Fall historically has been a time for strength within the technology sector. I see no reason to go against this theory this year and below are three technology stocks we think will continue to rise.
Oracle (ORCL) This tech stock dominates the enterprise market and has continued to excel even during the economic slowdown. Oracle’s biggest worries always were the fact that with the recession many large corporations could slash the IT budget to cut costs. While this was a major concern, Oracle has sheltered itself fairly well and has still done exceptionally well. In our current economic climate, before investing in a tech stock it would need to have exposure to strong end-markets, high returns, and a strong balance sheet. Oracle has all three. In addition, Oracle is launching a set of new products that will help it take even more market share in a sector it dominates along with helping it gain double-digit growth. These are all exceptional numbers and factors when looking into Oracle’s future prospects. I like Oracle a lot and think it is a strong investment. It has delivered 17% earnings growth even during these tough times and when valuing the stock it is relatively cheap, trading at 11 times forward earnings. With a PEG Ratio of 1, P/S Ratio of 4.46, ROE 25%, ROA of 15%, and over $32 billion in cash, Oracle is as strong as it gets when it comes to tech stocks. Top on a 1% dividend yield and you have a great overall investment!
Amazon (AMZN) Amazon is an interesting company. Not only is it a tech stock but it is also one of the leading retail stocks, the world’s largest actually. I love Amazon; I think it is a great growth stock going forward. AMZN has successfully taken on Apple (AAPL) in the tablet battle with the Fire and the new Kindles along with increasing sales in all other aspects of the business. The company holds a market cap of $98 billion and trades at 93 times earnings. These are ridiculous numbers. Amazon just has so many levers of growth and different ways of generating revenue, which makes me love the stock so much. If you don’t own it buy it; if you own it buy some more. I think Amazon is a safe bet on both the retail market and the technology sector. 12 months from now expect Amazon to be getting awfully close to $300 per share.
EMC Corporation (EMC) operates in the information technology sector, primarily by providing information infrastructure and data center operations. EMC has a solid book of business, from top to bottom. The numbers that stand out and attract me to investing in EMC are a PEG Ratio of 0.98, P/S Ratio of 2.57, market cap of $47 billion, and the fact that it trades at 23 times earnings. Like the other picks above I believe EMC is a leader in both its sector and sub-sector and that’s why I like it as an investment so much. I believe the technology sector should continue to rise going forward and I believe EMC will be a key company leading the charge.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.