The S&P 500 has more than tripled in value since 2009, leading many to declare that U.S. stocks are fully valued. However, opportunity may still exist in at least one sector – technology. While global growth worries threaten to end the bull market cycle, tech stocks, particularly those of mature tech companies, may offer upside potential in the near-term for the following reasons:
With the U.S. economy continuing to show signs of improvement, the Fed is expected to raise rates in the near-term.
Source: Bloomberg, as of 11/16/15.
Thanks to their enviable financial health, certain tech companies may likely deliver shareholder returns over the coming year through share repurchases, dividend increases and M&A activity.
Tech stock valuations look reasonable compared to other U.S. sectors and there may be additional room to run.
|1.||Factset, Haver, and Goldman Sachs Global Investment Research.|
|2.||Forbes, as of 5/8/15.|
|3.||Goldman Sachs Global Investment Research, as of 9/30/15.|
|4.||Bloomberg, as of 10/16/15. Compilation of sell-side earnings estimates.|
|5.||Bloomberg, as of 11/16/15.|