Your New Year's Resolution: Avoid Boring Tech Stocks in 2012
BOSTON (TheStreet) -- The turning of the calendar to a new year usually means making resolutions, whether it be to exercise more or to quit smoking. Investors, though, should resolve to avoid boring technology stocks in 2012, says fund manager Jerry Jordan.
Jordan, manager of the Jordan Opportunity Fund (JORDX), sees little opportunity in the technology sector, which outperformed industrials, financials and materials in 2011 but underperformed consumer staples, utilities and health care. With 2012 barely begun, Jordan says investors probably won't find many appealing names in tech this year, either.
"There is very little in tech worth owning," Jordan says by phone from his Boston office. "It's not so much avoid tech. It's just that there isn't much exciting. It's just hard to find anything that's particularly interesting."Over the past year, the information-technology sector of the S&P 500 has gone nowhere as several tech heavyweights have floundered. Hewlett-Packard (HPQ) is down 37% over the past year, Oracle (ORCL) has dropped 17%, and Microsoft (MSFT) has declined 4%. High fliers like Akamai Technologies (AKAM) and Salesforce.com (CRM) have lost 31% and 25%, respectively, over the past 12 months. Jordan has a takedown for nearly every group of tech companies. Of hot up-and-coming stocks like Salesforce.com and VMWare (VMW), Jordan notes that the stocks trade between 50 and 80 times earnings, a rich premium to the broader market. While he says HP and IBM (IBM) are "crazy cheap" by the same valuation metric, he notes that investors will probably see flat or lower earnings going forward. "For example, Microsoft (MSFT) is a fine stock to own, and it won't hurt you, but it's been a market performer for years," Jordan says. "And IBM, it's a Dow stock, it's been around forever, and Buffett owns it. But what does it do? It's a big lumbering tech company with a lot of entrenched customers. They don't do anything really well or anything really wrong. I don't know if that continues."
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