7 Top Technology Stocks to Watch in 2016

Technology Stocks to WatchThese 7 Technology Stocks Could Be Big Winners in 2016

Technology stocks are once again the target of the bulls and momentum traders after the NASDAQ blew back above 5,000 on Friday. This is the first time since August 19th.

Many of you know I’m a major supporter of technology and growth stocks as these are the areas of the stock market that provide the more aggressive traders and investors the best prospects for achieving financial independence. But while some names are looking expensive, there are some top technology stocks to watch if you know where to look.

While it’s true you can make more consistent results with the likes of The Procter & Gamble Company (NYSE:PG), Colgate-Palmolive Co. (NYSE:CL), and The Coca-Cola Company (NYSE:KO), you need to also have funds invested in the high-growth technology area to help add some risk-adjusted returns to your portfolio.

The widely traded PowerShares QQQ Trust, Series 1 (NASDAQ:QQQ) is nearing its 52-week high set in August and is up about 40% from the low.


PowerShares Chart

Chart courtesy of www.StockCharts.com

Why 2000 is no Déjà Vu for Technology Stock

The current love affair with tech stocks has not been driven by small-cap stocks. Rather, it was driven by heavy buying returning to the so-called brand name large-cap technology stocks. These include Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), Facebook, Inc. (NASDAQ:FB), Apple Inc. (NASDAQ:AAPL), eBay Inc. (NASDAQ:EBAY), and Alphabet Inc. (NASDAQ:GOOG) to name a few. These large-cap tech names are easily beating Wall Street estimates and delivering impressive growth metrics.

Microsoft, for example, under the stewardship of CEO Satya Nadella, is proving to be a top technology play. The stock has not seen these levels since the spring of 2000. MSFT is becoming relevant on Wall Street again. No longer hidden in the news behind the likes of Apple, Facebook, Netflix, Inc. (NASDAQ:NFLX) or Alphabet, we are seeing Microsoft shares drive the headlines and message boards. The move to Windows 10, Office 365, and a big push in cloud applications through its Azure platform, along with innovative tablets and a new true laptop, Microsoft is hip again.

Microsoft Corporation Chart

Chart courtesy of www.StockCharts.com

Now some argue the surge in technology stocks is reminiscent of late 1999 and early 2000 prior to the Internet bubble.

Having been actively trading back then, I can say things are different now. Back then, we saw massive spikes in no-name technology stocks that had no revenues and even solid business platforms. Shell companies with no active business were being pushed higher. Internet-related stocks saw massive euphoric and reckless buying for no reason other than greed.

While there is still greed now, it is nowhere close to the levels back then. I can attest to that. But while the similarities are relatively small, I would still be looking to realize some profits at this time.

If you are concerned about the current level of the NASDAQ and technology stocks, you could play through selling Put Options to generate some premium while also setting a downside price at which you are willing to buy the stock. In addition, you could also look at playing the long side via Call Options as a risk-managed leveraged trade that could return big if the technology sector has new bull legs into 2016.

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