For Immediate Release
Chicago, IL – February 8, 2018 – Zacks Value Trader is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here:
End of an Era: Big Tech Stocks Move from Growth to Value
Welcome to Episode #128 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio service, shares some of her top value investing tips and stock picks.
Technology continues to be one of the hottest sectors among investors. For the past 30 years these companies have been on the cutting edge of transformations in retail, the Internet, personal computing and, coming soon, artificial intelligence.
But even tech titans mature as companies. The days of 20% revenue growth a year fade unless there’s a new product or acquisition which can boost growth rates.
From Growth Superstar to Value
It’s not easy going from the big kid on the block that everyone wants to play with to a more mature, lower growth company.
It doesn’t happen overnight.
Take IBM IBM.
It had been a big growth story for decades but in this new century, that growth has slowed considerably.
Sales are expected to decline by 1.6% in 2019 and another 0.3% in 2020. Investors will be compensated by a healthy dividend for their patience, currently yielding 4.7%.
But the Street is clearly valuing IBM as a value stock. It has a forward P/E of just 9.7.
Tech Titans Now Value Stocks?
1. Microsoft MSFT was the start-up in the early 1980s when IBM hired it to create an operating system for its PC. But it has evolved beyond its Windows product and now is a cloud and social media player. Is Microsoft in a transition towards a value stock or is there still plenty of growth left on the horizon?
2. Intel INTC has a forward P/E which indicates it may have already transitioned over to a value stock. It’s trading at just 11x. But is that all it takes to be considered a value play?
3. Cisco CSCO had one of the top IPOs of the 1990s. It was included on the list of the “tech titans” during the dot-com boom. But now, it’s revenue growth is expected to be in the single digits for 2019 and 2020. Is it a value stock now?
4. Apple AAPL makes one of the most popular products on the planet, the iPhone. But for the first time since it was introduced in 2007, sales of that product are actually on the decline. Is this the end of Apple’s growth story?
The transition from growth over to being a value stock can be shocking for some long-time growth investors. But for value investors, it can provide an opportunity.
What else should you know about the future of the big technology stocks?
Listen to today’s podcast to find out.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Zacks Investment Research
800-767-3771 ext. 9339
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Zacks Investment Research