Best of the Week
Most Popular
1.London House Prices Bubble, Debt Slavery, Crimea 2.0 - Russia Ukraine Annexation - Nadeem_Walayat
2. Gold And Silver – 2014 Coud Be A Yawner; Be Prepared For A Surprise - Michael_Noonan
3.Sheffield, Rotherham Roma Benefits Plague, Ch5 Documentary Gypsies on Benefits & Proud - Nadeem_Walayat
4.Glaring Q.E. Failure Spotted - Money Velocity Is Falling Rapidly - Jim_Willie_CB
5.Don't Miss the Boat on Big Biotech Catalysts: Keith Markey - Keith Markey
6.Gold Prices 2014: Do What Goldman Does, Not What It Says - David Zeiler
7.Bitcoin Price Strong Appreciation to Be Followed by Declines? - Mike_McAra
8.Gold Preparing to Launch as U.S. Dollar Drops to Key Support - Jason_Hamlin
9.Doctor Doom on the Fiat Money Empire Coming Financial Crisis - Andrew_McKillop
10.The Real Purpose Of QE - It’s Not Employment - Darryl_R_Schoon
Last 72 Hrs
The Big, Bad Market: A French Psychosis? - 25th Apr 14
The Great American Giveaway - 25th Apr 14
Has the Stock Market S&P Topped At Exactly The Same Price As Gold? - 25th Apr 14
Bond Market Investing - Not All Debt Is Created Equal - 25th Apr 14
This is the Next “Big Thing” in Energy - 24th Apr 14
Rome Wasn't Burnt In A Day - 24th Apr 14
When Does Government Policy Become Criminal Behavior? - 24th Apr 14
The Great Recession Grinds On - Measuring Misery around the World - 24th Apr 14
Apple, Facebook Beat Expectations - Stock Markets Long-term Recap - 24th Apr 14
Broad Stock Market Situation on the Remains Tense as Companies Release Quarterly Earnings - 24th Apr 14
How High-Frequency Traders Use Dark Pools to Cheat Investors - 24th Apr 14
Stock Market Bears Wrong Again, Apple to Push Dow to New All time High - 24th Apr 14
Gold Prepared for the Attack of the Short Sellers - 24th Apr 14
Weak U.S. Housing Data Supports Euro - 24th Apr 14
Killing the Maximum-Wage Myth - 23rd Apr 14
U.S. Quarterly Economic Review - Optimism at the Fed - 23rd Apr 14
Why Mohamed El-Erian Left Pimco - Video - 23rd Apr 14
QE Is A Fraud Perpetrated By Made Men - 23rd Apr 14
Gold and Miners Outperform Once Again - 23rd Apr 14
G-20 and the US Tell the Bank of Japan to End Quantitative Easing - 23rd Apr 14
How to Get in the Trading Game and Profit - 23rd Apr 14
Fed Follies, U.S. Housing Market Fiasco - 23rd Apr 14
What Will December 31, 2014 Financial Headlines Look Like? - 23rd Apr 14
Why Gasoline Prices are Surging Again - 22nd Apr 14
Cold War 2.0 - 22nd Apr 14
The JIS – Junk Ideology Syndrome - 22nd Apr 14
How to Avoid Losing All Your Money - 22nd Apr 14
Silver Up, Stocks S&P Down - 22nd Apr 14
U.S. Mainstream Media Propaganda Setting the Stage for War With Pakistan - 22nd Apr 14
U.S. Interest Rates are NOT Rising! - 22nd Apr 14
A Crisis vs. the REAL Crisis: Keep Your Eye on the Debt Ball - 22nd Apr 14
Bitcoin Implications of Lack of Price Action - 22nd Apr 14
Japan - The Twilight Of The Rising Sun - 22nd Apr 14
Is This What a Credit Bubble Looks Like? - 22nd Apr 14
The Dark Side Of The Silver Mining Industry - 21st Apr 14
Strong U.S. Dollar Rally Could Pull Rug From Under Gold and Silver - 21st Apr 14
Silver Feeble Rally Fails to Hold Breakout, Falling Back Towards Support - 21st Apr 14
Stock Market Smart Money – All Out or More to Go? - 21st Apr 14
Fast Rising Pump Prices Counterattack - 21st Apr 14
Extreme Climate Change And Life On This Planet - 21st Apr 14
Gold and Silver Stocks Sitting Tight - 21st Apr 14
Stock Market Minor Correction Imminent - 21st Apr 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

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