In part one, I spent discussed catalysts for 5 technology stocks with strong Q3 seasonality.
In part two, we'll take a look at the last five.
For those who didn't see it the first time, the following list comes courtesy of our team at The Seasonal Investor. It shows the top seasonal technology stocks for the coming quarter. All have finished Q3 higher in at least 4 of the past 5 years. Also, remember we covered Apple and its supply chain separately here.
|Symbol||SECTOR||INDUSTRY||# Up||# Up||10 Year Q3||5 Year Q3|
|(Past 5)||(Past 10)||Average||Average|
|AMT||TECHNOLOGY||DIVERSIFIED COMMUNICATION SERVICES||4||8||2.00%||4.45%|
|AMZN||TECHNOLOGY||INTERNET SOFTWARE & SERVICES||4||6||12.29%||19.29%|
|GOOG||TECHNOLOGY||INTERNET INFORMATION PROVIDER||4||5||3.65%||4.42%|
|IBM||TECHNOLOGY||DIVERSIFIED COMPUTER SYSTEMS||4||7||3.94%||7.60%|
|VZ||TECHNOLOGY||TELECOM SERVICES - DOMESTIC||4||6||-1.10%||3.80%|
Let's start with Google . The company's Q3 success could be the result of post I/O conference euphoria.
This year, Google rolled out a 7 inch Nexus tablet at the conference. The Nexus is yet another in an increasingly crowded space as device makers try to dislodge market leader Apple's stranglehold.
While its tempting to label the Nexus another also-ran, don't discount the market potential too much. After all, Android phones control over 50% market share and Apple only owns about 50% of the fast growing tablet market. The tablet is expected to start shipping in July, so as soon as iFixit does its teardown I'll cover the Nexus supply chain in more depth.
Over at IBM, the company has a relatively gaudy goal of boosting its earnings per share to $20 by 2015. That's going to mean a good share of cost control alongside growth. To this end, it took the unpopular step of freezing salaries. The company's tight-fisted spending seems to be working, at least for shareholders. In Q1, the Global Technology Services segment - which is facing the wage freeze - saw gross margin expand 150bps from the prior year.
At Intuit, mobile products are the highlight. Its GoPayment product aims to capture the burgeoning credit card processing on the go trend. The company is also considering an iPad version of Quickbooks, which will be welcomed by small business users.
Intuit also controls a whopping 85% share of the retail tax prep software category and about 60% of the emerging digital tax filing space. As the company converts more users to digital platforms, margins and cross-selling opportunities offer upside.
Like Intuit, SAP is increasingly providing software as a service, aggressively competing across the software food chain with Oracle (ORCL).
Back in May, the company announced its $4 billion acquisition of Ariba (ARBA). The move strengthens its goal of being the go-to supply chain solution.
There's an overwhelming rush to shift process solutions to practice. And, at the same time to consolidate and analyze big data. As data silos crumble and are replaced with unified solutions, SAP will benefit.
The final stock making the cut is Verizon.
The company is shifting users to shared data plans this month. The move is likely to boost future revenue, even as it kills off the usefulness of the average revenue per user metric. Shared plans give the company a leg up in matching usage to capacity, and is likely an early stage move in preparation of an increasingly connected home.
These seasonal top performers may offer a bright spot in an otherwise challenging summer. If so, using weakness to time entries could benefit investors by fall.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.