Tech companies are the wave of the global economic future. They will never totally replace the “traditional” sectors of the economy like manufacturing, energy, and agriculture, but there certainly seems to be increased integration between tech and old-line industries.
So, if you’re an investor looking to cash in on the latest trends driving the tech market, where should you put your money? The explosion of IPOs from various tech giants — Facebook, Pandora, Twitter, etc. — makes this a pretty efficient market by today’s standards. Thus, it’s difficult to determine where astronomical future growth hasn’t already been priced-in to a particular equity.
The following is a brief examination of current tech winners that may be flying a bit under investor’s radar.
The recent international uproar over NSA data gathering has proven one thing: there is a ton of digital data floating around in the world. Companies that can provide comprehensive solutions for big data will be very relevant for many years to come. One such company, Cognizant Technology Solutions (CTSH), provides IT solutions, consulting, and outsourcing. Since the great recession, companies have consistently cut expenses; CTSH can replace an in-house IT staff and provide cost-saving technology solutions.
On the hardware side, there are three companies poised for massive future growth: RiverBed Technology (RVBD), Aruba Networks (ARUN), and Equinix (EQIX). RVBD makes top-of-the-line networking equipment, which allows for easy and fast transmission of company data over wide area networks. ARUN is attempting to cash in on two trends: the first is the increasing popularity of wireless cloud computing, the second is the growth in telecommuting. ARUN allows secure access to company data and applications regardless of the user’s network or device. EQIX provides data centers for thousands of clients across the globe, allowing growth and protecting digital assets.
The population in the United States is growing old, and the following companies are attempting to combine health and technology to care for our aging population. Athenahealth (ATHN) provides cloud computing for medical practices. It can securely maintain patient health records and payer information with integration between front line providers and back office bill collectors.
DNA decoding has quietly become a “$4 billion” market. People want an accurate predictor of future health, something DNA decoding can offer. Illumina (ILMN) and Life Technologies (LIFE) are two companies that currently make the technology for DNA sequencing. A word of caution: both companies have relatively high P/E ratios and are in their infancy.
The Online Persona
Shutterfly (SFLY) and LinkedIn (LNKD) are two of the best, under the radar sites you can invest in. SFLY is an online site that allows customers to store, share, and print their photos. It also allows custom photo creations like greeting cards and calendars. LNKD is an online professional networking site that functions as a digital resume. You can build your professional network, look for a new job, and generally enhance your credibility within your field.
I know it’s hard to say Apple (AAPL) is “flying under the radar” but this is included as a feast or famine kind of investment. If they continue their tradition of introducing groundbreaking new technology, this stock will be a winner for years to come. The big unknowns are increased saturation in the mobile phone and tablet market from established competition, and whether CEO Tim Cook can fill the abnormally large shoes of his predecessor.
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Myron McDaniel writes on the tech industry, computer software, gadgets, mobile phones, new tablets such as the kensington ipad air from kensington.com, social media and other important tech areas.
Image courtesy of Twobee / FreeDigitalPhotos.net