Posts Tagged ‘technology stocks’
There are lots of companies but very few stocks I like in this stock market, because stocks have already gone up in value so tremendously.
Countless large-caps provided excellent returns this year, and many of them are old brands that still offer meaningful dividend yields. What’s transpired with the equity market this year has been truly amazing and practically, I don’t think the run is over just yet.
Cracker Barrel Old Country Store, Inc. (CBRL) has a 52-week trading range of $60.07 to $118.44 and a forward price-to-earnings (P/E) ratio of 18.46, according to Thomson Reuters. And guess where the stock is now—right at its all-time record high, up approximately 84% (not including dividends) since this time last year. All this from a mature restaurant brand.
Johnson & Johnson (JNJ), one of my key benchmark stocks and the kind of company that’s welcome in any long-term equity market portfolio, has had a really good year. Its capital appreciation is reminiscent of its performance in the late 90s.
Many blue chips trade similarly to Cracker Barrel and Johnson & Johnson: they go through long periods of consolidation providing minimal capital gains, and then they explode in trading action, typically associated with technology stocks. (See “Why I Like This Blue Chip So Much [55th Dividend Increase Just Announced].”)
So with the huge price moves, the case for a major retrenchment/correction/consolidation in the equity market is very solid. But there needs to be a catalyst for this to happen. The equity market is overbought and looking tired, but there is still a strong willingness on the part of institutional investors to … Read More
In the late 90s, the anticipation of an initial public offering (IPO) was the hottest thing on Wall Street for traders. Get in on the pre-IPO allotment, and chances are you would make tons of money. I still recall the frenzy that surfaced after an IPO, especially from technology stocks.
Fast-forward a decade, and the market anticipation for IPOs is not as frenzy-like. Now traders are more careful to buy into IPOs after their initial debut.
The key to success in investing in IPOs today is patience. Even if an IPO skyrockets after its debut, it is often prudent to wait for a pullback or for the lock-in period to expire before buying, as this is when the initial investors, such as funds and institutions, can sell their shares in the stock market.
A great example of a former IPO star that opened at a high price but subsequently faltered was Internet stock Groupon, Inc. (NASDAQ/GRPN); the stock traded above $30.00 on its November 4, 2011 debut, but fell to as low as $2.60 a year later on November 12, 2012. I looked at the stock as a decent risk-to-reward play, and now the stock has been sizzling on the charts, up 332% from its November 2012 low. (Read “Why There’s No Stopping the Internet Sector.”)
Another example of a highly anticipated Internet IPO was Facebook, Inc. (NASDAQ/FB), which traded as high as $45.00 on its debut on May 18, 2012, and subsequently plummeted to $18.80 on October 19, 2012. But with over one billion subscribers, I considered Facebook to have excellent potential—if the … Read More
Change in the railroad business is not something you expect, but it is happening with Bakken oil.
The Association of American Railroads (AAR) is the industry group for North American railroad stocks, and while all trade groups are to be taken with a grain of salt, you can garner insight on the U.S. economy by reading the AAR’s data.
Even if you aren’t interested in railroad stocks, business conditions for railroads are still very relevant. They remain the backbone of North America and the industrial economy.
According to the AAR, U.S. Class I railroad stocks originated a record 97,135 carloads of crude oil in the first quarter of 2013. This represents a gain of 20% from 81,122 carloads in the fourth quarter of 2012 and a substantial increase of 166% from 36,544 carloads originated in the first quarter of 2012.
While the shipment of oil—Bakken oil, in particular—is the source of renewed growth for railroad stocks, the numbers also reveal a flatness that coincides with the rest of the U.S. economy.
The AAR reported that in the first 21 weeks of 2013, U.S. railroad stocks reported volume of 5.8 million total carloads, down 1.8% from the comparable period in 2012. Total U.S. traffic for the first 21 weeks of 2013 was 10.8 million carloads and intermodal units, up 0.8% comparatively.
For the same period, Canadian railroads reported volume of 1.6 million carloads, up 2.3% comparatively, and 1.1 million intermodal units, up 4.7%.
Volume on Mexican railroads came in at 315,377 carloads, up nine percent, with 192,060 intermodal units, down 0.3% from last year.
Railroad stocks have been on a … Read More
Technology stocks underperformed the S&P 500 and Dow in the first quarter of the year, but that’s no big deal, as I continue to see technology as a market leader.
The month of April saw some buying return to technology stocks, with the NASDAQ managing to outperform the S&P 500—that’s a start.
While we have seen momentum dissipate from technology stocks and Apple Inc. (NASDAQ/AAPL) lose some of its shine, I remain bullish toward technology stocks.
The chart of the Technology Select Sector SPDR (NYSEArca/XLK) below shows the current sideways trading channel for this index and the current test at the upper resistance line, as indicated by the top blue line.
If my technical analysis is correct, I expect technology stocks to take a run at the resistance.
Chart courtesy of www.StockCharts.com
According to FactSet, earnings growth for the information technology (IT) sector is estimated at 0.2% in the first-quarter earnings season—if Apple is excluded. FactSet is optimistic the sector will rally in the second half of this year, with an estimated growth rate of 12.0% in the third quarter and 11.2% in the fourth quarter. (Source: “Earnings Insight,” FactSet, April 19, 2013.)
Of course, if Apple rebounds, the growth rate will likely rise.
If we exclude Apple, FactSet estimates the IT sector will grow at 10.0% and 12.4%, respectively, for the third and fourth quarters. These are pretty darn good numbers.
My top areas for growth going forward include the mobile, Internet, communications, networking, IT, and cloud computing sectors.
I suggest adding both small and large companies across different businesses, which will add diversity, making your tech holdings … Read More
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