5 More Tech Winners I Love Right Now

Welcome back to week 21 of the Big Idea Portfolio. Apple (Nasdaq: AAPL  ) roared back more than 6% on the week, giving my portfolio and the broader market a nice lift. Riverbed Technology (Nasdaq: RVBD  ) also gained on a positive research report. Details on these companies and more in a minute. First, let's dig into the numbers:

Company

Starting Price*

Recent Price

Total Return

Apple $422.46 $562.29 33.1%
Google $650.09 $591.53 (9%)
Rackspace Hosting $41.65 $50.94 22.3%
Riverbed Technology $25.95 $16.52 (36.3%)
Salesforce.com $100.93 $147.00 45.6%
AVERAGE RETURN -- -- 11.14%
S&P 500 SPDR $127.15** $132.10 3.89%
DIFFERENCE -- -- 7.25

Source: Yahoo! Finance.
*Tracking began at market close on Jan. 6, 2012.
**Adjusted for dividends and other returns of capital.

Apple rallied on positive research reports and an irresistibly cheap valuation. A surprisingly poor earnings report from Dell (Nasdaq: DELL  ) may have also been a contributor as numbers suggest the iPad may be taking a toll on traditional PC sales.

Let's talk price first. Foolish colleague Evan Niu ran the numbers last week and found the Mac maker gave back $107 billion in market value after rising to $644 a share in the wake of a blowout fiscal second-quarter earnings report. Bears simply outnumbered bulls, with skeptics preying on fears that iPhone momentum wouldn't continue.

But even if they're right, at 13.7 times earnings, Apple trades for a substantial discount to the broader S&P 500 and its CAPE-adjusted 21.2 P/E ratio. Even without adjustments, Apple stands below the 14.1 P/E the S&P 500 sports. Not exactly fair when you consider that, according to multiple researchers, the Mac maker accounts for about one third of the index's year-over-year growth.

Some analysts see this trend continuing. In a research report issued last week, Piper Jaffray's Gene Munster disputed assertions that Qualcomm's (Nasdaq: QCOM  ) troubles with obtaining 28-nanometer wireless chips from contract manufacturers will have an impact on Apple. Munster says the Mac maker tends to get favorable treatment from vendors because of its propensity for bulk buying, and there's every reason to believe that will be the case here, too.

Goldman Sachs added to the bullishness in a report that argues Apple's rich telecom subsidies -- recently thought to be at risk with AT&T and Verizon publicly touting competitive handsets -- will remain intact for the foreseeable future. No carrier wants to be the first to cut ties with Apple, especially now that we have T-Mobile's decline as evidence for what failing to carry the iPhone can do.

Then there's Dell, which reported an overall 4% decline in revenue in the latest quarter and a 12% drop in consumer products sales. A transition to a broader portfolio of technology products and services aimed at businesses is taking a toll, but so, apparently, are iPad sales.

Finally, Riverbed Technology rose after management added $150 million to an existing share repurchase program. Why? Executives believe the stock is cheap, which is the one and only reason -- and I mean ever -- to use shareholder cash to buy back stock.

The week that was
Just when it looked like the market would never rally again, it did. Both the Russell 2000 and the Nasdaq Composite rose more than 2% -- 2.57% and 2.11%, respectively -- while the S&P 500 (INDEX: ^GSPC  ) jumped 1.74%. Of the majors, only the Dow Jones Industrial Average rose less than 1%, closing up just 0.69%, CNBC reports.

Further bad news from Spain and millions in Facebook-related losses at Citigroup's Automated Trading desk did little to lift investor spirits. So what drove the gains? Consumers, apparently. The latest research into consumer sentiment shows we're as optimistic about jobs and wage increases today as we were in October 2007. Given what happened the very next year, perhaps that's reason for caution? Either way, the Chicago Board of Exchange Volatility Index, or VIX, widely regarded as the best gauge of fear in the market, dropped sharply as investors gained more confidence in their market bets.

See you back here next weekend for more tech stock talk. And remember to check out the Fool's latest special report -- "Forget Facebook -- Here's the Tech IPO You Should Be Buying" -- and add the Big Idea portfolio stocks to your Foolish watchlist for ongoing, up-to-the-minute coverage. Both the report and the watchlist are 100% free to Fools:

  1. Add Apple to my watchlist.
  2. Add Google to my watchlist.
  3. Add Rackspace Hosting to my watchlist.
  4. Add Riverbed Technology to my watchlist.
  5. Add salesforce.com to my watchlist.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple, Google, Rackspace Hosting, Riverbed Technology, and Salesforce.com at the time of publication. Check out Tim's web home, portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of salesforce.com, Citigroup, Riverbed Technology, Google, and QUALCOMM. The Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Rackspace Hosting, Riverbed Technology, Google, salesforce.com, and Apple. Motley Fool newsletter services have recommended creating a stock position in Riverbed Technology. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Motley Fool newsletter services have recommended creating a bear put spread position in salesforce.com. 

The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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