Big, blue-chip tech stocks have had a terrible year, frustrating many bulls who see incredibly low PEs, and can’t fathom why they’ve been such losers.
Microsoft has a PE of 10x for example, and it’s sitting on a gigantic cash pile.
Google’s PE is a (relatively) slim 18x, with its forward PE only at 12x.
According to a recent investor survey from Oppenheimer, big investors view them as value traps: Stocks that look good on a PE basis, but just keep going lower and lower (like what’s happening right now). Microsoft has been a classic dead-money value trap forever.
So are investors fools for buying now?
Oppenheimer’s Brian Belski thinks they are worth buying.
- Tech stocks have better revenue growth forecasts than most industries.
- Cash management (dividends are getting better).
- And they’re among the most exposed to global growth.
This chart shows the estimated growth of various industries. Only energy and materials are expected to grow faster.
Among the tech stocks he favours (based on a screen of low PEs, a high S&P rating, and earnings growth of over 10%): Microsoft, Intel, Hewlett Packard, Adobe, and Dell.
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