The tech sector rocketed on the S&P 500 in 2009. Can investors expect a similar trend in 2010? Ross MacMillan, analyst at Jefferies & Co., shared his stock picks for next year.
“The way that we’re looking at stocks is to see those that we think have the best legs for cyclicality,” MacMillan told CNBC.
“Those stocks that have seen their earnings decline the most through the trough of the cycle, and have the potential to rise the most as we see recovery,” he explained.
Autodesk —“Parts of the business—manufacturing, media and entertainment, and some areas of infrastructure—those parts of the business will recover first,” he said. He has a $30 price target on the stock.
Oracle —“Oracle will be a beneficiary of corporate IT spend recovery and we’ve seen very little of that so far, so we think that will be a bigger driver next year,” he said.
“We assume that the [Sun-Oracle deal] will close and that deal will likely add about 15 cents to their earnings in the first calendar year close. When we look at our numbers, the stock looks very attractive from a valuation perspective.”
“Buy” rating on Microsoft —“That company is enjoying a product cycle with Windows 7, but Windows 7 from a corporate spending perspective is ahead of us—very few large corporations have upgraded their operating systems,” he said.
“That’s going to happen in 2010 and even beyond, so that coupled with broad improvement in IT spending is going to be a play.”
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Jefferies makes a market in ADSK and ORCL.