These Tech Stocks Will Make Me Rich

Welcome to week 37 of my stock-picking throwdown with Mr. Market. Let's get right to the numbers:

Company

Starting Price*

Recent Price

Total Return

Akamai

$22.23

$19.58

(11.90%)

Harris & Harris

$6.22

$4.71

(24.30%)

IBM

$127.64**

$101.42

(20.50%)

Oracle (Nasdaq: ORCL  )

$22.69**

$19.68

(13.30%)

Taiwan Semiconductor

$10.34

$9.17

(11.30%)

AVERAGE RETURN

--

--

(16.26%)

S&P 500 SPDR

$124.37**

$85.37

(31.36%)

DIFFERENCE

--

--

15.10

Source: Yahoo! Finance.
*Tracking began on Aug. 7, 2008.
**Adjusted for dividends and other returns of capital.

Talk about a turbulent week. A smattering of stronger-than-expected earnings reports and a surge of investor enthusiasm clashed with news of a potential conspiracy at Bank of America (NYSE: BAC  ) . Mr. Market can't decide which way to go.

Yet his mood may prove moot. There's mounting evidence that March's big rally, which extended into early April, will soon end. Global deleveraging -- as much as $4 trillion in credit-fueled economic damage, according to the International Monetary Fund -- could stunt economic growth, and thereby stock prices, for years to come.

Caterpillar (NYSE: CAT  ) , meanwhile, said Wednesday that revenue declined 22% last quarter. Profits plunged, too, as the heavy-equipment maker suffered huge charges for laying off some 25,000 workers.

Caterpillar, you're no butterfly.

The week in tech
Nor are many of the tech titans that reported earnings this week. Microsoft (Nasdaq: MSFT  ) copped to the first year-over-year profit decline in company history last night. Data-storage supplier EMC (NYSE: EMC  ) chief executive Joe Tucci called a tech market bottom, even as his company reported a 9% drop in sales.

Motley Fool Rule Breakers recommendation VMware (NYSE: VMW  ) , whose virtualization technology is key to greener data centers, was one of the few tech businesses delivering positive growth. Revenue improved 7% year over year, while per-share profit jumped 64%. But even here, skeptics had reason to grouse; VMware also suffered the first sequential revenue decline in its history as a public company.

Of all the techies checking in with investors this week, Apple (Nasdaq: AAPL  ) performed best. A slight dip in Mac sales notwithstanding, the iEmpire crushed the Street's expectations, as iPhone revenue quadrupled from last year's fiscal second quarter. Talk about impressive.

But Apple is the rare winner in tech right now. Investors are therefore best served by exercising prudence in picking stocks -- stick to the very best -- and patience in waiting for gains. That's how David Gardner produced a decade of 20% returns in the real-money Rule Breaker portfolio. Tom Gardner's "simpleton portfolio" was also a 10-year winner. With these five tech stocks, I believe I'll achieve similar success.

Checkup time!
Let's move on to the rest of today's update:

  • Investors and IT managers alike have expressed mixed feelings over Oracle's planned $7.4 billion buyout of Sun Microsystems. To assuage fears, Ken Jacobs, who leads product strategy for Oracle's server technologies, spoke at this week's annual MySQL user conference. MySQL is an open-source database that's proven popular for Web software, and which has been described as a threat to Oracle's core franchise. Jacobs used his time on stage to speak of a history of collaboration between Oracle and MySQL and promised more, The Register's Gavin Clarke reported. 

There's your checkup. See you back here next week for more tech stock talk.

Get your clicks with more techie Foolishness:

Akamai, Harris & Harris, and VMware are Motley Fool Rule Breakers recommendations. Microsoft is a Motley Fool Inside Value pick. Apple is a Motley Fool Stock Advisor selection. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers had stock and options positions in Apple and stock positions in Akamai, Harris & Harris, IBM, Oracle, and Taiwan Semiconductor at the time of publication. Check out his portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool.

The Motley Fool owns is also on Twitter as @TheMotleyFool. Its disclosure policy is tech-tastic.


Read/Post Comments (2) | Recommend This Article (23)

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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 April 24, 2009, at 4:04 PM, zemz wrote:

    caterpillar has a huge moat and will reap the benefits of the china stimulus initiatives. cat is holding at 70% off its 52 week high and its lucrative dividend will give an investor huge profits as the economy recovers

  • Report this Comment On April 25, 2009, at 1:49 PM, TMFMileHigh wrote:

    So I probably shouldn't even respond to this but, given the risk that someone but might bite at the line that this is somehow linked to Google in China and will be a massive multibagger, please see:

    http://www.sec.gov/Archives/edgar/data/1139570/0001144204090...

    That's the 10-Q report for this company. Notice the huge and increasing accounts receivable that are heavily concentrated in a handful of customers.

    There's also this, from page 14:

    NOTE 4 - PREPAID SALES INCENTIVES

    On October 1, 2008, the Company offered the members of www.subaye.com a sales promotion whereby each member would receive 1,600 Digital Video Discs ("DVDs") from the Company if the member agreed to commit to the Company's current membership terms for being a member of www.subaye.com for the twelve month period ending September 30, 2009. The DVDs included a promotional advertisement for each member's business in the introduction section of the DVDs. The remaining programming on the DVDs consisted of the Big Movie: Subaye motion picture, which the Company's subsidiary 3G Dynasty holds the copyright to. The members of Subaye are expected to use the DVDs for their own promotional and marketing purposes. Additionally, if a current member does decide to cancel their membership with www.subaye.com, they have agreed to reimburse the Company for approximately two and a half times the cost of the DVDs, which is approximately $1,152 per member. A total of 16,000 members of www.subaye.com accepted the sales promotion and therefore have agreed to remain members of www.subaye.com for the twelve month period ending September 30, 2009. In December 2008 and January 2009, a total of 25,600,000 DVDs were delivered to the members of www.subaye.com. The Company is amortizing the total cost of the sales promotion, which was approximately $6.7 million, evenly over the twelve month period ending September 30, 2009, in accordance with Emerging Issues Task Force ("EITF") Issue No. 01-9. The unamortized portion of the sales incentive, approximately $5.1 million, is classified as prepaid sales incentives in the Company's balance sheets.

    Hoo-boy. Buying customers and then locking them in with the threat of a massive penalty. How again does this relate to cloud computing? Not at all is my guess.

    Also: no mention of Google in the 10-Q.

    FWIW and Foolish best,

    Tim (TMFMileHigh and @milehighfool on Twitter)

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