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Top Tactical Tech Trades
05/21/2004 12:00 am EST
"Our goal is to highlight the strongest investment themes in the hottest sectors," says trading expert Bryan Perry, editor of Tactical Trader. With a bundle of acronyms, many of his favorites are involved in emerging markets such as HDTV, VOIP, and RFID:
"We have no investment banking clients and no companies that push us to promote their stock, so we’re free to think, openly, objectively, and critically. We follow 12 vertical industries that we feel are going through rapid transformation and from there, we have over 4,000 imbedded in these industries. We survey these people several times a quarter to get an up to the date pulse–peak around the corner that gives us a lead on Wall Street. We understand that we can’t follow everything, so we focus on the areas that we think are the hottest growth sectors for the next five years, and then focus on the best opportunities within those sectors for the next six months.
"The integration of the personal computer, WI-FI, high definition TV, DVD, etc., is a huge trend. The ability to converge all these trends in your living room is rapidly taking place. Comcast (CMCSK NASDAQ) is the big cable company. They just pulled their bid for Disney. The stock is just a tremendous play if you want a nice stable workhorse. This is a big-cap name that’s really poised to benefit as the big provider of these services. This is a stock that we like.
"Motorola (MOT NYSE) is another stock to look at. It's been a leader with their ‘clamshell’ phone. They also make these digital conversion boxes that go on the top of your TV. The companies have been reporting results that are higher than expected. In fact, the company really blew out its numbers. If we are going to be long in this market environment, we want companies that are hitting their numbers out of the park.
"The most popular name, and certainly the company that will be the biggest provider of chips for the set top boxes, is Broadcom (BRCM NASDAQ). They are in the catbird's seat for this whole digital play. If you want to own a big-cap chip name, this is probably the best horse to ride for the rest of the year. The stock has been very resilient and has been holding up very well. There is a lot of confidence in this company and the stock can move very quickly on a market turn. Management pays themselves very well, and that always gets a lot of criticism. But while they are aggressive in regards to compensation, it doesn’t mean that the stock won’t work for us as investors.
"Another emerging trend we like is the market for RFID–radio frequency identification. The big player here is Zebra Technologies (ZBRA NASDAQ). They are the largest bar-code provider in the world. Needless to say, Wal-Mart is their largest customer. This is the leader in this market. In addition, the stock is suitable for options traders. The company has been reporting great numbers. There is a great technical chart, with no breakdown during the market's recent setback. The stock just held like a rock and is still near its all-time high. The trend is there and the sector is hot.
"AudioCodes (AUDC NASDSAQ) is involved in the software end of VOIP–or voice over Internet protocol. It does business with 80% or more of the Fortune 500 companies. The VOIP market remains one of the most promising areas of growth for this year and next. This is an Israeli company and we’d note that there is often a discount applied because of the geopolitical risks. Yet some of the world's best-managed company are based there. We'd also note that 90% of its operations are outside of Israel. The company recently beat estimates and guided for a strong 2004.The story only gets better from here.
"I’d also mention Nortel (NT NYSE), which is also big in VOIP. The company has financial issues, and has to restate their numbers. Nobody knows how ugly that is going to get when they do post those numbers. Nevertheless, there is a lot of insider buying here. I like the idea of buying alongside management. The stock is trading at just $3.50 to $4 a share. And they are winning a lot of big contracts in VOIP.
"Another company winning some big VOIP contacts is Lucent (LU NYSE), and investors can look at the stock at these levels. Lucent just got the contract from Southwestern Bell, to roll out its whole VOIP network. Meanwhile, Lucent is rolling out nationwide broadband for Verizon. E-mail was the last killer application, and there hasn’t been one since. But having broadband access from a laptop could be one. The firm beat estimates and affirmed guidance for 2004. Lucent scores high in our surveys as far as business momentum is concerned, and the nationwide rollout of wireless broadband service bodes well for the company."
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