The media and investors tend to focus their attention on the “hot” stocks. 
What’s trendy, cool and hip can often override what’s simply making money for investors.
Such is the case with the “old-school” technology stocks.
Names like Microsoft (MSFT), Intel (INTC), Cisco (CSCO), Adobe (ADBE) and Alphabet (GOOG, GOOGL) have found their groove again and are worthy of modest investor’s portfolios as we prepare to head into 2016.
Year-to-date, the old-school tech stocks are averaging returns of 18%, more than doubling the Nasdaq Compsite’s 8% gains for the same period.
So what’s put the pep back in these old-school tech stocks’ steps and why should you consider them a hold for your portfolio in 2016?
Old-School Tech Stars: Microsoft (MSFT)
Software giant Microsoft is hitting on all cylinders right now as hardware, software and Cloud Computing are driving revenues higher. The company has bested analyst expectations for earnings all but one quarter of the last two years and has topped revenue expectations in all quarters for the same period.
The result of the strong fundamental performance has been a surge in the Microsoft stock price. Year-to-date, the shares have returned 19%. This follows a strong performance of 25% in 2014, which was well above the Nasdaq’s return.
Microsoft stock’s chart is among the strongest within the Nasdaq Composite, as the stock is trading well above its 50- and 200-day trendlines, which together paint a picture of strong technical health and outlook for the stock.
Our technical models target another strong year for MSFT, with a target move of more than 20% and a price target of $65.
Old-School Tech Stars: Intel Corp. (INTC)
The best-known name in the semiconductor sector is making strides again as Intel’s business model has benefited from new generations of their processors and other semiconductor products. The company has gone on a capital expenditure initiative that includes some attractive acquisitions that will help Intel maintain its growing market share.
Intel stock hasn’t seen the same strong technical performance as some of its old-school tech peers, as the shares are trading slightly lower on a year-to-date basis, but our models suggest that this will change shortly.
Intel stock just completed a bullish Golden Cross pattern, which forecasts that the stock will grow twice as fast as it usually does over the next six months. In addition, the shares saw a successful test of their 50-day moving average, a key milestone that will be certain to get technical buyers adding to their Intel positions.
Our Behavioral Valuation models suggest that Intel stock will likely see upgrades from Wall Street analysts as we move into the New Year, which will help catapult the stock higher. As a result, our midyear 2016 price target for Intel stock stands at a healthy $40.
Old-School Tech Stars: Cisco Systems (CSCO)
We really miss the days when Cisco was the gold standard for beating earnings by ALWAYS besting analyst expectations by a penny. That consistency may have passed, but the ruler of network infrastructure is definitely making strides again.
Cisco stock has beat analysts’ earnings expectations all of the last eight quarters as renewed demand for network gear of all sorts has built a strong revenue stream. Like Intel, Cisco stock hasn’t fully reflected this strength yet, as shares are trading 2% lower than where they started the year. This will change though.
Cisco stock is heading for its own Golden Cross, likely to happen within the next ten trading days. Historically, these bullish technical patterns result in average returns of 5.2% over the following three months and 9.3% after six months. This doubles the historical averages for Cisco.
Currently, only 58% of the Wall Street analysts covering Cisco stock have it ranked a buy. This will improve as the shares begin to outpace the broader market. These upgrades will propel Cisco shares even higher.
In all, our Behavioral Valuation models forecast a target price of $32 during 2016, an 18% run from current levels.
Old-School Tech Stars: Adobe (ADBE)
One of the most silent performers in the Nasdaq has been Adobe Systems. With names like Twitter (TWTR), Facebook (FB) and Alphabet getting all the headlines, Adobe stock’s year-to-date gains of 25% have gone all but unnoticed.
Adobe’s stranglehold on all things media has landed its products and services on almost all of our electronic devices, helping to drive strong fundamental growth. The company has met or exceeded earnings expectations all of the last eight quarters. Looking forward, earnings growth is expected to come in at almost 40% for 2016 and 48% in 2017.
In other words, the earnings growth story is far from over.
Adobe stock’s 2015 charts reflect this fundamental strength, with shares forging to new all-time highs multiple times — an extremely bullish trend.
The shorter-term charts suggest that Adobe shares could see a short-term pullback to the $88 level that should be considered a buying opportunity, as the stock is targeted to move another 15% to 20% over the next six months for a price target near $110.
Old-School Tech Stars: Alphabet (GOOGL)
Even though Alphabet Inc. — formerly Google — is one of the previously mentioned “hot” stocks, it’s still considered one of the old-school technology names in our book.
Google set themselves apart from their competitors by figuring out the monetization puzzle around search-engine marketing. The company continues to draw from experience in the Cloud and other ventures as Google stock continues to outpace the market with a year-to-date gain of 47%.
Over the short-term, our chart analysis sees a likelihood that Google stock will dip to the $700 level, which would be a great buying opportunity, as the shares are likely to surge higher in 2016. Our technical models are targeting a move back to the $800 mark and higher, a 15% move by mid-year.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
