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Canaccord Genuity, the capital-markets division of investment bank Canaccord Financial, was founded in Canada as a venture-capital firm in 1950, and has since expanded operations into the U.S., the U.K., China and Australia. The firm's wealth management unit had more than $14 billion (Canadian) in assets under administration as of Sept. 30.
After a year in which global trends drove stock correlations to record highs, the Canaccord Genuity technology team says 2012 may be a year in which "favorable returns are the reward for superior fundamental analysis."
Technology as a whole has performed only slightly better than the overall market this year. The
S&P 500 Index of the largest U.S. companies is down 2.2% through Friday's close, compared to a 1.9% decline on the
Technology SPDR ETF and a 1% dip on the
iShares Dow Jones U.S. Technology ETF. Through Dec. 15, technology was the fifth-best performer of the S&P 500's 10 sectors, trailing defensive categories like utilities, health care and consumer staples.
But not all technology stocks are created equal. Shares of
Apple(AAPL - Get Report) are up 18% this year and
Intel(INTC - Get Report) has climbed 10.5%. Meanwhile,
Netflix(NFLX - Get Report) has tumbled 60% and even tech giant
Cisco Systems(CSCO) has dropped 11%.
Canaccord isn't only sticking to tech for its 2012 recommendarions. On Monday, consumer analyst Camilo Lyon wrote in a research note that
Under Armour(UA) and
Foot Locker(FL) are his top consumer picks for next year with the athletic footware cycle continuing to power sales growth in 2012.
The bigger focus, though, is on technology. Despite uneven returns for the sector, Canaccord's tech team is bullish, while signaling caution on PC growth trends and supply constraints. Canaccord analysts say trends are most favorable in mobile, Cloud-based service and new media.
"Our top picks focus incrementally on product cycle stories and businesses that are well-positioned to be the beneficiaries of established growth trends," the group of analysts wrote in a research note released Friday.
Analog Devices(ADI), which makes digital signal processing integrated circuits , and
Integrated Device Technology(IDTI), which makes a range of semiconductor products.
Analyst Bobby Burleson says that, entering 2012, investors need to understand how constrained PC growth could be because of an inventory correction, lackluster end demand, and the disk drive shortage following the floods in Thailand.
"While we remain concerned about near-term softness in PCs and communications and acknowledge the potential for another number cut, we believe the worst cuts are behind us," Burleson writes. "Heading into 2012, we like names with broad-end market exposure and low PC exposure."
Burleson picks Analog Devices because of the potential for more dividend increases. As a bonus, the company has virtually no PC exposure, he says. Similarly, Integrated Device also has limited PC exposure and Burleson expects the company gross margins to rebound in 2012 as the company completes its transition to a fabless model.
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