The back-to-school season means that Wall Street’s annual “Who wins back-to-school?” guessing game is in full swing. Analysts and commentators are trying to guess which retailers will see a surge in sales and profits as kids load up on new supplies and duds for the new year.
The real story this back-to-school season is not clothes or backpacks — it’s technology. Increasingly, schools and students at all levels are relying on technology. So, popular tech companies, not retailers, will be the major beneficiaries of the spending on school supplies. To save us from the guessing game, Portfolio Grader outlines which tech companies have the fundamentals that will allow them to shine during the back-to-school season.
Microsoft (MSFT) is seeing strong sales and profit growth this year and should see continued strength as kids load up on tablets and software this year. Even Microsoft Xbox sales are seeing a boost as parents are buying for the recently-introduced learning applications and not just gaming. Of course, Microsoft Office, the standard package for word processing and spreadsheets, should see increased sales as well. Portfolio Grader is aware of the strong back-to-school prospects and upgraded MSFT stock to a “strong buy” this week.
Apple (AAPL) continues to lead the way in the technology sector. Apple will be selling iPads and Mac computers by the bushel as students prepare for the school year. iPhone sales will likely see a spike during the back-to-school shopping sprees, especially as parents buy their college kids new phones to stay in touch during the school year. Apple is still the favorite among kids and teenagers and can expect this back-to-school season to boost its top line. Portfolio Grader expects big things from AAPL stock and still ranks it an “A” and a “strong buy.”
As consumers are still very cautious spenders, their searches for the best deals will encourage discounting at the expense of profit margins. The retail sector is not going to be the winner this back-to-school season as technology will be the one requirement for all back-to-school shoppers. Therefore, the two leading tablet and computer companies, Microsoft and Apple, will definitely be reaping the most benefit of this year’s back-to-school buying binge.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.