I have been a failure at trying to find ideas in the technology, financial services, and real estate sectors. I really have been trying, but I just will not chase stocks to meet sector guidelines.
Just before the pandemic I met the management of Veeco Instruments - VECO. For years this had been one of my favorite technology stocks because it was a semiconductor equipment maker that sold near book value. When I heard their uninspiring presentation in 2019, I instantly knew why the stock had been $15 forever. This meeting left a long lasting impression on why it was dangerous to buy “value oriented” technology stocks.
I know I need to learn more about some of these companies, but that will take time. Here are my top tech ideas in order of attractiveness:
Rogers Corp. - ROG - $116 - duPont had offered $277 for ROG, but the Chinese anti-trust (?????) regulators blocked the deal, and duPont had second thoughts. Since then the company has had operating issues, and management changes, and activist Starboard has been involved. The base business is ok, but growth prospects are murky. This is certainly a top 40 idea. I almost wrote the evil word “catalyst”, but really I just need to understand the business a little better.
NICE Ltd. - NICE - $169. These guys provide cloud platforms, but I really do not know what the hell that means. NICE seems to grow at 15-20%, and the stock only sells for 15x earnings. The stocks has recently declined from $250 to $170 after reporting a strong first quarter, but not raising the 2024 full year guidance. This company is headquartered in Israel, so proceed with some caution. I listened to the call and only understood every third word, even though they were speaking perfect English. NICE is a large holding of a smart Canadian hedge fund called Black Creek. I love 6 of BC’s top 8 holdings, and NICE is their 9th. Maybe this is a cheap AI stock?
Paypal - PYPL - $58 - Some smart value guys have been circling this idea for a few years. The stock is down from $300. I try to stay away from companies competing with Apple, but at some price maybe you can try. Still 2x sales and 15x earnings, and I have always found their website confusing.
Keysight - KEYS - $135 - This is the old Hewlett Packard test and measurement business. I just cannot pay 22x, but if sentiment (6 buys, 4 sells) get worse maybe I could be interested.
Intel - INTC - $31 - Maybe every value guy should own this stock, but I just am not smart enough to understand all the issues. Again if you have to be 15% technology, I guess you could own this stock.
Trimble - TRMB - $57 - I love the base business here, but I did not like the recent JV with AGCO. Maybe at some lower price.
Harmonic, Diodes, Digi International, and Cohu - In the past I have tried to make these small “gadget” companies work, but with little success. When tech is the worst performing sector, maybe I can go back here.
Arrow Electronics - ARW - $199 - This is the tech stock that value guys buy if they have to own one. This company “screens well” (high growth, low PE), but I just do not see the upside.
Kimball Elecronics - KE - $22 - Another way to cheat the tech sector is owning contract manufacturers. I have met these folks several times, and have not been impressed.
Corning, Teradyne, Logitech, Kyndryl, MKS Instrument, Ultra Clean, and a dozen more are all stocks that are up 30-50% in the last year that I just will not chase. That is why I am a failure.