Posted on Tuesday, December 4th, 2012 | In Market Commentary
The tech-laden NASDAQ fared the best in November with a 1.1% advance, which was well ahead of the 0.3% gain in the S&P 500 and 0.5% decline in the DOW. Yet technology and growth stocks have not fared in the equities market since the end of the first quarter, with the NASDAQ down 2.6%, versus a 0.6% advance by the S&P 500 and 1.4% decline by the DOW.
In spite of the sluggishness of technology stocks, I suggest you continue to follow my investment strategy; buy good technology stocks on market weakness in the equities market, as long as you are willing to hold on to these stocks for the longer-term and ignore the near-term volatility.
A classic example of a technology stock that fell into the doldrums and provided a good buying opportunity was Facebook, Inc. (NASDAQ/FB), which traded at a low of $17.55 on September 4 prior to rallying $11.00 a share, or a whopping 63.0%, to over $28.00 on Monday. Facebook is exciting investors with its new plan of generating revenues from its one billion subscribers in such areas as mobile advertising. The reality is that Facebook has an impressive one billion pairs of eyeballs that can be extremely valuable if a sound strategy is executed. Again I would look to accumulate on price weakness down to the low-$20.00 level. The company’s biggest threat is Google Inc. (NASDAQ/GOOG) in the equities market.
Chart courtesy of www.StockCharts.com
Another major technology stock that is going through a rough patch is Apple Inc. (NASDAQ/AAPL), which at below $600.00 is down over 16.0% from its record high of $705.00 on September 21. We are seeing some panicking in the market on whether to hold Apple, but my view is that unless the company loses its grip on the tablet and smartphone markets, it will continue to be the “best of breed.” I’m excited about Apple’s expansion into China’s massive mobile market of over 800 million users. If you’re interested, look to buy on weakness or via call options, which you can read about in “Here’s a Low-risk Strategy Given the Big Risk.” However, note that this is not a specific recommendation to buy this stock at this time; just a general idea of your options.
Chart courtesy of www.StockCharts.com
And as we move forward, my belief has not changed. I continue to feel that technology will remain the top growth area to make money in the equities market.
I believe that the area that will offer the opportunity for the best stocks in the equities market is mobility applications for tablets and smartphones, as users shift away from the more cumbersome personal computers and laptops.
Success in the equities market is all about innovation.
The major chip companies, such as Intel Corporation (NASDAQ/INTC), will also be an excellent place to stash some capital in the equities market.
Also take a look at some of the smaller technology stocks that develop solutions for mobile applications, such as Synaptics Incorporated (NASDAQ/SYNA) and 8×8, Inc. (NASDAQ/EGHT), along with Glu Mobile Inc. (NASDAQ/GLUU) in the high-risk speculative area.
I’m mixed on Microsoft Corporation (NASDAQ/MSFT). Its “Windows Surface” tablet is priced way too high to compete against the broad choices available out there.
For the thrill-seeker, take a look at Nokia Corporation (NYSE/NOK), which has a poor product line, but is patent-rich. The stock has been surging in the equities market. It is worth a closer look for the contrarian investor, as the market tries to value its patents.
Please note that none of the stocks I have mentioned represent a buy endorsement; they are only examples of stocks that you may want to look at in technology.
I continue to firmly feel that technology will be the place for the best equities market opportunity for growth investors going forward.
About Michael Lombardi (http://www.profitconfidential.com)
Michael bought his first stock when he was 17 years old. He quickly saw $2,000 of savings from summer jobs turn into $1,000. Determined not to lose money again on a stock, Michael started researching the market intensely, reading every book he could find on the topic and taking every course he could afford. It didn’t take long for Michael to start making money with stocks, and that led Michael to launch a newsletter on the stock market. Today, Michael only employs the top market analysts and editors. Some of our recommendations have posted gains in excess of 500%! Michael has authored and published over one thousand articles on investment and money management. Along the way to building Lombardi Publishing Corporation, now with over one million customers in 141 countries, Michael became an active investor in real estate, art, precious metals and various businesses. Readers of the daily Profit Confidential e-letter are offered the benefit of the expertise Michael has gained in these sectors. Michael believes in successful stock picking as an important wealth accumulation tool. Married with two children, Michael received his Chartered Financial Planner designation from the Financial Planners Standards Council of Canada and his MBA from the Graduate Business School, Heriot-Watt University, Edinburgh, Scotland.