2 Big Winners in the Shifting Tech Landscape

by Traders Reserve | April 18, 2013 11:00 am

Earnings season is here and there are growing questions about the big names in tech – Apple (NASDAQ:AAPL[1]), Google (NASDAQ:GOOG[2]), Dell (NASDAQ:DELL[3]) and Hewlett-Packard (NASDAQ:HPQ[4]), to name a few. The driver of earnings will be the marketplace shift from personal computers to smart phones and tablets — personal tech.

• Research firm IDC estimates PC shipments of 79.2 million in Q1 of 2013, an almost 11% decline from Q4 2013.
• IDC attributed the falloff to tablets. Tablet sales grew more than 78% in 2012 to more than 125 million units. Their forecast for 2013 is growth of almost 50%.
• IDC also predicts the smartphone market will grow more than 27% in 2013.

With this shift, I see two big winners, Apple and SanDisk (NASDAQ:SNDK[5]).

Apple’s growing share

Apple has been the dog everyone likes to beat recently. Wrong dog, that one. The company has stabilized its market share in phones[6] and that share is now growing.

•  StatCounter, a market-tracking firm, reported serious growth in smartphone share for Apple in February. Apple’s share hit 27.2%, up from 23.3% in December. Android’s share stalled at the same time.
• The Yankee Group’s March U.S. Consumer Survey  found that “only about 15% of consumers intend to buy a Samsung (PINK:SSNLF[7]) phone within the next six months, while 40% intend to buy Apple iPhones within that period.” The survey also found 61% of existing Samsung owners would stick with the brand versus 85% of iPhone users.

Apple is the best and the most undervalued company on the planet – my numbers show it is selling at a two-thirds discount to the S&P 500. Sometime in the next one to three quarters – perhaps as early as next week – this market foolishness will begin to end.

Surging demand boosts SanDisk

If you do not want a pick winner beyond the shift to personal devices, look at SanDisk, the leader in the NAND flash memory used in these devices. The company owns patents – and receives licensing fees – on various aspects of NAND flash memory production and the company sells a great deal of NAND chips itself.

•  The research firm IC Insights projects $31 billion in NAND sales in 2013, based on shipments of 8.8 billion units, with prices declining 7%. If that seems troubling, it is actually great news – NAND price decreases can top 20% a year and capacity is tightening.
• Research company iSuppli sees NAND demand will increase past 2013 due to smartphones, tablets and the growing emergence of computers with solid state drives – memory equivalent to hard drives, now available from all major computer makers.

I expect the stock to continue to run based on short-term and long-term fundamental strength.

Source URL: https://investorplace.com/2013/04/2-big-winners-in-the-shifting-tech-landscape-aapl-dell-hpq-sndk-ssnlf/

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