Tech stock have been in the news a quite a bit lately with things like the Twitter (TWTR) IPO and the results of the recent earnings season dominating the news.
This week, an article in Barron’s suggested that parts of the tech sector are in a bubble and should be avoided. Given all the interest and attention swirling around the sector, it might be useful to use Portfolio Grader to get an idea of what is really going on in the tech sector right now. Keep in mind the market is starting to thin out as it advances, so you’ll need to focus on those stocks with the very best fundamentals.
I want to focus first on the larger tech stocks with market capitalizations above $10 billion. These are the stocks that attract all the media attention and buzz and are most heavily owned by traders and investors.
A few tech stocks out there have earned our highest grade of “A” and are worth buying at current prices. Facebook (FB), Micron Technology (MU) and surprisingly Hewlett Packard (HPQ) now have the type of strong fundamentals that make them best-of-the-best stocks that attract intense buying pressure form institutions and hedge funds.
As important as it is to own the very best large technology stocks, it’s equally important to avoid the very worst.
Right now the worst of the big tech names is Broadcom (BRCM). The network and wireless infrastructure company recently lowered its revenue forecast and announced additional layoffs, causing the stock to fall hard for the past few weeks. BRCM earns an “F” from Portfolio Grader and remains a “strong sell.”
Some other well-known tech stocks don’t make the grade right now, either. Apple (AAPL) has seen its earnings growth and momentum flatten out this year, and the stock is currently ranked “D,” or “sell.” IBM (IBM) missed analyst estimates last quarter, posting its sixth straight year-over-year decline in quarterly revenue. The stock is rated a “sell” by Portfolio Grader. Until the fundamentals of these two former tech leaders improve, investors should avoid and consider selling if they already have shares in their portfolio.
Tech stocks will always attract a lot of attention from the pundits and media. Using a tool like Portfolio Grader helps you separate fact from fiction and own the best stocks while avoiding the worst.
Louis Navellier is the editor of Blue Chip Growth.