Wed, 19 Nov 2014
Third Quarter Hiccup
Apple's record-making bond issuance was met with tremendous demand this week, but it's not our favorite large-cap tech bond idea today.
Companies that have solid intellectual property and very strong portfolios around software will continue to drive earnings growth and are good long-term holdings, says Morningstar's Grady Burkett.
Although companies such as IBM and Apple have been increasing return to shareholders, the long-term resilience of these businesses remains uncertain, says Morningstar's Josh Peters.
Although the tech sector hasn't had the best earnings season, Apple , Microsoft , and others still have solid long-term fundamentals and are trading at attractive discounts.
Cyclical and economic concerns have hampered the tech sector but are also creating potential buying opportunities in large- and mid-cap names, according to Morningstar's Grady Burkett.
Apple's gross margins likely will shrink over time, but the market is underestimating the long-term potential of the iPhone , says Morningstar's Brian Colello.
Buffett has the discipline to guide capital back into his firm rather than use it for dividend payouts, but most companies are better off distributing excess cash to shareholders, says Morningstar's Josh Peters.
The market pondered mixed earnings reports from Apple , Microsoft , IBM , and Amex this week, while GM had a better-than-expected quarter.
Greed trumps fear in several pockets of the tech sector, but buying opportunities can still be found.
Investors should remain selective amid a generally uninspiring marketplace, while keeping an eye on secular themes.
Investors could still benefit by taking a closer look at some firms with strong positions in mobile computing.
As valuations have run up in tech , we're staying focused on economic moats.
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