News outlets have been very impressed with the performance of technology stocks in the first half of 2007. It is true, tech stocks are performing better than most other sectors and the trend may continue for the remainder of the year. In this blog we’re going to look at 5 fast moving tech stocks and a way an investor can potentially boost the already tidy gains using a covered call investment strategy.
An audio podcast of this article is available at: poweropt.com/podcasts/2007_07_16_tech.mp3
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These 5 stocks are gigantic in their field and, if things should go south, it is unlikely they will suffer the same drop some of their distant tech-cousins did in the early years of the millennium:
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Analysts have been impressed with how the tech giant has expanded into new markets and expect they will have earnings growth nearing 20% through 2010. The stock growth has lagged behind the anticipated 20% earnings growth at a respectable 14%.
Video teleconferencing and wireless broadband are among the products and services giving Cisco so much growth. Large traditional companies are eating up these services as they are seeing productivity and cost benefits.
Texas Instruments (TXN):
Analysts see a value in Texas Instruments as it is currently trading with a P/E of 17. This P/E looks to be about a 14% discount when compared to historical averages.
Analysts are expecting 10 to 15% growth for Texas Instruments this year. And still others think this may be conservative.
With their recent acquisition of Hyperion, Oracle seems to marching forward as a leader of supplying and developing business applications. The company’s earnings per share will come in around 16%. Analysts are also speculating earnings for Oracle could top 20% in years to come.
Adobe is about to undergo a major software upgrade. Traditionally this means increased profits. Because of this, some analysts are expecting revenues to be in excess of 25% in the second half of 2007.
Adobe continues to be a great innovator of software and web development tools. This position doesn’t seem to be in any way challenged as Photoshop and Acrobat Reader are the gold standards of photo manipulation and document reading software.
Looking at this News from an Options Trading Perspective:
Finding the right option trade can be difficult for investors if they don’t have a solid search tool to help them identify trades. Option data and information is often cumbersome and difficult to find. An option investor requires the aid of a reliable tool to help them with the difficult task of identifying solid option trades.
|Covered Call Search|
|Hewlett Packard||HPQ||47.35||HPQHJ||07 AUG 50.0 (33)||0.5||1.1||1.1||6.7|
|Texas Instruments Inc.||TXN||38.9||TXNHH||07 AUG 40.0 (33)||0.96||2.5||2.5||5.4|
|Adobe Systems Inc.||ADBE||41.09||AEQHV||07 AUG 42.5 (33)||0.7||1.7||1.7||5.2|
|Cisco Systems Inc.||CSCO||29.99||CYQHF||07 AUG 30.0 (33)||1.1||3.7||3.8||3.8|
|Hewlett Packard||HPQ||47.35||HPQHW||07 AUG 47.5 (33)||1.45||3.1||3.2||3.5|
|Oracle Corp.||ORCL||20.4||ORQID||07 SEP 20.0 (68)||1.2||5.9||4.2||4.2|
These trades offer between 1.1 and 5.9% downside protection and between 3.5 and 6.7% potential profit. Note the Oracle trade is a September option with 68 days until expiration and the others are August trades with 33 days until expiration.
Competitors for HPQ include: Canon Inc. (CAJ), Dell Inc. (DELL), International Business Machines Corp. (IBM), Apple Computer Inc. (AAPL), BMC Software Inc. (BMC), 3Com Corp. (COMS), Cray Inc. (CRAY), Datalink Corp. (DTLK), EMC Corp. (EMC), FalconStor Software (FALC), Gateway 2000 Inc. (GTW), Lexmark Intl. Grp. Inc. Class A (LXK), Network Appliance Corp. (NTAP), Opsware Inc. (OPSW), palmOne Inc. (PALM), Sun Microsystems Inc. (SUNW), Unisys Corp. (UIS), and Xerox Corp. (XRX).
Competitors for TXN include: QUALCOMM Inc. (QCOM), STMicroelectronics NV (STM), Freescale Semiconductor, Inc. (private), Advanced Analogic Techs. Inc. (AATI), Actions Semiconductor Co. Ltd. (ACTS), Analog Devices Inc. (ADI), Agere Systems (AGR), AudioCodes Ltd. (AUDC), Broadcom Corp. (BRCM), Syntax-Brillian Corp. (BRLC), Conexant Systems Inc. (CNXT), Cirrus Logic Inc. (CRUS), DSP Group (DSPG), Exar Corp. (EXAR), Fairchild Semi. Inter. Inc. (FCS), ID Systems Inc. (IDSY), Integrated Device Tech. Inc. (IDTI), Intel Corp. (INTC), Intersil Hldg. Corp. (ISIL), Linear Technology Corp. (LLTC), Marvell Tech. Group Ltd. (MRVL), Microsemi Corp. (MSCC), Maxim Integrated Products Inc. (MXIM), National Semiconductor Corp. (NSM), O2Micro Intl. Ltd. (OIIM), On Semiconductor Corp. (ONNN), PortalPlayer Inc. (PLAY), ParkerVision Inc. (PRKR), Sigmatel Inc. (SGTL), Silicon Image Inc. (SIMG), Silicon Labs (SLAB), Supertex Inc. (SUPX), and Volterra Semiconductor Corp. (VLTR).
Competitors for ADBE include: Apple Inc. (AAPL), Microsoft Corporation (MSFT), Quark, Inc. (private), and Nuance Comms. (NUAN).
Competitors for CSCO include: Juniper Networks, Inc (JNPR), Nortel Networks Corp. (NT), ADTRAN Inc. (ADTN), Acme Packet Inc. (APKT), Arris Group Inc. (ARRS), Avaya Inc. (AV), Avici Systems Inc. (AVCI), Blue Coat Systems Inc. (BCSI), Brocade Comm. Systems Inc. (BRCD), Carrier Access Corp. (CACS), Check Point Software Techs. Ltd. (CHKP), Ciena Corp. (CIEN), 3Com Corp. (COMS), Citrix Systems Inc. (CTXS), Extreme Networks Inc. (EXTR), Foundry Networks Inc. (FDRY), F5 Networks Inc. (FFIV), Harmonic Lightwaves Inc. (HLIT), McData Corp. Class A (MCDTA), MRV Comms. Inc. (MRVC), Orckit Comms. Ltd. (ORCT), Packeteer Inc. (PKTR), Redback Networks Inc. (RBAK), Radware Ltd. (RDWR), Riverbed Tech. Inc. (RVBD), Radvision Ltd. (RVSN), Sycamore Networks Inc. (SCMR), SAFENET Inc. (SFNT), SonicWall Inc. (SNWL), and Sonus Networks Inc. (SONS).
Competitors for ORCL include: International Business Machines Corp. (IBM), Microsoft Corporation (MSFT), SAP AG (SAP), Ariba Inc. (ARBA), BEA Systems Inc. (BEAS), CDC Corp. (CHINA), Concur Techs. Inc. (CNQR), Cognos Inc. (COGN), salesforce.com Inc. (CRM), Dendrte International Inc. (DRTE), Epicor Software Corp. (EPIC), i2 Technologies Inc. (ITWO), JDA Software Group Inc. (JDAS), Kronos Inc. (KRON), Lawson Software Inc. (LWSN), Manhattan Assoc. Inc. (MANH), Progress Software Corp. (PRGS), Quest Software Inc. (QSFT), RightNow Techs. Inc. (RNOW), and Sybase Inc. (SY).
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