These Tech Stocks Will Make Me Rich

Welcome to week 116 of my stock-picking throwdown with Mr. Market. Let's get right to the numbers:

Company

Starting Price*

Recent Price

Total Return

Akamai (Nasdaq: AKAM  ) $22.23 $49.77 123.9%
Harris & Harris $6.22 $4.40 (29.3%)
IBM $123.46** $143.74 16.4%
Oracle $22.40** $28.32 26.4%
Taiwan Semiconductor $9.35** $11.05 18.2%
AVERAGE RETURN -- -- 31.20%
S&P 500 SPDR $121.20** $120.20 (0.83%)
DIFFERENCE -- -- 32.03

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

Mr. Market wins this round, but it was a turbulent week for all. Investors appear discombobulated in the face of the world's reaction to Fed Chairman Ben Bernanke ordering $600 billion in fresh greenbacks for new stimulus spending. I can't blame them. You know it's getting weird when Fidel Castro sounds like the reasonable one.

"Apparently the U.S. government, with its traditional anti-crisis measures, resorted to another desperate decision," the former Cuban leader wrote in an op-ed shortly after Bernanke ordered the printing presses on.

He has a point. A weaker dollar lends further credence to inflation fears even as it boosts the attractiveness of U.S. exports. It's also a startlingly hypocritical move in the face of the administration's criticism of China over purported currency manipulation.

Expect the administration to brush aside blowback from Castro, the G20, and Congressional conservatives. Global suppliers such as Intel (Nasdaq: INTC  ) and Deere & Co. (NYSE: DE  ) will sell more goods as a result of the weaker dollar.

And it's not the like the president doesn't have bigger problems. Last week, his bipartisan commission on deficit reduction introduced 50 proposals for cutting close to $4 trillion in federal debt. A cursory review of the week's editorials suggests liberals and conservatives were virtually united in their opposition to the plan.

Color me unsurprised. The nature of the fix we're in economically -- lagging growth, low corporate investment, in danger of needing permanent stimulus -- requires tough medicine for all. Whether Washington will give it to us is an open question, and one that continues to weigh on investors.

The week in tech
Those betting on a more digital future have less reason to worry. Demand for high-performance microprocessors and cloud-computing services continue to rise at a blistering pace.

Last Monday, Rackspace Hosting (NYSE: RAX  ) reported a 23% revenue increase and a 50% per-share earnings improvement. The company also continues to produce prodigious levels of free cash flow -- more than $100 million over the past year despite a high rate of capital investment. Returns on those investments are also rising. Rackspace earned 12.5% on its deployed capital in the 12 months ended in September, up from 10.9% in the year ended in June. We'll be talking more about this on Friday, when we host a live chat with Rackspace CEO Lanham Napier here at Fool.com.

In the meantime, Advanced Micro Devices (NYSE: AMD  ) executives said last week they're aiming to deliver between 44% and 48% gross margins in 2011. Though that's still well below where Intel rates, AMD has shown improvements in its ability to deliver chips profitably.

It's a feel-good stock story and a reminder that it's the upstarts and disruptors such as AMD that have the best odds of becoming millionaire-maker stocks.

Look at David Gardner. He produced a decade of 20% returns in the real-money Rule Breaker portfolio by betting on a collection of innovators, and then holding them for the long term. Tom Gardner's "simpleton portfolio" was also a 10-year winner. I believe that, with my tech portfolio, I will achieve similar success.

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

  • Shares of Akamai are down more than 10% over the past week on concerns that negotiations with Netflix (Nasdaq: NFLX  ) will result in lost revenue and depressed margins. But the concerns are overblown. While competitor Level 3 (Nasdaq: LVLT  ) will now be taking on duties once thought to be Akamai's, Netflix's streaming business is growing so fast Akamai may earn more revenue now with a smaller slice of the pie than it was before Level 3 entered the picture.

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

Get your clicks with more techie Foolishness:

Did you know the Fool changed its disclosure policy? Read all about it here.

Netflix is a Motley Fool Stock Advisor selection. Akamai and Rackspace Hosting are Motley Fool Rule Breakers recommendations. Intel is a Motley Fool Inside Value pick. Motley Fool Options has recommended subscribers purchase Intel calls. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the market-beating Rule Breakers stock picking team. He owned shares of 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. You can also get his insights delivered directly to your RSS reader. 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 owns Intel calls and shares of IBM, Intel, and Oracle. The Fool is also on Twitter as @TheMotleyFool. Its disclosure policy is tech-tastic.


Read/Post Comments (1) | Recommend This Article (10)

Comments from our Foolish Readers

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 November 15, 2010, at 3:52 PM, rav55 wrote:

    AMD is gaining market share on Intel. Small but it is a gain.

    Zacate is a game changer. New technology playing into AMD wheelhouse; Graphics!

    Computer performance is not about what benchmark software can tell you but rather what you as the user can actually SEE for yourself. Seeing means graphics.

    Sandy Bridge is a reaction to AMD and a poor one. We all know that Intel can not design a GPU to save their soul but any GPU on die is certainly better than a discrete GPU BUT AMD has a library of high performance GPU design to draw from as well as a team inplay to create the next generation APU.

    An investment in AMD is not about numbers but rather about understanding the product.

    AMD Fusion is the next generation and Intel has again been caught napping.

    AMD has lead every CPU advance since they lauched the first 1 ghz cpu, they lauched the first multicore cpu and now they have launched the first GPU/CPU or APU.

    Intel has a great record of reacting until now. Because Intel has NO gpu design team, Inbtel has NO design portfolio Intel will loose market share.

    Intel will buy Nvidia because they have no choice. But they will not be able to execute that GPU design portfolio for at least a year or more.

    Again AMD is not a numbers play but a technology play. They have the product and they are delivering.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1369684, ~/Articles/ArticleHandler.aspx, 11/29/2014 5:16:14 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement