The end-of-year holiday season is a time for memories and reflection and I found myself engaging in a little of both the other day.
I was alone at the house, and was stringing up some Christmas lights and found myself drifting back in time … to middle school and high school.
In seventh grade, I got my first part-time job – changing light bulbs at an apartment complex. I also began designing and building custom light boxes using colored bulbs controlled with staggered timing switches.
In my freshman year in high school – for my electronics class – I put together a pretty sophisticated strobe light from a nice kit. That was my introduction to capacitors, diodes and wiring diagrams.
There was a reason for this mental road trip.
You see, the lights that I was stringing up around the perimeter of my house the other day happen to use a very specialized technology.
And this specialized technology is something that I knew you’d want to hear about because it represents a massive profit opportunity.
If you’ve been following our twice weekly conversations here at Strategic Tech Investor, you know that I’m very bullish about technology stocks.
But I want to let you in on a little secret …
I’m also bullish about the overall stock market.
In fact, I’m predicting that the Standard & Poor‘s 500 Index will advance 15% in 2014, rising from the current 1,795 to 2,065. That will not only take the closely watched index up through the psychologically important 2,000 level, it will take it to the highest level in history.
And that’s the broad market index.
I believe that the tech sector could do even better.
During an appearance on the Fox Business Channel‘s Varney & Co. on Thursday, host Stuart Varney asked me point blank if I was worried about what’s ahead for tech stocks.
You can certainly understand why he’d ask such a question. The health of the U.S. economy continues to be a real worry for many and the growing political mess we know as Washington can only make matters worse.
Against that troubling backdrop the tech-focused Nasdaq Composite Index is up 31% so far this year and 207% from its financial crisis lows of March 2009 – returns that handily trump the respective 22% and 142% gains of the record-setting Dow Jones Industrial Average.
Whispers of “another tech bubble” and “another dot-bomb implosion” have been getting louder, and the excellent and the always-probing Varney wanted to know if I was worried – or perhaps even bearish.
We know the drill: U.S. retailers count on the holiday shopping season for as much as 20% to 40% of their total sales for the year.
And we know that this year won’t be any different.
What we don’t know is how much American consumers are going to spend: Will this season go like gangbusters, or will it just be a bust?
The National Retail Federation (NRF) is expecting a gangbusters holiday season, having just forecasted a record $602 billion in sales, a healthy 3.9% jump from 2012.
But the respected Gallup polling group is expecting a bust, saying that U.S. consumers expect to spend an average $704 each, or about 10% less than during the Christmas season a year ago.
Investors often handicap the major retailers, trying to guess which one will get the biggest share of the holiday shopping bucks.
We’re not going to waste our time with that futile exercise.
You see, we know that the holiday season is also a big time of the year for gadget sales: American consumers are only too happy to drop small fortunes on computers, smartphones and the other consumer-electronic gadgets that are the tangible results of this country’s dominant high-tech sector.
We can predict who those winners will be, and can identify the stocks we believe will zoom as a result.
Today, I’m going out on a limb once again to predict that the tech sector will have a great Christmas overall. And I’ve identified four market leaders who should do well for investors this holiday season.
Mutual fund superstar Peter Lynch used to say that individual investors had a big advantage over Wall Street. If you just keep your eyes and ears open, Lynch would write, you’re bound to see big profit opportunities long before the investment-banking boys in New York.
And the biggest opportunities are often right in your own neighborhood.
Lynch knew his business.
For months now, we’ve been talking about a “ground floor” investing opportunity – a whole new business that I believe could triple or more in just the next few years.
Well, just the other night, as my lovely wife and I were strolling to a village restaurant near our home, I ran right into proof that this potential $6 billion industry has already grabbed a big handful of the all-important consumer market – just as we said it would.
This was more than just validation: It tells me this market is evolving even faster than I projected – and says I may have underestimated the overall market potential.
And that’s not all.
My “Peter Lynch moment” the other night served a “Buy” signal trigger on a stock with double-your-money profit potential.
In the July 26 Strategic Tech Investor, we explained why we believed that search-giant Google Inc. (NasdaqGS: GOOG) was a “must-own” stock.
Using the five rules we created to identify the biggest-potential stocks, we told you how the Mountain View, Calif.-based tech innovator was continuing to position itself as a company that will continue to create wealth for its stockholders.
Not long after, several folks wrote in to say that Google’s $885 share price made the stock too pricey for them to own.
We countered with the same response we always make to such comments: On a given amount of cash, a 30%, 50% or 80% return will net the same profit – no matter if that cash is invested in a $50 stock or a $550 stock.
And, with Google, we’re already on our way: The share price has already advanced 15%, meaning that $885 stock is already trading north of $1,000 a share, and closed Monday at $1,015.
Sometimes, you’ll find, the stocks that appear the most expensive actually turn out to be the cheapest at the time you buy them.