2011 has proved to be a tough year for stocks in the tech sector. Just look at the performance of the tech-heavy NASDAQ, an index that is up only 1.2% year-to-date, indicating little buying interest in tech stocks, and marking a flat performance for the year.
With so many of the top names in technology taking a beating in the past year, the tech sector has been a mine field for investors. The well known maker of BlackBerry, Research In Motion is off 65% for the year, and Hewlett-Packard, the popular computer hardware player, has traded lower by 35% for 2011. The theme also continues into other top names such as Juniper Networks and Nokia, both trading lower by 35% as well.
While the tech sector as a whole has certainly been a disappointment in the past year, the downturn has provided investors with buying opportunities, if they know where to look. As semiconductors appear to be set for a pop in share prices, it may prove highly advantageous to investors to look into these companies for potential investments.
The Problem With Investing In Today’s Markets
With all of the uncertainty in the market concerning the European debt crisis and economic issues continuing in the United States, millions of investors are facing the dilemma of what is the best way to invest their capital in an uncertain market. Most of the time the stock market enjoys a slow move to the upside with occasional bumps in the road, but overall the market continues trending steadily upward.
This environment makes investing easy, as all that is required to realize a profit is the commitment to steadily putting money in the market and profiting as the market rises. In addition, a bear market, while certainly painful, is at the very least predictable in that you can expect broad moves to the downside, with short-lived bounce back rallies interspersed throughout the moves downward.
Investing during a bear market for the most part requires a strategy that focuses on attempting to locate securities that have a large margin of safety, and having the discipline to not bail out at what would prove inevitably to be the bottom of the market.
Lately, the markets have suffered from wild swings, trending downward on bad news one minute, and then swinging wildly to the upside on a piece of good news the next. Then comes another bit of bad news and there go the markets downward again. It is enough to make even the most seasoned investor throw up their hands, pull their money out of the market, and stash it under their mattress.
Does Applied Materials Have It All For A Profitable Play In The Tech Sector?
Before you resort to stashing your money away – mattresses pay 0% after all- take this opportunity to look into stocks that possess a reasonable valuation, an expected growth rate that is healthy, as well as stocks that pay a nice dividend. By searching for securities that fit these guidelines, you may be better poised to ride out the wild swings seen in the market today.
If you fell like that is too tall an order in today’s market environment, you may want to consider a play on semiconductors, an industry that appears set to rebound, with Applied Materials (AMAT) being an excellent potential play in this industry, and in the tech sector in general.
Semiconductors appear to be poised for a pop, and Applied Materials could best position you to profit from the upward trend in the industry. Applied Materials seems to have it all, with sales for the year currently at $11.2 billion, $1.94 billion in income, and a P/E of 8.57 this stock is poised for continuing upside potential.
Applied Materials also pays a 2.6% dividend yield, with an expected long term growth rate of 13%. The volatility that is certain to continue in the equities markets could provide buying opportunities in the coming days for entering long positions in Applied Materials, and the tech sector as a whole.