In Tech We Trust

Banking stocks got us into this mess. Maybe tech stocks can get us out.

Even during yesterday's nasty sell-off, a few tech stock bellwethers managed to rise under the deluge.

Company

10/6/08 Gain

Apple (Nasdaq: AAPL  )

1.1%

Baidu.com (Nasdaq: BIDU  )

2.4%

TiVo (Nasdaq: TIVO  )

1.8%

Expedia (Nasdaq: EXPE  )

0.7%

MercadoLibre (Nasdaq: MELI  )

10.1%

Juniper Networks (Nasdaq: JNPR  )

1.8%

Priceline.com (Nasdaq: PCLN  )

0.5%

Yesterday's gains didn't come easy. Apple, Expedia, MercadoLibre, Juniper, and Priceline all hit fresh 52-week lows during the day before snapping back into positive territory.

Some of the winners had clear catalysts. TiVo received a favorable court ruling. Another sharp drop in oil prices fueled the prospects of online travel enablers Expedia and Priceline. However, most of yesterday's tech leaders on the upside didn't have material news to report. Don't you dare tell me that Juniper rose just because it released the JUNOS for Dummies instructional guide yesterday.

No, most of Monday's winners were likely the result of value-hunters anxious to nibble at some of the attractive prices in tech. Apple for less than 17 times forward earnings estimates? Expedia for just eight times next year's profitability?

That's too rich to pass up for long-term investors willing to withstand the near-term volatility. As long as the fundamentals are still intact -- and they are, for many of the leading tech companies -- nibbling on the right tech stocks makes sense.

Other ways to ride out the volatility:

Baidu.com is a Motley Fool Rule Breakers selection. Priceline.com and Apple are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz has tried to catch a falling steak knife, with the scar to prove it. He does not own shares in any of the stocks in this article, save for TiVo. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


Read/Post Comments (2) | Recommend This Article (2)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 07, 2008, at 10:31 AM, lcwilliam wrote:

    This article, like many on the fool.com focus on metrics that are not current. In this article, the author focuses on forward earnings "AAPL has 17 times forward earnings." This is true, if and only if, no earnings revisions are made by WallSt Analysts from now until the end of next year. If you think '08 has been hairy, just wait for '09. Downward earnings revisions will be everywhere in 2009, especially on consumer driven stocks like Apple. The current earnings estimates for next year (aka "forward earnings") are worth nothing at this point in time. Need to look at cash and financial stability, not faux earnings.

  • Report this Comment On October 07, 2008, at 2:50 PM, TMFBreakerRick wrote:

    lcwilliam, thanks for the feedback. I did go on to explain that the earnings assumption are attractive "as long as the fundamentals are intact."

    That opens the door to revisions, and Apple HAS had lower revisions in recent weeks. However, at least one of the companies on the list -- Baidu -- has had its earnings estimates revised higher. Apple also has a twenty-something quarter streak of beating analyst estimates.

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