Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

Great News for Large-Cap Tech

Monday, January 21st, 2013
By for Profit Confidential

Great News for Large-Cap TechWho has all the money these days? While the government has most of it and can make more of it when it wants, it also owes a lot of money. Rather, large corporations are best off these days, and they aren’t investing much in new plant, equipment, and/or employees. But there is hope out there in the universe of cash-hoarding corporations, and that great hope is in enterprise information technology (IT). Forget retail technology; it’s the enterprise-level IT suppliers that stand to be the big beneficiaries of corporate spending over the next several years.

For a corporation, things are very simple. Company management might ask: should we build a new plant for a new line of windmills? The answer, of course, would be “No,” and they’d then contract it out to China. They ask: should we hire a few more people in the sales department, customer service, or IT support? “Maybe,” they’d answer, “but no full-time employees and let someone else handle payroll.” Management decides they really need to update the company’s e-commerce efforts, asking: should we hire more computer programmers? “No” would be the answer again and they’d contract it out to India. So, who wins in a system like this?

We know the outsourcing corporation wins—it’s winning already. Within this system, though, there are players that are required for it all to work seamlessly and efficiently, the one group poised to benefit from it all: application software, database management, server and storage, cloud and IT “strategy alignment.”

The cash hoard is about to be unleashed, but on enterprise IT, not new plant or equipment, and certainly not full-time employees. Some large-cap companies in this group include Oracle Corporation (NASDAQ/ORCL), International Business Machines Corporation (NYSE/IBM), SAP AG (NYSE/SAP), and Infosys Limited (NASDAQ/INFY). The numbers for enterprise IT companies already coming in are decent, but I think they’re going to get a whole lot better. Corporations have money to spend—on efficiency, data management, and storage. What better way than to invest in efficiency in an uncertain economy? How else does a corporation keep its earnings from falling?

An old friend of mine worked in the IT department of a large insurance company. His whole department got outsourced to International Business Machines (IBM), which took over the company’s data requirements along with other customers. He became the outsourcing go-to guy for other corporations, and finally, after a few years, IBM outsourced his entire outsourcing department to India. Talk about embarrassing. The outsourcing IT guy got outsourced himself—twice. No more job in IT. Now he works in the oil and gas business and is doing fine.

Right now, corporate balance sheets in the U.S. are, for the most part, in excellent shape. There’s a lot of money floating around, but it’s not being invested in new business operations. What I believe we’ll see over the next several years is a huge spending spree of corporate cash on application software IT, anything and everything that can make a large corporation run more efficiently and with the smallest amount of personnel possible. This is the group of companies that is going to benefit. And Oracle is the perfect example.

  • Double your money every year for 24 years running?

    Since 1989, we've made 912 option picks, with an average annualized profit of 166.17% per recommendation.

    All from Lombardi's best option picks!

    Click here to learn more.

VN:F [1.9.22_1171]
Rating: 0.0/10 (0 votes cast)
VN:F [1.9.22_1171]
Rating: +1 (from 1 vote)

This is an entirely free service. No credit card required.

We hate spam as much as you do.
Check out our privacy policy.

Mitchell Clark - Equity Markets Specialist, Financial AdvisorMitchell Clark, B. Comm. is a Senior Editor at Lombardi Financial specializing in large- and micro-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Income for Life and Micro-Cap Reporter. Mitchell, who has been with Lombardi Financial for 17 years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. Add Mitchell Clark to your Google+ circles

The Great Crash of 2014

A stock market crash bigger than what happened in 2008 and early 2009 is headed our way.

In fact, we are predicting this crash will be even more devastating than the 1929 crash…

…the ramifications of which will hit the economy and Americans deeper than anything we’ve ever seen.

Our 27-year-old research firm feels so strongly about this, we’ve just produced a video to warn investors called, “The Great Crash of 2014.”

In case you are not familiar with our research work on the stock market:

In late 2001, in the aftermath of 9/11, we told our clients to buy small-cap stocks. They rose about 100% after we made that call.

We were one of the first major advisors to turn bullish on gold.

Throughout 2002, we urged our readers to buy gold stocks; many of which doubled and even tripled in price.

In November of 2007, we started begging our customers to get out of the stock market. Shortly afterwards, it was widely recognized that October 2007 was the top for stocks.

We correctly predicted the crash in the stock market of 2008 and early 2009.

And in March of 2009, we started telling our readers to jump into small caps. The Russell 2000 gained about 175% from when we made that call in 2009 to today.

Many investors will find our next prediction hard to believe until they see all the proof we have to back it up.

Even if you don’t own stocks, what’s about to happen will affect you!

I urge you to be among the first to get our next major prediction.
See it here now in this just-released alarming video.