Tech Sector Upside

The Technology sector has been battered over the past few months as stocks tumbled and the economic situation deteriorated. The sector is down -12.4% this year. However, before the recent catastrophe, the tech sector was growing quite nicely. In fact, it was up 108.5% since October of 2002. This is second only to the Energy sector. Tech stocks grew an average of 14.63% per year over the past seven odd years. Unlike real estate and some financial stocks, this was not due to irrational exuberance or bubble atmosphere, but on new innovation, higher demand and better productivity. Look at the iPod, the progression of computers, the speed of Internet, Google and HiDef televisions.

So whats changed? Why are tech stocks doing so terribly? Well, I'm not positive. But a lot of it has to do with investor sentiment. Investors leaving the stock market and pulling out of very popular stocks. Many of these are technology sector firms, like Google. This has proved deadly for stocks within the technology sector. Also, there is the real fact that people buy less tech goods during a recession, (do you buy the iPod or the groceries?) However, higher demand from overseas will counteract this to some degree. This can be attributed to the ever growing middle class of India and China, and the weak dollar making our products seem cheaper. Even if some of the price decreases are warranted by decrease demand for technology, I think these stocks still present a unique value buy.

The graph above shows the S&P Technology Sector Index. It shows the massive losses that the sector has experienced over the past year. The sector is down -12.7% in 2008, compared with -6.53% for the S&P at large. For contrast, the Financial Sector is down -8.92% in 2008. This means the tech sector is performing worse than the financial stocks that are right in the middle of the meltdown.

The Tech sector represents a huge value opportunity right now simply because the stocks have been beaten so low. Like financial stocks, these companies are trading at fractions of what they were a year ago. However, unlike financials, they have no real flaws behind them. These companies are not going anywhere, and if your willing to wait for a little bit, they will yield HUGE returns in the coming months.

Top Tech Stocks

Google Inc. (NASDAQ:GOOG)
-Market Cap: 146.60 Billion
-current year forward (CYF) P/E: 23.97
-CYF PEG: .9374
-52 wk HIGH/LOW/CHANGE: 747.24/412.11/-.78%
-YTD HIGH/LOW/CHANGE: 691.48/412.11/-32.35%

Apple Inc. (NASDAQ: AAPL)
-Market Cap: 143.33 Billion
-CYF P/E: 29.68
-CYF PEG: .957
-52 wk HIGH/LOW/CHANGE: 202.96/80.60/61.43%
-YTD HIGH/LOW/CHANGE: 198.08/119.46/-22.84$

Microsoft Corp. (NASDAQ: MSFT)
-Market Cap: 267.58 Billion
-CYF P/E: 15.37
-CYF PEG: .603
-52 wk HIGH/LOW/CHANGE: 37.50/26.87/.7%
-YTD HIGH/LOW/CHANGE: 35.60/26.87/-19.24%

Cisco Systems Inc. (NASDAQ: CSCO)
-Market Cap: 142.81 Billion
-CYF P/E: 15.56
-CYF PEG: 1.044
-52 wk HIGH/LOW/CHANGE: 34.24/21.77/-1.12%
-YTD HIGH/LOW/CHANGE: 27.07/21.77/-11.49%