As Tech Stocks Soar, Are Facebook and Twitter Still Buys?

It's hard to overlook tech stocks' pricey valuation, but one well-known research still has faith in the sector.

Mar 8, 2014 at 1:30PM

It's no secret to say the stock market as a whole has been more or less on fire for the last several years. As we approach the five-year anniversary of the stock market's Great Recession bottom in 2009, the S&P 500 now finds itself up roughly 175% from those lows.

It's also no great insight to note that technology stocks have performed even better than the broad market. Over the same five-year period, the tech-weighted Nasdaq, as well as small- and large-cap tech stocks, outperformed the market in general.

So what could be wrong?
The natural downside in all this is that now technology stocks have gown increasingly expensive, especially as companies like Facebook (NASDAQ:FB) and Twitter (NYSE:TWTR) change hands at what could be fairly described as aggressive current valuations.

However, despite their current rich premiums, one well-known research house recently came out in favor of technology stocks. So with high-flying stocks like Facebook and Twitter having grown so expensive, how should investors approach both the broader technology sector and specific opportunities like Facebook or Twitter?

In the video below, tech and telecom analyst Andrew Tonner gives his thinking on the tech sector as a whole and specific growth powerhouses like Facebook and Twitter.

The coming tech revolution dwarfs Facebook or Twitter
Let’s face it: Every investor wants to get in on revolutionary ideas before they hit it big. Like buying PC maker Dell in the late 1980s, before the consumer computing boom. Or purchasing stock in e-commerce pioneer Amazon.com in late 1990s, when they were nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hyper-growth markets. The real trick is to find a small-cap "pure play" and then watch as it grows in EXPLOSIVE lockstep with its industry. Our expert team of equity analysts has identified 1 stock that's poised to produce rocket-ship returns with the next $14.4 TRILLION industry. Click here to get the full story in this eye-opening report for free.

Andrew Tonner has no position in any stocks mentioned. The Motley Fool recommends Twitter. It recommends and owns shares of Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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