Monday, April 15th, 2013
By Mitchell Clark, B.Comm. for Profit Confidential
The most important news to come will be in two technology stocks: Intel Corporation (NASDAQ/INTC) and Microsoft Corporation (NASDAQ/MSFT). What these two companies report in their earnings results will be very telling when it comes to the health of the personal computer (PC) market.
Both Intel and Microsoft are not expensively priced on the stock market at all. Intel, in particular, has a very fair valuation, and its dividend yield is well over four percent.
Of course, the key issue for both of these companies is growth. With the prevalence of tablets and all kinds of PC-derivative products, it is tough to imagine both these companies reporting strong growth in earnings.
Consensus earnings estimates for Microsoft are quite a bit stronger than they are for Intel.
With the stock market at its highs, all kinds of new initial public offerings (IPOs) have hit the market, and some are very interesting companies.
One small, but growing technology company out of Irwin, PA is The ExOne Company (NASDAQ/XONE), which is in the business of manufacturing three-dimensional (3D) printing machines. These machines help designers and engineers to produce industrial prototypes and production parts. The company sells to the aerospace, automotive, and heavy equipment markets.
ExOne is a company that?s still in its early stages. In its latest earnings report, 2012 fourth-quarter revenues grew to $12.7 million, up a substantial $10.0 million over the fourth quarter of 2011.
The company turned profitable in the latest quarter, with earnings of $0.9 million, up from a net loss of $2.8 million in the comparable quarter.
For 2012, total revenues were $28.7 million, representing growth of 88% over 2011. The company incurred a net loss of $10.2 million in 2012, compared to a net loss of $8.0 million in 2011.
The timing on the stock market could not have been more perfect for all the new IPOs. There have been several new listings by small technology companies, and some new restaurant chains are really doing well. (See ?The Stocks Making a Comeback in the Last Two Earnings Seasons.?)
Stock market strength is likely to be very kind to Wall Street in the first quarter. There is a slew of earnings reports from Wall Street this week.
The stock market has so much potential this year. Even if earnings results in the first quarter are only mediocre, any further economic recovery will immediately translate right to the bottom line.
Still, it?s tough to be a buyer in a stock market at its all-time record high. I continue to favor blue chips, but last week?s trading action saw a real resurgence in the NASDAQ Composite index. This was a very positive development and a necessary one if the stock market is going to continue its rally.
There is pent-up demand in a number of industries. And there is more pent-up demand from institutional investors to be buyers in the stock market. This market can still tick higher, even if it?s through disappointing earnings results.
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