This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Awaiting Word From Three Tech Biggies

Technology ended last week 12.6% undervalued according to my models, making it the cheapest sector in the market. In second place was consumer durables at 5.5% undervalued. Overvalued sectors include basic industry at 5.5%, energy at 8.5% and public utilities at 5.2%. Comparing valuations suggests that investors should continue to rotate into technology stocks.

This week, we have a few big hitters reporting earnings in the tech sector.

Cisco Systems (CSCO - Get Report) reports after the close Wednesday with an expected EPS of 24 cents. Three months ago, Cisco warned that it wouldn't meet prior guidance for the current quarter. I have reasons to believe that Cisco will beat the consensus this time.

Cisco should report increased demand for its routers from telecom providers that are upgrading their networks. Look for solid growth in VoIP networking with advanced security features.

My model shows Cisco 21.5% undervalued, with fair value at $22.84. The weekly chart profile would shift to positive on a close this week above its five-week modified moving average of $17.59. I see monthly pivots at $18.23 and $18.85, with potential upside to my semiannual and quarterly pivots at $18.99 and $20.79.

One of the stronger semiconductor companies, Nvidia (NVDA - Get Report), also will report after the close Wednesday with an expected EPS of 36 cents. Nvidia shares have traded higher over the past three months, raising the bar for the current quarter.

Despite the chipmaker's rise, it's still 13.7% undervalued, with fair value at $39.58. The weekly chart profile is neutral with declining 12x3 weekly slow stochastic, but with last week's close above the five-week MMA at $32.71.

If Nvidia remains between my monthly and quarterly pivots at $33.54 and $34.52, the reaction to the earnings report is likely to be a coin flip, particularly with the neutral weekly profile. It thus makes sense to wait for the earnings report rather than take the risk of a long or a short before the release. On a negative reaction to earnings, there is risk to my monthly value level at $28.48, at which point investors should add to longs. On a positive reaction to earnings, there is the possibility of another new 52-week high, but investors should reduce holdings on strength to my semiannual risky level at $41.14.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
DELL $0.00 0.00%
CSCO $28.21 0.00%
NVDA $19.73 2.18%
AAPL $123.38 0.50%
FB $95.29 1.19%

Markets

Chart of I:DJI
DOW 17,630.27 +189.68 1.09%
S&P 500 2,093.25 +25.61 1.24%
NASDAQ 5,089.2060 +49.43 0.98%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs