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Technology stocks have been weak in recent weeks. Even the darling of the tech world, Apple, has fallen more than 20% from its September high. Is this a good time to buy and lock in tech stock profit?
Maybe. Technology stocks are notoriously volatile. One minute investors love them; the next minute they hate them. If you are interested in this space, we recommend avoiding the high-flyers. Rather, we suggest two more contrarian investing approaches.
Our preferred approach is to focus on well-established tech companies’ stocks that pay solid dividends. They may be less sexy than the latest darlings, but their stockholders get paid even if the sector remains in the doldrums for some time.
Yes, we know Apple pays a dividend. But we are not willing to recommend it around $600 a share because we think the stock will be in for a bumpy ride if the company can’t keep coming up with blockbuster products. (For the record, we did like it once. We recommended Apple stock in November 2002 at 7.80 per share, split adjusted. Of course we sold it too soon, but the purchase recommendation was still a good call.)
In the November issue we offer eight technology stock picks with solid market positions and stock yields of more than three percent.
While technology turnaround stocks that pay dividends may be safer than some other technology investments, they probably do not have as much juice in them as some of the former Internet high-flyers that have come rudely back to earth. If these companies can turn around either their results or investor perceptions--or better still, both--the stocks could move up dramatically.
The same investment newsletter names eight stock profit opportunities in fallen Internet companies—each of which have large markets and the potential to generate significant profits if they can figure out how to make money in those markets. Moreover, most of them have little or no debt, and so they are somewhat like long-term options.
Of course, anyone with a stock trading education will remind you: there is no such thing as an entirely safe investment. Like options, these fallen Internet stocks have significant upside, but some of them also have the potential to be worthless, or nearly so, if they can’t come up with a profitable business model before they run out of money.