First, I should start by stating: am and always have been a value investor. With this principle in mind I am bullish on Microsoft and big pharma. However I am starting to question the theroy of value teck stocks because of a few violators. i.e. Yahoo, eBay, Dell et cetera. These among others were supposedly good values for some time now, only to drop much more. Is this simply a case of poorly managed companies in slowing industries withco increasing competition? Are they just a small exception, or do they just need to mature? What do you think?
2006-08-01 14:56:24 · 6 answers · asked by Anonymous in Business & Finance ➔ Investing
It rather depends on your definition of value. On a historic basis, MSFT, Dell, INTC, CSCO etc are trading at what might be considered a low price considering that they are all the leaders in their markets. Normally, that would be enough for the market to assign a premium to their valuation. But that does not appear to be the case today.
You might have noticed that many of the large cap stocks are performing very poorly lately. I think that it might be an idication that we are in a bear market.
The value currently is in t-bills. Almost everything else has topped out.
2006-08-01 16:25:29 · answer #1 · answered by Anonymous · 0⤊ 1⤋
I think what you are looking for is a formerly high-flying tech stock that has been beaten down, and is poised for a turn-around. The hard part is finding the exact turn-around point or "bottom." Apple would fit this bill, if purchased in 1998 or 2003.
Certainly, MSFT, DELL, Yahoo, and EBay are all plenty mature companies. That is a large part of their problem. A huge company can't grow extremely rapidly, and rapid earnings growth is what drives the stock price up on these types of stocks.
Another way to say this is: The conversion from a growth stock to a value stock is pretty ugly & usually the stock price must drop a factor of 2 or 3 or more.
Yes, the PC industry is growing more slowly than several years ago. Yes, Dell has more competition (HPQ) than a good investment should have. Some would say the same about MSFT (Google), but I wouldn't. MSFT is late with its new OS & Office suite, XBox hasn't fully ramped yet & they're just too big.
2006-08-01 22:32:44 · answer #2 · answered by Tom H 4 · 0⤊ 0⤋
Depends on how low the valuation is. Look under "Key Statistics" in the Yahoo Financial section, then READ THE DEFINATION of terms used there. That will educate you about it a bit.
So first define what a "tech" stock is, in your book;, then use the Key Statistics section to help you find the value.
Yes I think there can be a "value" tech stock. The stock price may look busted, bruised and a bit nicked up, but if the company does things you think are "tech", and it meets your defination of value, where there you have it.
Merck might have been a value stock at 27, but right now its up 50%, so its "value", again, is in the mind of the buyer or seller.
2006-08-01 22:34:55 · answer #3 · answered by denaliguide2 3 · 0⤊ 0⤋
the first 2 that came to mind was IBM and HEWETT PACKARD
both big size Companies with other mixes going on.....
I think in general the industry as a whole is slowing ...Look AOL had to go free content....who's gonna win the Yahoo, Google war
or will Myspace eat up ad space too....you can only make them so cheap and so fast.....
2006-08-01 22:48:47 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Well, what's your definition of value investing? Microsoft is trading at 20 times trailing earnings and 6 times book value... It does not look like value in my book...
2006-08-01 22:24:18 · answer #5 · answered by NC 7 · 0⤊ 0⤋
I think Microsoft and IBM are value investments, but i can't think of any others. I'm not saying they're good investments, just that they would not be growth investments.
2006-08-01 22:18:12 · answer #6 · answered by Anonymous · 0⤊ 0⤋