Anyone who bought shares in Apple over the past 15 years and recently cashed them in is likely sitting on some pretty substantial profits.
However, had they sold them a year ago they would be in a better position or had they bought in the last 12 months they would be sitting on a loss.
Performance of stock since 2000
Source: Google
This is because the market has begun to worry that the cutting edge firm behind some of the most ubiquitous products in history has fallen from its perch.
In this article, we hear from four fund managers, about the technology stocks making them bullish for anyone who thinks Apple’s day is doomed.
ORACLE
Colin McQueen, manager of the Sanlam Four Stable Global Equity Fund, says this software and cloud-computing giant could be the next Microsoft.
“We continue to have high conviction in the prospects for Oracle as it manages the migration of customers from license-based revenue to higher margin ‘software as a service’ revenue. Oracle is a stable company with a wide economic moat and good management, with free cash flow growing earnings per share (EPS) at 15 per cent per annum.”
He says it is currently being priced for zero to low growth, making it look very attractive.
“Even if Oracle’s economic moat is slowly being eroded, the stock is too cheap,” he said.
“The market is underestimating stickiness of the customer base and the extent to which Oracle has expanded its product portfolio to encompass new technologies, new platforms, and the way it is managing its transition to the Cloud.”
“While in an earlier stage of its transition, we believe Oracle can repeat the same success as Microsoft.”
TESLA
Is it a car company, battery manufacturer or a galactic exploration firm?
Its founder Elon Musk, who first made his billions with PayPal, thinks in the next 15 years all cars with be both electric and automated and plans to cash in on this mega trend. He also famously hopes to die on Mars, “but not on impact”.
Josh Spencer, manager of the T. Rowe Price Global Technology Equity fund, thinks Musk’s vision – of electronic automated cars – stands a good chance of delivering strong returns regardless of what is happening in the broader economic environment.
“The macroeconomic landscape is challenging at the moment, which is clearly creating headwinds for companies to grow. This does put the impetus on trying to identify companies able to generate their own growth,” he said.
“We see a number of companies with competitive advantages exploiting some of the mega trends in tech – such as cloud computing and other disruptive technologies. Tesla is one such name we are bullish on over the long term.”
“We believe [Tesla] is a revolutionary company, which is addressing an enormous market with differentiated technology.”
The stock has rocket up in recent years, although orders for its latest more humbly priced Model 3 are low in comparison to the car giants of today, and many have argued it is expensive despite having fallen from a high a year ago.
Performance of share price over 5yrs
Source: Google
Spencer said: “The consumer response to the recently-unveiled Model 3 has been fantastic, and we do not see any reason why Tesla cannot scale up production to meet the demand for its product and grow substantially in the coming years.”
WIRECARD
Next, Nicolas Walewski, manager of the Alken European Opportunities and Absolute Return Europe funds says Wirecard is “one of the most attractive investment opportunities in Europe”.
“It has underperformed the broader market recently, which we believe is largely attributable to an extremely dubious report from an anonymous source,” he said.
“Wirecard has had three extensive reviews from the German financial regulator BaFin in recent years and there has never been any cause for concern. It has a strong relationship with MasterCard and Visa, managing hundreds of billions of dollars in transactions, also without any problems. It is opening businesses in the US and Singapore, again without complications.”
“The company has been growing at about 25% per annum over the last decade and there is no reason to expect this growth will slow over the coming few years. At a 16x forward P/E, the stock is very attractively valued.”
BLUE PRISM
Last up, Philip Harris, manager of the EdenTree UK Equity Growth fund says he sees a gripping opportunity in “software robots and robotic process automation” and area many are expecting a generational structural shift.
“[It is] highlighted by one study showing 47 per cent of US jobs could be automated within the next 10 years. The market leader is Blue Prism. The investment case is that any repetitive task can be automated by rule-based processes,” he said.
“This presents huge cost and productivity savings. This recurring revenue stream licence fee model is the equivalent ‘wage’ of the software robot.”
Robotics and automation have seen a flurry of interest from investors and the media recently. Although Blue Prism has only just listed on the London market – two months ago – it is already off to a strong start.
Performance of stock since March 2016
Source: Google
“While there is limited patent protection in respect of Blue Prism’s technology, IBM’s position as key partner underlines that the technology is not easily replicable. The US key market business remains pivotal and the company continues to grow its channel pipelines to drive sales.”
“The company maintains high gross margins. However, it is highly operationally geared with new customers and may be lossmaking while it grows rapidly. Earnings forecasts remain conservative.”
