The ASX tech stocks have been strongly outperforming in 2019.
The WAAAX shares – a group of our hottest ASX tech stocks – have been consistently climbing higher to outperform the S&P/ASX 200 Index (INDEXASX: XJO).
However, with several healthcare companies also surging to record highs this year, could the Aussie healthcare stocks outperform the ASX tech stocks in 2020?
Why the Aussie tech stocks have been rocketing higher
Afterpay shares have rocketed 168.25% higher this year with the next best WAAAX stocks being Xero (+91.23%) and Appen (+90.70%).
Strong earnings and consistent growth have been the keys to the ASX tech stock outperformance in 2019.
Appen recently upgraded its earnings for what seems like the millionth time in a year and Afterpay’s AUSTRAC audit report boosted investors spirits this week.
Xero landed its biggest client ever in RSM Australia in October while the WiseTech share price has remained under pressure amid its back and forth with US short-seller J Capital.
But it hasn’t all been smooth sailing for the Aussie tech stocks in 2019. We saw earlier this year how vulnerable the growth companies can be to US–China trade war rhetoric, which is why I think healthcare could be a good sector to rotate into as we enter 2020.
Why ASX healthcare stocks could outperform in 2020
While ASX tech has outperformed in 2019, so too has the ASX healthcare sector.
The CSL and Cochlear share prices have gained 31.39% and 50.90%, respectively, and both remain well inside the ASX 50.
With concerns over GDP growth and slowing wages, 2020 could be the year to rotate into a countercyclical sector such as healthcare.
Barriers to entry in the form of intellectual property and patents could also help safeguard earnings next year. This could be the key to outperforming the domestic market relative to the ASX tech stocks in 2020.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO, Cochlear Ltd., and CSL Ltd. The Motley Fool Australia owns shares of Altium, Appen Ltd, WiseTech Global, and Xero. The Motley Fool Australia has recommended Cochlear Ltd. 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. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
- Why I think the Xero share price is a futureproof buy – August 12, 2020 9:41am
- Coronavirus: SkyCity share price falls as NZ restrictions tighten – August 12, 2020 9:27am
- Results: News Corp share price on watch as net income drops 919% – August 12, 2020 9:27am