Tech Trends to Watch in 2008

Editor's note: This is part 2 of a two-part series.

This is the second part of a two-part commentary regarding McKinsey's article on "Eight business technology trends to watch" and what this might mean for those investing in TheStreet.com Internet Index stocks. If you haven't already done so, click here to read the first article on trends that deal with managing relationships. Tech Trends to Watch in 2008.

The next two groups of trends have to do with a) managing capital and assets and b) leveraging information in new ways.

First, a few words about the method and tools I use for selecting the potential stock winners in this or any sector.

I score a stock in three areas: momentum, strength, and expectations. The momentum score includes analysis of the company's real economic profit, net changes in shareholder equity and cash flow trends. The strength score considers, among other things, franchise value, profitability and financing self-sufficiency. The expectation score incorporates valuation metrics, new business growth, earnings estimates and management value-added.

While this process can be a bit overwhelming, one very handy tool for getting all this data and creating useful scorecard is Infinancials.com, an online service for business valuation. While the best stocks should consistently score well in all three areas, a company need not score well in all three areas to receive a buy rating. The same is true for sell-rated stocks.

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