To make it into our Growth Portfolio, each of our tech stocks had to have some unique and critical technology giving it an edge in a large and growing market essential to achieving a sustainable world, explains Stephen Leeb, growth stock expert and editor of The Complete Investor.
It also couldn’t be excessively overvalued relative to other tech companies. Still, the insanely high valuations of many other tech companies hurt our choices as they suffered from guilt by association. Major declines in a sector rarely discriminate between the good and the bad.
We recommended Advanced Micro Devices (AMD) because of the overall superiority of its products and product mix, and that edge has since grown even greater.
The company completed its acquisition of Xilinx, a leader in programmable logic chips, and continues to introduce faster products — both GPUs and CPUs — while remaining the only company capable of providing integrated circuits optimized for use in both chips together.
While it trails Nvidia (NVDA) in the GPU space, it has leapfrogged Intel (INTC) in CPUs. Despite supply chain difficulties, profits continue to solidly beat expectations. AMD’s products are necessary in everything from EVs and autonomous vehicles to the technologies that guide Deere (DE) tractors. It is hard to imagine an energy revolution without AMD playing a major role.
We picked Micron (MU) in part because it was that rare great tech company with compelling value characteristics. Unfortunately, that didn’t protect it against a general tech downturn — apart from defense companies, no tech company was spared however low its multiple or price-to-book.
In less than a decade, Micron has gone from a company struggling to survive to one where the only question is how fast it can grow. Not long ago, Micron was an also-ran in the memory area. Today it is arguably the leader in DRAM chips (those needing constant power) and coming on fast in NAND chips.
Not a bad area of tech in which to lead, given that memory chips now constitute 30% of the semiconductor industry compared to 20% a decade ago. With Moore’s Law no longer operative, memory now drives the chip industry and should continue to expand.
Fast growth in tech, faster growth in tech’s memory segment, and fastest growth in companies gaining market share in memory, are utterly inconsistent with a stock trading near book value and with a single-digit P/E.
