Best of the Week
Most Popular
1.U.S. Inner City Turmoil and Other Crises: Ron Pauls Predictions for 2015 - Dr_Ron_Paul
2. What’s In Store For Gold Price in 2015? - Ben Kramer-Miller
3.Crude Oil Price Ten Year Forecast to 2025: Importers Set to Receive a $600 Billion Refund - Andrew_Butter
4.Je ne suis pas Charlie - I am not Charlie - Nadeem_Walayat
5.The New Normal for Oil? - Marin_Katusa
6.Will Collapse in Oil Price Cause a Stock Market Crash? - OilPrice.com
7.UK CPI Inflation Smoke and Mirrors Deflation Warning, Inflation Mega-trend is Exponential - Nadeem_Walayat
8.Winter Storms Snow and Wind Tree Damage Dangers, DIY Pruning - Nadeem_Walayat
9.Oil Price Crash and SNP Independent Scotland Economic Collapse Bankruptcy - Nadeem_Walayat
10.U.S. Housing Market Bubble 2.0 Meet the Pin - James_Quinn
Last 5 days
13 Investment Themes for 2015 - 29th Jan 15
The Raging Currency Wars Across Europe - 29th Jan 15
The End of Currency 'Safe-Havens' - 29th Jan 15
Ron Paul on U.S. Fed, Central Bankers Monetary Psychopaths - 29th Jan 15
Why Microsoft Stock Will Provide Major Investing Returns - 29th Jan 15
Exploring the Clash Within Civilizations - Mind the Gap - 29th Jan 15
Saudi Arabia Changes Kings, But Not its Oil Policy - 29th Jan 15
Crude Oil Price Bulls vs. Resistance Zone - 28th Jan 15
Acceleration Of Events With Rising Chaos – US Dollar Death Foretold - 28th Jan 15
The Fed and ECB Take the West back to when the Rich Owned Everything - 28th Jan 15
Washington's War on Russia - 28th Jan 15
Cyber War Poses Risks To Banks and Deposits - 28th Jan 15
Lies And Deception In Ukraine's Energy Sector - 28th Jan 15
EUR, AUD, GBP USD – Invalidation of Breakdown - 28th Jan 15
“Backup-Camera Envy” Is Driving This Unstoppaple Investment Trend - 28th Jan 15
The Great "inflated" Expectations for Gold, Oil, Commodities -- and Now Stocks - 28th Jan 15
How to Find the Best Offshore Banks - 28th Jan 15
There’s More to the Gold Price Rally Than European Market Fears - 28th Jan 15
Bitcoin Price Tense Days Ahead - 27th Jan 15
The Most Overlooked “Buy” Signal in the Stock Market - 27th Jan 15
Gold's Time Has Come - 27th Jan 15
France America And Religious Terror War - 27th Jan 15
The New Drivers of Europe's Geopolitics - 27th Jan 15
Gold And Silver - Around The FX World In Charts - 27th Jan 15
It’s Not The Greeks Who Failed, It’s The EU - 27th Jan 15
Gold and Silver Stocks Investing Basics - 27th Jan 15
Stock Market Test of Strength - 26th Jan 15
Is the Gold Price Rally Over? - 26th Jan 15
ECB QE Action - Canary’s Alive & Well - 26th Jan 15
Possible Stock Market Pop-n-drop in Store For SPX - 26th Jan 15
Risk of New Debt Crisis After Syriza Victory In Greece - 26th Jan 15
How Eurozone QE Works: A Guide to Draghi's News - 26th Jan 15
Comprehensive Silver Price Chart Analysis - 26th Jan 15
Stock Market More Retracement Expected - 26th Jan 15
Decoding the Gold COTs: Myth vs Reality - 26th Jan 15
Greece Votes for Syriza Hyperinflation - Threatening Euro-zone Collapse or Perpetual Free Lunch - 26th Jan 15
Draghi's "No-growth" QE Money for Stocks, Zilch for the Economy - 25th Jan 15
Unjust and Undeclared Wars - 25th Jan 15
The European Central Bank Commits Monetary Suicide - 25th Jan 15
Stock Market ECB EQE week - 25th Jan 15
Gold And Silver Timing Is Most Important Element - 25th Jan 15
The Best Way to Invest in the Next Alibaba Internet Stock IPO - 25th Jan 15
The Outpatient Surgery Business Rains Cash into Healthcare Stocks - 25th Jan 15
Stock Traders Flock to Gold GLD ETF - 24th Jan 15
10 Reasons Why You Need an Offshore Bank Account - 24th Jan 15
Goldman Sachs Blankfein - Regulation is Like Background Noise - 24th Jan 15
Gold in Euros Surges As ECB To Print Trillion Euros and Greek Election This Sunday - 24th Jan 15
Gold Bear Market Rally or New Bull ? - 24th Jan 15
Euro-zone 'QE already Working' Says IMF Lagarde - 23rd Jan 15
ECB and EU LTRO and QE for Dummies: Or, Make These Trades - 23rd Jan 15
Debt and Deflation: Three Financial Forecasts - There's More Than Falling Prices - 23rd Jan 15
Market Should Not Doubt' Mario Draghi ECB QE - 23rd Jan 15
Francs, Bonds, Barrels, and Bail-Ins - 23rd Jan 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Learn to Trade

The Top Tech Stocks for 2013

Companies / Tech Stocks Jan 09, 2013 - 01:47 AM GMT

By: Investment_U

Companies

David Eller writes: January is here and predictions for the coming year are rampant.

There are so many great cutting-edge technology companies and hopes for the next 12 months that it’s easy to lose your discipline and let greed take over.


I’d love to spend the next 500 words talking about companies like Tesla (Nasdaq: TSLA) and Facebook (Nasdaq: FB) and Google (Nasdaq: GOOG). But we’re at a triple top on the S&P. And even if companies meet their earnings expectations, companies with high valuations can drop as investors become more conservative.

As we’ve detailed in the past, a company’s share price is made up of the book value (or liquidation value) plus earnings potential. Even if the balance sheet is healthy and the company meets current earnings estimates, your $80 stock could become a $60 stock overnight if the expectation for future growth slows.

Since stocks like Facebook have few net assets and low (if any) current earnings, the expectations for future earnings have a huge impact on the share price. Here at Investment U, we prefer to follow tangible earnings growth rather than speculation. So for today’s forecast I looked through more established companies, with real assets, and at least one stable earnings stream in addition to a good case for growth. In short, if the growth story doesn’t work out as quickly as Wall Street expects, you won’t end up holding an empty bag.

After diligent research, I see the following four tech companies as standouts for safe outperformance in 2013:

•Intel (Nasdaq: INTC) has been left for dead. Semiconductor investors have been focusing on wireless and low-power rather than PC suppliers. That shouldn’t be a surprise since PC makers had a very tough 2012. The corporate PC refresh cycle was extended due to the weak economy. Tablets were becoming mainstream. Dell (Nasdaq: DELL) and HP (NYSE: HPQ) continued to disappoint. Intel tried to get into mobile computing, but the Ultrabook isn’t effectively competing with the iPad. However, the corporate computing market isn’t going away. Expectations are low, the stock is cheap… and with a 5% dividend, you are being nicely paid to wait for earnings to improve. The CEO transition will bring an increased focus on mobile, which will hopefully increase the number of design wins for Intel’s low-power Medfield product line.

•Apple (Nasdaq: AAPL) is loved by its customer base, but it remains a hardware company. After being disappointed by Dell and HP throughout 2012, professional investors have not been willing to acknowledge that Apple may be different, and that traditional hardware margin compression may not be in store for Apple. The fact is that Apple is selling a closed ecosystem of products, not commodity products that interact with third-party hardware. This is similar to IBM’s early days, but with one major difference: Apple provides a better user experience for its customers. Estimates as well as expectations have come down over the last two quarters, and Apple is now trading at less than 10x out year earnings.

The company merely needs to execute on its current product line to meet estimates and see a dramatic increase in share price. If it executes on a revised Apple TV product or builds out a Netflix-like, on-demand content offering, these new revenue streams would dramatically increase Apple’s earnings potential. It seems strange but a combination of execution and new product offerings at a time when expectations (and valuation) are low could drive 50% upside to its existing massive valuation.

•Synchronoss (Nasdaq: SNCR) may be the most widely used company that you’ve never heard of. It provides an activation platform for mobile services and recently expanded into cloud computing through its recent acquisition of NewBay. As an activation vendor, Synchronoss has a relatively stable and boring business that is likely to grow through tablet adoption. However, carriers are attempting to increase their service offerings and NewBay provides the infrastructure to allow the carriers to do it. Synchronoss has the relationships and NewBay has the infrastructure. The date marking the beginning of the recent run in the share price was the date of the company’s presentation at the Credit Suisse conference, November 28. Professional investors have been building positions, but the game is still in early innings.
•Teradata (NYSE: TDC) is a “big data” management vendor. All of the little bits of information that insurance companies and social media vendors collect and use needs to be correlated, stored and used to predict future behavior. This may mean you’ll get more direct mail and unwanted sales calls, but at least you can profit from this trend in the market.

Teradata is the most highly recommended vendor by Gartner group. It’s positioned in Gartner charts in “the upper right” quadrant for being the best executor, as well as the best innovator. The stock pulled back in the second half of 2012 due to weakness in U.S. business, but revenue and profits held up in Europe. Why? When the economy is difficult, companies scrutinize their books more heavily. There are two bright spots for Teradata. First, it’s a rapidly growing business in Asia where, as a spinout of NCR, Teradata has a unique competitive advantage. Also, a unified appliance (called Aster) will allow Teradata to offer a cheaper, “out of the box” solution. Sure, you can buy a solution from SAP (NYSE: SAP) or Oracle (Nasdaq: ORCL). But if you want to connect multiple vendors together, a third party can be more appealing.

Each of these companies has an established underlying business in a rapidly growing sector of technology.

They may not sound as sexy as a Tesla but, in my opinion, each will likely outperform the overall market in 2013, without the concerns of drawdown similar to Groupon (Nasdaq: GRPN).

Good Investing,

by ,

Source: http://www.investmentu.com/2013/January/the-top-tech-stocks-for-2013.html

http://www.investmentu.com

Copyright © 1999 - 2012 by The Oxford Club, L.L.C All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Investment U, Attn: Member Services , 105 West Monument Street, Baltimore, MD 21201 Email: CustomerService@InvestmentU.com

Disclaimer: Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Investment U Archive

© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014