Tough Times Ahead for Big-Cap Tech

This column was originally published on RealMoney on Dec. 18 at 2:03 p.m. EST. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.

It could be a year of limited upside ahead for big-cap tech.

According to my model, tech stocks with market caps of more than $50 billion could decline 15% to 40% over the next three years. Overvalued stocks should decline to their fair values, and those that are now undervalued probably won't get to their fair values. As the table below will show, ValuEngine rates them all a hold.

For those readers unfamiliar with my screening methods, I like stocks that are rated strong buy or buy according to ValuEngine, with strong buys at least 10% undervalued and buys at least 20% undervalued. This usually occurs when a stock is trading lower toward a value level from my model. When stocks rise and become fundamentally overvalued and technically overbought, I look for risky levels at which to book profits on strength, or suggest protective strategies such as sell-stops, given a weekly close below the stock's five-week modified moving average. ...