructure services are mission-critical in nature. Therefore, they represent a high switching cost for the customer and Cognizant enjoy a competitive advantage on that front. Additionally, BPaaS (business processing as a service) in Cognizant’s outsourcing division involves long term contracts that last several years. This brings revenue visibility and also represents another moat for the company. Cognizant also has a strong reputation among competitors for infrastructure and cloud services. The company ranked number three in the HFS Research rankings. Lastly, it is worth noting that Cognizant earns 90% of revenue from existing customers and tends to retain customers.
Price Action Among The Best Tech Stocks To Buy Now
Cognizant’s stock is up 2% for the past month. It last closed at $78 on 10th December 2020. On a year-to-date basis, the stock is up about 26.5% while on a 5-year basis, the stock is up 34%. One of the biggest names in tech, Microsoft, is down more than 2% for the past month. However, the stock is up 31% for the past month and has grown 4X in the last 5 years. Netflix, meanwhile, is up 2% for the past month, up 51% for the year 2020, and 4X in the past 5 years.