Randall J. Lopez 
Despite recent turmoil inside the IT region for 2008, I contend that this is now where you need to be. The reasoning here follows that the monetary sector is suffering to hold its awful information buried, the housing marketplace is shambles or even retailers are struggling to preserve growth. A move in the direction of tech appears fully logical because of generally sturdy worldwide publicity, assured balance sheets and the reality that IT stocks preserve a traditionally low correlation to the broader markets. Let’s choose some generation bulls.
Consumer Electronics – The Net Fool alternatives Apple (NYSE: AAPL) Hey Mr. Market, why so down on Apple? The iPod enterprise is absolutely matured. The iPhone is losing inventory to similar devices. MacWorld becomes missing its traditional celeb prospect. I tell you what, take this information and know that Apple has historically executed its exceptional when sentiment is low. Steve Jobs & Co. Is my favorite IT pick for 2008. The downside has opened up cost inside the stock, and I sense they’ve bottomed!
Looking in addition to the concerning troubles. The iPhone turned into selling much less due to Apple’s push into the new iPod Touch, the analysts at Needham cited that “Apple could have bought close to four million iPhones in its absence.” Add this to the truth that an anticipated 25%-30% of iPhones have been “unlocked” from AT&T, more than a few that really benefits AAPL through the provider’s headache. While iPod sales were slowed, I experience that the mp3 device is merely in a transitioning segment, and exciting possibilities are actually raised in a cellular era.
I sense that AAPL can be a recession resistor. Mac enterprise is healthier than ever, and unmarried-handily offset losses in iPods. Investors are punishing high-cease companies like Apple for any disappointments. The inventory is 35% off its highs, trading at a premium 24-times-earnings as compared to its peer’s 32x and has a PEG of 0.7x. They’ve were given the loose coins float we like ($6.78/share est. 2008) and its business segments have in no way seemed healthier. People are hating in this company for no cause. As Warren Buffet places it: “Be worried when others are grasping, and greedy most effective when others are nervous.”
Comm. Equipment – The Net Fool choices Corning (NYSE: GLW) Corning is the corporation you need for LCD glass panels. This market is thriving with larger and worse tv sets popping out on every day. Fourth zone outcomes showed that management feels the equal due to endured investment in centers and stable relationships with marketplace leaders. 2008 outlook changed into VERY high quality and new revenue streams have to be determined in an anticipated 60%+ increase in LCD capital spending. GLW anticipates releasing a new flexible fiber glass material and must see appreciation from the approaching adoption of mandated diesel filtration. No essential catalyst is using the boom, that’s simply odd, but an attractive valuation recovers a maximum of the risk.
Outside of LCD glass, Corning remains running the desk. A new “Gorilla Glass” product that enabled contact-screen access has grown to be with ease offered to handset producers. Corning seems to understand the shift to cell generation and is actually on the ball. With this in mind, Standard and Poors added: “income acceleration to 17% increase in 2008, up from thirteen% in 2007, aided by means of currency advantages and greater importance because of higher call for liquid crystal display (LCD) glass substrates from TV and laptop producers.” Everything is coming together for Corning, even Verizon is on board, a new client of GLW’s “ClearCurve” cable solutions. ClearCurve is the sector’s maximum bendable fiber, 100x extra bendable than normal fiber… Which is outwardly very important. This new generation may want to unlock huge capability with the assist of an enterprise chief in FiOS.
Corning must be a core era preserving for each investor. They remain less expensive with a PEG at zero.83x and a forward PE at 13x versus an expected trading fee closer to 20x. There are some dangers presented by overcapacity within the LCD glass enterprise and potentially slowed IT spending. However, I feel as although stores will keep purchasing the glass for larger displays, and the fiber for the quicker net. If they may be overstocking and can not sell, this is their problem… No longer Corning. These guys beat earnings with the aid of a penny, and their outlook simplest advanced. They are bulls across the board and should exchange at a top class in my view.
Solar Semiconductor – The Net Fool alternatives First Solar (NYSE: FSLR) After doubting the extreme-boom in the back of solar technology in January 2008, it appears excessive time we apologized to powerhouse gainers like First Solar. ThinkEquity Partners gave this splendid stock a one-phrase category, “debottlenecking.” After smashing profits estimates of fifty-three cents a percentage with a brilliant seventy seven cent benefit, they favored 30% on the day after increasing 2008 steering. Don’t permit this purchase-than scare you away. We notion the solar enterprise run-up turned into completed and were definitely validated incorrectly. The yr-over-yr sales growth of 280% and energy in EPS shows stronger destiny profits power.
Operating efficiency is one of the primary benefits I see from operation in 2008. Costs in step with watt ($1.12) averages have been down 6% at the yr, and a terrible foreign money impact from the Euro became nearly totally overshadowed by means of inexpensive operations in First Solar’s Malaysia plant. Spots for development had been recognized, and most analysts feel they can carry home the gold. Most drastically, the primary and 2nd quarter 2008 should show to expose persevered boom on the right track with 2007 appreciation. Solar companies are all buying and selling at appealing rates when considering an increase. With oil at the flow upward, evidently, momentum for inexperienced strength will continue to be sturdy. Investors must return to the sun area with sturdy earnings and call for in thoughts.
The Malaysian plant’s revamped may also have a negative impact on First Solar’s first sector earnings in 2008. On the alternative facet of the coin, we count on an increase in manufacturing and notice working margins helping at 30%+ degrees. I would not be surprised at all to see extra exact information in steerage. We count on their PE and PEG ratios to come back extra in line with the enterprise because the modern-day top rate they seem like buying and selling at is an end result of explosive growth over the last year. Execution turned into perfect in 2007, and with nothing but green-lighting so far… First Solar makes for a splendid long-time period increase play.
Infrastructure Tech. – The Net Fool alternatives Akamai (NYSE: AKAM) Akamai is alive and well in 2008. After thinking about them in advance in 2007, they’ve persisted to show power in their enterprise. In a recession-trending market, there may be a chunk of safety surrounding an internet-primarily based company. There is VERY sturdy leisure and media call for throughout the net, and Akamai is simply the agency to deliver the goods. AKAM published a big bounce in income for the duration of the fourth region earnings call, which handily beat analyst estimates. After increasing steering into 2008 with continued streaming media call for at the net, it’s miles turning into tough to spin this organization negatively.
Akamai Technologies has had an exquisite run up over the years. Frustrating the bears yet again on their ultimate income conference, AKAM got a lift off in their fifty two-week lows. They’ve now extended their streak of sequential sales and profit growth to 20 consecutive quarters! What’s extra, their stability sheet is as healthy as ever; they’ve over again expanded unfastened coins drift to $634m from $566m. With the main position in a thriving content material-shipping marketplace, analysts which include Canaccord Adams recommend the potential sales and earnings increase “in excess of 30% for the following numerous years.”
The valuation of Akamai is contested regularly via analysts over whether they may be reasonably-priced or in-line. I trust they’re to the reasonably-priced facet seeing as how they are off about forty-five % from their 52-week high and are trading with a PEG of zero.7x. I might be tempted to check the waters if they fall underneath $32. They are buying and selling at a mild top class in price-to-profits terms, however, I feel this is extra than merited as they appear to be an assured recession maintaining in facts era. With charge sensitivity predicted to fade alongside reducing bandwidth fees, it might look like Akamai’s market to influence over the following few years.
That’s it for statistics technology. There are truly a few exquisite shares to be determined within the sector, notwithstanding the perception that tech is constantly greater risky and threatening than financials, conglomerates etc. While February is a traditionally poor season for IT, I wouldn’t thoughts getting my march shopping accomplished a bit early with numerous bad sentiment unfairly dragging down flawlessly wholesome companies.
