Tech Stocks Under the Radar
Most of the media’s attention to the tech sector is focused on the four FANG stocks: Facebook, Amazon, Netflix and Google (now Alphabet). For a while, Twitter elbowed its way into that elite group but then fell out when the share price languished this year while the rest of the market rallied strongly. Shares of equally popular Tesla also have been stuck in neutral since rising above $200 over two years ago, providing no net return to its patient investors as the stock also pays no dividend.
The tech sector is nothing if not volatile, sending some stocks soaring to new heights while others circle the drain. That’s why we evaluate the companies we cover in Breakthrough Tech Profits objectively, because getting caught up in the beguiling promise of whiz-bang technologies usually ends badly. In fact, some of the most mundane tech companies are also the most profitable, as Joe Duarte’s recommendation of Texas Instruments shows. (Spoiler alert: The company doesn’t just make calculators.)
Meanwhile, Ben Shepherd has found a group of stocks that he believes have gone unnoticed and unloved despite racking up impressive results. Just three months ago, I wrote a similar article (“Top Tech Takeover Targets”) about two small-cap tech stocks trading at low valuations that might be future acquisition targets. Since then, one of them, Applied Optoelectronics, has already gained more than 80% and shows no sign of slowing down.
The three companies Ben found have not only strong results and good value but also little analyst coverage. As much as we’d like to think a company is traded solely on its own merits, coverage counts. Once coverage of these unnoticed worthy companies increases, their stock prices also rise—often dramatically.
But for every big winner in the tech sector, there is an equally big loser, and Alex Pape explains why he believes automated investing company Financial Engines may be the next high-flier to bite the dust. Sometimes lost in the conversation about tech investments is that ultimately we buy or sell these stocks because we intend to one day fund our retirement with the proceeds from these transactions. Here, automated technology has not been as helpful improving the investing process as this company might lead you to believe. It’s time somebody called the company out on that point, and Alex makes a strong argument for why this stock is grossly overvalued and how you can profit from that discrepancy.
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