AAPL AVGO CYBR Games Joe Albano NVDA QQQ SPY SWKS

My Tech Wreck Picks | Seeking Alpha

Joe Albano

Your complete market has been decimated during the last three months as S&P 500 (SPY) sectors starting from power and oil to blue-chip industrials to know-how have discovered themselves deep within the claws of a bear.

(Supply: constancy.com)

Since my focus and experience is in know-how, I’ll check out what names have one of the best potential for a rebound as soon as the market begins climbing in addition to what names have weathered the storm one of the best. This listing ought to will let you add names to a “shopping list” which can be utilized to build up shares when the time is true (which could possibly be quickly).

Broadcom

Ever since Broadcom’s (AVGO) earnings report on December sixth, I have been extra involved in getting the inventory into my portfolio. At a time when tech has been hurting, and there have solely been pockets of power in software program and cybersecurity, it was a pleasing shock to see such bullishness from a hardware firm’s administration.

Broadcom does not match into the tech wreck narrative because it has maintained a flat response within the face of a NASDAQ (QQQ) bear market. Nevertheless, for this reason I’m interested in it – it is a standout.

ChartAVGO knowledge by YCharts

With expectations for about 17% income progress to $24.5B and free money move of $10B in 2019, the corporate is plowing a refund to shareholders within the type of buybacks, (potential) acquisitions, and dividends. Based on CFO Tom Krause:

…on the dividend based mostly on roughly $eight.2 billion of free money circulate that we generated in fiscal 2018, we’re growing our goal quarterly money dividends beginning this quarter to $2.65. This constitutes a rise of 51%…we’re additionally budgeting to return a further $eight billion to stockholders by means of inventory buybacks in fiscal 2019. Coupled with the dividend, this implies we’re planning to return roughly $12 billion to stockholders in fiscal 2019, which constitutes all of our projected free money stream, plus the surplus money that we now have on our stability sheet right now.

This isn’t administration pulling again the reigns as they head into an in any other case tech tepid 2019. I like the arrogance and the anticipated progress – it bodes nicely for me and my portfolio.

Now, the query is when do I enter? Contemplating the inventory has closed the gaps it created following earnings, there’s not rather more I am ready for. The one expectation I’ve is for the inventory to check the 50 and 200-day shifting averages that are compressed at this level. A bounce off of this degree would make me a purchaser. A break beneath it will make me maintain off a bit longer for a greater entry. I do, nevertheless, just like the bounce off the 50-week shifting common and that bodes nicely for an expectation of a check and bounce off the 50/200-day shifting common.

Each side of the evaluation make me a purchaser of shares – pending the shifting common check – within the low $230s.

CyberArk

CyberArk (CYBR) is one other robust candidate in as we speak’s surroundings because it has weathered the 2018 fall/winter storm very similar to Broadcom.

ChartAVGO knowledge by YCharts

I up to date my thesis on CyberArk in mid-November in a public article, and nothing has modified a month and a half later. We’ll know extra basically when the corporate stories in February – however the local weather has remained robust.

As for when to enter the inventory, there was alternative lately on some weak spot, however I nonetheless see a chance looming given some softness within the general market persevering with. I am particularly speaking a few hole the inventory hasn’t completed filling.

I am not satisfied it’s going to fill it; there is no rule which says it has to, however it’s a level to remember. The issue now’s it should deal with the 200DMA if it needs to shut the hole, which may be achieved after which shut over the 200DMA with no points. Nevertheless, an in depth under the 200 would sign warning.

With it crossing over the 50DMA late Thursday, it might be headed for some larger strikes within the coming weeks. Nevertheless, the chart does not persuade me of that both, essentially. All that stated, I might be a purchaser on weak spot into the mid-$60s whereas watching rigorously.

Apple

Now, I begin to get into the names which aren’t doing so scorching on this surroundings however have the most important alternative for rebound given a greater market local weather together with enhancing company-specific points.

Apple (AAPL) is the primary in my listing on this class. Apple has moved down additional than I’ve seen it transfer in a number of years; rivaled solely by when it fell 31% shifting into 2016.

As you’ll be able to see, the decline was rather more unfold out, lasting virtually precisely a yr.

ChartAAPL knowledge by YCharts

Apple went from outperforming the NASDAQ to massively underperforming it because it headed deeper into November. Loads of this downward transfer began at earnings when the corporate introduced it will not breakout unit gross sales of iPhones, amongst different merchandise. On prime of that, slowing progress from suppliers like Qorvo (QRVO), Lumentum (LITE), and Cirrus Logic (CRUS), amongst others, has brought on the market to freak out and convey expectations down for iPhone gross sales as the corporate heads out of the vacation season.

The corporate has extra than simply iPhones to lean on for its enterprise akin to Providers, which is rising at a mid-20s progress price. So long as iPhones do not see the underside drop out within the subsequent couple of quarters, the corporate has the maneuverability to develop income in different areas with out seeing general progress disappear.

Taking a look at Apple’s near-term chart brings us to the scarier aspect of tech inventory charts.

I needed to go all the best way again to August of final yr to seek out some resistance-turned-support to determine the place Apple’s inventory might discover a spot to land. The issue now’s despite the fact that it has discovered help the shifting averages made a dying cross (circled in pink). Moreover, the MACD is the bottom it has been within the final 5 years – so there is a bit of injury executed to the chart technicals.

Having stated that, I nonetheless like Apple down within the $150s as valuation is popping to fairly undervalued.

I like to interrupt out F.A.S.T. Graphs for occasions like this the place a persistently performing firm and a persistently performing inventory might be proven a strong truthful worth degree. At present, the truthful worth in accordance with F.A.S.T. Graphs is $178-$179 on the regular P/E in comparison with the mid $140s the place it was buying and selling just some days in the past. I am trying to begin accumulating shares right here.

Skyworks

Talking of Apple suppliers, Skyworks (SWKS) has been sinking on somewhat minimal information within the earnings division. Administration expects to see progress proceed into 2019, however the information for Q1 was apparently too huge to deal with – $60M draw back on a $1.01B information.

Skyworks is what I might classify as a thrown out with the bathwater sort of state of affairs. As the corporate has labored its method away from being Apple buyer dominated, it has allowed itself to be much less reliant on the ebbs and flows of Apple information. Wait, it hasn’t? That seems like a chance to me, and with the corporate anticipating a rising 2019, why is the inventory getting punished prefer it expects progress to show damaging?

I requested F.A.S.T. Graphs the identical query, and it informed me, “Looks to be pretty cheap here.” Truthful worth is taken into account to be $98 versus a present inventory worth round $67.

So far as the inventory chart and figuring out if this can be a falling knife, I am leaning in the direction of no. What I discover instantly is a continued decrease lows inventory worth however a diverging MACD, the place the MACD is making greater lows within the face of the inventory worth motion – this can be a bullish signal. Moreover, I additionally see a small channel which is on the verge of a breakout because of the final two days’ value of positive aspects.

In the intervening time, I personal a wholesome quantity of Skyworks so I am not wanting so as to add personally, however I might contemplate this can be a nice entry level for somebody trying to provoke or fill out a place.

Nvidia

This can be a inventory I’ve been making an attempt to suppress my pleasure on as a result of I by no means thought I might see it this low once more. Nvidia (NVDA) has had a tough go during the last a number of months, particularly earlier than after which after earnings the place the slide which preceded solely accelerated.

ChartNVDA knowledge by YCharts

The rationale for the drop is because of the anticipated unfavourable prime and backside line progress coming in 2019. Nevertheless, the inventory market would have you ever assume that is the brand new regular. Let’s not overlook the corporate’s RTX playing cards usually are not a dud. The rationale for this income hiccup is because of stock mismanagement. This isn’t a elementary flaw within the firm’s know-how however quite a retail-sided velocity bump. As soon as this stock problem clears, a lot of the place Nvidia was heading can be acknowledged within the financials. Serving to this would be the help within the GPU driver and gaming software program aspect for RTX which can proceed to mature all through this stock concern.

As for the chart, it appears the scariest of all with no help discovered but and a big hole a lot additional down with a $104 backside to it.

A part of me needs to start choosing up shares right here, which is probably not a nasty alternative, and if the inventory manages to go right down to the low 100s, I can proceed to greenback value common my place. I might be OK with a mean within the 100 teenagers. For now, I proceed to carry off however not with no finger near the set off. I might choose to attend for bottoming motion as Nvidia nonetheless seems to be a falling knife.

Tech Wreck Persevering with?

Proper now, the market continues to be falling. Nevertheless, as my first two shares on this article present, wholesome shares are ready to be picked up. The remainder of the record has a various diploma of falling knife syndrome. Accumulation in smaller elements is the perfect strategy as we do not know the place the underside will really be – it might have occurred, or it might be two months away. Greenback value averaging is one thing I’ll aspect with whereas the market decides when that backside is.

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Disclosure: I’m/we’re lengthy SWKS. I wrote this text myself, and it expresses my very own opinions. I’m not receiving compensation for it (aside from from Seeking Alpha). I’ve no enterprise relationship with any firm whose inventory is talked about on this article.

Further disclosure: I’ll provoke a Lengthy place in AAPL, NVDA, CYBR and/or AVGO over the subsequent 72 hours.

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