Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Covid, Debt and Precious Metals - 3rd Jun 20
Gold-Silver Ratio And Correlation - 3rd Jun 20
The Corona Riots Begin, US Covid-19 Catastrophe Trend Analysis - 3rd Jun 20 -
Stock Market Short-term Top? - 3rd Jun 20
Deflation: Why the "Japanification" of the U.S. Looms Large - 3rd Jun 20
US Stock Market Sets Up Technical Patterns – Pay Attention - 3rd Jun 20
UK Corona Catastrophe Trend Analysis - 2nd Jun 20
US Real Estate Stats Show Big Wave Of Refinancing Is Coming - 2nd Jun 20
Let’s Make Sure This Crisis Doesn’t Go to Waste - 2nd Jun 20
Silver and Gold: Balancing More Than 100 Years Of Debt Abuse - 2nd Jun 20
The importance of effective website design in a business marketing strategy - 2nd Jun 20
AI Mega-trend Tech Stocks Buying Levels Q2 2020 - 1st Jun 20
M2 Velocity Collapses – Could A Bottom In Capital Velocity Be Setting Up? - 1st Jun 20
The Inflation–Deflation Conundrum - 1st Jun 20
AMD 3900XT, 3800XT, 3600XT Refresh Means Zen 3 4000 AMD CPU's Delayed for 5nm Until 2021? - 1st Jun 20
Why Multi-Asset Brokers Like TRADE.com are the Future of Trading - 1st Jun 20
Will Fed‘s Cap On Interest Rates Trigger Gold’s Rally? - 30th May
Is Stock Market Setting Up for a Blow-Off Top? - 29th May 20
Strong Signs In The Mobile Gaming Market - 29th May 20
Last Clap for NHS and Carers, Sheffield UK - 29th May 20
The AI Mega-trend Stocks Investing - When to Sell? - 28th May 20
Trump vs. Biden: What’s at Stake for Precious Metals Investors? - 28th May 20
Stocks: What to Make of the Day-Trading Frenzy - 28th May 20
Why You’ll Never Get Another Stimulus Check - 28th May 20
Implications for Gold – 2007-9 Great Recession vs. 2020 Coronavirus Crisis - 28th May 20
Ray Dalio Suggests USA Is Entering A Period Of Economic Decline And New World Order - 28th May 20
Europe’s Coronavirus Pandemic Dilemma - 28th May 20
I Can't Pay My Payday Loans What Will Happen - 28th May 20
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Stealth Tech Stocks Rally Catalysts

Companies / Tech Stocks Jul 18, 2014 - 06:56 PM GMT

By: Money_Morning

Companies

Michael A. Robinson writes: Just weeks ago, the mainstream media was still talking about an alleged “tech correction.”

However, I see things much differently. The tech-centric Nasdaq Composite Index has gained some 6.5% so far this year. That’s more than double the Dow Jones Industrial Average‘s 3% gain.

This is great news I just had to share with you.


Folks in Silicon Valley have a term they use to describe a company that wants to keep its operations quiet.

They call it Stealth Mode

The term applies to a startup that’s hiring, raising funds and developing a product – but is operating in secret to keep its competitors in the dark.

 ”Stealth Mode” also could describe this quiet – but substantial – rally tech stocks have been in nearly all year and, especially, during the last three months.

While the media was focused on the Dow recently hitting a record 17,000, the Nasdaq has done twice as well. All the while, Wall Street and the mainstream financial media have kept quiet about it.

About 15 months ago, I noted that well over half of all Americans have less than $25,000 in savings – and can’t afford to retire. That number hasn’t changed much overall… but I know it’s changing for you.

After all, at the same time, I told you that the road to wealth is paved with tech.

This has long been true – from the lightbulb, the radio, the television, and the airplane in the past to transistors, semiconductors, computers, software, the Web and smartphones today.

And these midyear numbers prove this trend is showing no signs of slowing down.

Today, I want to talk with you about why I think tech stocks will continue climbing for rest of this year. And I’m sharing with you three great ways to not only play the Stealth Tech Rally…but also to continue filling your retirement war chest with more and more gold…

High Tech Is the Winner

It’s true that the Standard & Poor’s 500 is ahead of the Nasdaq so far this year. With a year-to-date gain of 7.5%, it’s doing about 14% better.

But that advantage disappears when you look at what’s happened over the last three months. During that time, the Nasdaq has gained some 9.75%, beating the S&P’s gains by 30%.

By just about anyone’s standards, that’s a decisive victory.

While I’m especially hot on tech, I also still expect a strong 2014 for the overall market based on several key economic factors.

Let’s start with the job market. We have had five straight months in which the economy has added more than 200,000 jobs. That’s the best five-month stretch in six years.

Auto sales also continue to do well. At the end of June, the industry had an annual sales run rate of 16.3 million news cars and trucks. At that rate, 2014 sales would rise 4% from last year, when sales of 15.6 million cars and light trucks were the highest they had been since the Great Recession.

Meanwhile, the Institute for Supply Management trade group says U.S. manufacturing expanded in June for the 13th consecutive month. The group’s New Orders Index registered 58.9 percent, up 3.5% from May reading.

The continued economic expansion bodes particularly well for tech stocks. And I’m not the only one who thinks so.

For the second quarter ended June 30, analysts polled by Thomson Reuters expect the tech sector to show the strongest growth in earnings per share among the 10 industry sectors in the S&P 500.

Indeed, the consensus forecast calls for tech earnings per share to rise 12.5% from the similar period last year. That’s more than double the 6.2% gain analysts expect for the S&P 500 as a whole in the second quarter.

As I see it, the economic stats and second-quarter earnings projection prove what I’ve been saying all along: Tech will continue to drive the market higher the rest of this year.

I promised you that I would use Strategic Tech Investor to share my 30 years of experience in high-tech investing. I pledged to give you my keen and expert insights on mastering the tech markets.

I first shared with you my five-part strategy, which I’ve developed and perfected over those 30 years, to deliver winning picks time and again.

And now I want to help you jump in on not just a piece or two of our Stealth Tech Rally – but a big, highly profitable chunk of it.

With that Thomson Reuters report in mind, let’s take a look at the tech subsectors that I think will do particularly well in our Stealth Rally.

I’m going to recommend, for each one, an exchange-traded fund security that tracks a group of companies in a single sector like an index fund, but trades like a stock on an exchange. That way you can play the entire subsector’s rally with a single investment.

Let’s take a look.

Stealth Tech Rally Catalyst No. 1: Semiconductors

Among the 15 tech industries Thomson Reuters tracks, chipmakers and semiconductor equipment companies are expected to show the best earnings growth in the most recent quarter.

Earnings-per-share growth among chip companies in the S&P 500 is expected to average 40%. And the semiconductor equipment sector is right on its heels, with expected EPS gains of 38%.

Not only that, but market data researcher World Semiconductor Trade Statistics(WSTS) forecasts that the global chip market will have sales of $325 billion in 2014. That’s up 6.5% from 2013.

The industry is growing on the strength of sales of tablets and smartphones, as well as autos, digital cameras and game consoles.

The SPDR S&P Semiconductor ETF (NYSE: XSD) offers tech investors a broad play on the entire chip sector. It holds some four dozen companies that make microprocessors, computer memory and sensors.

XSD holds such big-cap names as Texas Instruments Inc. (NasdaqGS: TXN) and Intel Corp. (NasdaqGS: INTC). It also owns Atmel Corp. (NasdaqGS: ATML), which has market cap of less than $4 billion, and Silicon Laboratories Inc. (NasdaqGS: SLAB), with a market cap of $2 billion.

Trading at $70, XSD allows you to touch the entire tech ecosystem in a cost-effective manner. Over the past year, with gains of nearly 32%, XSD has beaten the S&P by roughly 82%.

Stealth Tech Rally Catalyst No. 2: The Internet

Internet and e-commerce firms also should do well for the rest of this year. Because they don’t have to operate factories, or contract out manufacturing, like hardware firms, the sector’s leaders have high profit margins and great cash flow.

Thomson Reuters says the Internet sector should have the third-strongest earnings performance for the second quarter – after chipmakers and semiconductor equipment companies – with a 28% gain.

I expect that trend to continue, serving as a major catalyst for tech stocks.

Just take a look at what’s happening with sector leader Facebook Inc. (NasdaqGS: FB). In this year’s first quarter, Facebook’s EPS nearly tripled. The social network’s mobile users in the period climbed above 1 billion for the first time, up 34% from a year ago – and Facebook has 1.28 billion total users, across both mobile and desktop.

The Street expects Facebook’s earning to rise by 68% for the second quarter when the firm reports July 23. But as much as I like Facebook, I think investors would do well to take a broader look at the sector.

That’s where the First Trust Dow Jones Internet Index (NYSE: FDN) comes in.

Besides Facebook, which is its largest holding, FDN also owns Amazon.com (NasdaqGS: AMZAN) and both classes of Google Inc. (NasdaqGS: GOOGL), which has voting rights, and GOOG, which does not. 

Trading at roughly $59.40, FDN has invested in online entertainment and e-commerce. It holds eBay Inc. (NasdaqGS: EBAY), the Priceline Group Inc. (NasdaqGS: PCLN) and Netflix Inc. (NasdaqGS: NFLX).

Over the past year, FDN beat the S&P by roughly 18%. I expect that figure to climb in the second half as the Internet sector reports strong earnings gains.

Stealth Tech Rally Catalyst No. 3: IPOs

Of course, IPOs are not unique to the tech sector.

However, as a former adviser to Silicon Valley venture capitalists, I can share with you that tech and the biosciences make up roughly 35% to 40% of the new stocks that go public each year. And at certain points in the market, that figure can climb much higher.

Just last week, of the 12 initial public offerings listed as ready to price over the next couple of weeks, nine of them were either in the biosciences or high tech.

In other words, tech is the biggest driver for IPOs, which themselves are major catalysts for a bull market.

Analysts at Dealogic estimate the total value of IPOs this year at $510.1 billion. That beats the previous first-half record of $498.9 billion set in 2007.

Main Street investors find it notoriously difficult to invest in IPOs – usually, only certified investors and fund operators can. In that case, an ETF may be the only way you can invest in newly public companies.

The First Trust IPOX-100 Index Fund (NYSE: FPX) is a great way to play this field. It gives investors the upside that comes with overall IPO market, and you won’t get burned on IPOs that flame out.

And FPX holds some great tech stocks: Tesla Motors Inc. (NasdaqGS: TSLA), NXP Semiconductors NV (NasdaqGS: NXPI) and Fleetcor Technologies (NYSE: FLT), a leading payments processing firm, are just the start of the list.

Over the past year, FPX has beaten the S&P 500 by 47%, with 25% gains. Compare that to the S&P’s 17% advance.

It’s like I’ve been saying for these past 15 months. The road to wealth is paved by tech.

There’s no doubt about it.

These ETFs offer us yet more ways – solid foundational plays – to get on that road and build your net worth over the long haul.

If you’re just coming in, welcome. I invite you to check out the archives to learn more about my rigorous five-part strategy for evaluating stocks.

If you’ve been here a while, let me know how you’re doing.

As I said those months ago, you can become the master of your destiny… and tech is how you’ll get there.

Related Reports:

Strategic Tech Investor: The Road to Wealth Is Paved by Tech. Strategic Tech Investor: The First Rule for Spotting a High-Tech Winner.

Source : http://strategictechinvestor.com/2014/07/we-go-to-stealth-mode-on-our-road-to-wealth/

Money Morning/The Money Map Report

©2014 Monument Street Publishing. 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 Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning 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 investent 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 after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 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

6 Critical Money Making Rules