Statistics released on Friday indicate that corporate spending is up, a promising economic indicator that has boosted profit forecasts for computer and software markers.
In fact, profit forecasts are holding up better than any industry in the world, according to Bloomberg. It's "a sign of confidence that corporate spending will keep the American economy expanding next year" despite Europe's spreading debt crisis and China's slow growth.
According to 2,900 analyst projections compiled by Bloomberg, net income at companies from Apple
According to the Commerce Department, investment in equipment and software climbed at a 15.6% annual pace in the third quarter, its highest since 2008. Technology expenditures may climb 3.9% to $2.7 trillion in 2012, according to the research firm Gartner (via Bloomberg).
Projections for technology companies have fallen less than any other group in the MSCI World this year: Consider that the profit estimate for tech is down 2.3% while utility forecasts were cut the most at 29%.
Technology stocks on the MSCI have a PEG ratio of 0.87 (the closer the ratio is to 0, the cheaper the company). The valuations are comparatively cheap when you consider that the household product-makers trade at 1.49, and health care is at 1.11.
Technology stocks have long been considered "undervalued." Could an increasing number of studies highlighting technology as the savior of the U.S. economy jump-start its valuations?
Are you interested in getting involved with the technology sector? If so, you may find it worthwhile to explore the sentiment of company insiders.
Insider buying (when its insiders like upper management and board executives personally buy company stock) is a bullish indicator for a company. Companies seeing this strong vote of confidence could outperform just like their employees predict.
When insiders buy their company's stock, it not only indicates that they have an optimistic outlook for the company, it may also indicate that they believe the stock is attractively priced.
Tech company insiders are buying up these names -- do you agree with their optimism? (Click here to access free, interactive tools to analyze these ideas.)
1. Motorola Solutions
5. Merge Healthcare
6. Take-Two Interactive Software
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Rebecca Lipman owns shares of Dell. Insider data sourced from Yahoo! Finance.
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