It's been a pretty good year for tech stocks--but even a good 2006 doesn't hide the fact that the sector has underperformed the market for the last three years. So--there should be plenty of growth ahead in 2007, right? Scott Kessler is the S&P's Senior Director of Technology Sector Equity Research. Peter Misek is Senior Tech Analyst at Canaccord Adams. On "Morning Call" the pair give their sector outlook and stock "picks."
Kessler says he believes investors should have a healthy percentage of tech stock exposure and that exposure should not be limited to large caps. He says pay attention to the stock--not the particular size of the company. Here are his favorites:
IBM --Kessler says the stock has been strong lately.
Texas Instruments --a well run company according to Kessler.
SRA International --it's outsourcing services to the U.S. Department of Defense.
He also likes Arris and Citrix Systems . Kessler says Citrix should benefit from more worker mobility--which requires remote connectivity from home and mobile devices.
Misek has a different take--saying he prefers large caps. His favorites include:
Microsoft --Misek says he expects around 5-7% PC unit growth and with the new OS Vista--it should reach 7-9%. He also says Microsoft might see some profit on its home entertainment division sooner than later.
Research In Motion --This is a top pick for Misek and not just because of the BlackBerry. The new 8800 full keyboard version of the Pearl will launch soon and that should have appeal in Europe.
Misek's advice: select big caps--otherwise look for some very niche type small caps. FYI: Misek has a hold on IBM. He doesn't have any sell ratings--he says he prefers not to give traditional sell ratings.