19 Opportunities In Electronic Technology, The Future Of Everything

I feel compelled to reiterate the purpose of this series of articles. Although I am attempting to identify attractively valued stocks in each sector presented by FactSet Research Systems Inc., I am not simultaneously recommending them as attractive or proper investment choices. Therefore, just because I am featuring them in the article, it doesn’t necessarily follow that I think they are good choices. Instead, I leave it up to the reader to evaluate each selection and then decide if these research candidates are worthy of their further scrutiny or not. Moreover, my primary objective is to illustrate how different individual companies are from each other, and even how different companies operating in the same sector can be. It is a market of stocks, not a stock market.

Although some may feel that this is a superfluous undertaking, I must respectfully disagree. I am only a couple years short of 5 decades in this industry, and one of my biggest frustrations is constantly seeing how people tend to overgeneralize about the stock market. To put this into context, one of the most common questions I am frequently asked is “what do you think the stock market’s going to do?”This question frustrates me because it’s not something that matters to me. Instead, what matters to me is what I believe the businesses I am invested in can generate on an operating basis, and whether the market is valuing those fundamentals correctly or not. As I once stated in the article, “I believe in minding my own businesses.”

With that said, the Electronic Technology Sector presented by FactSet Research Systems Inc. is comprised of some of the most interesting companies in the US and Canadian stock research universe. Furthermore, as I will be elaborating on later, it is also a sector comprised of very interesting and diverse subsectors. From Broadcom (semiconductors) to Apple Inc. (smartphones) to General Dynamics (aerospace and defense), some of the most interesting and prominent names in technology are found in this sector.

Furthermore, the Electronic Technology Sector also contains constituents that would be considered pure growth as well as many intriguing dividend growth stocks. Additionally, you will find growth stocks that are now morphing into dividend growth stocks.  Furthermore, this particular sector and its subsectors offer many important and vivid examples of the importance of valuation, a subject near and dear to my heart.

A Sector By Sector Review

This is part 7 of a series where I have conducted a simple screening looking for value over the overall market based on industry classifications and subindustry classifications reported by FactSet Research Systems, Inc. In part 1 found here, I covered the Consumer Services Sector. In part 2 found here, I covered the Communication Sector. In part 3 found hereI covered the Consumer Durables Sector and its many diverse subsectors. In part 4 found here, I covered Consumer Nondurables. In part 5 found here, I covered companies in the Consumer Services Sector. In part 6 found here, I covered the Distribution Services Sector.

In each article in this series, I will be providing a listing of screened research candidates from each of the following industry sectors, the sector I’m covering in this article is marked in green:

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A Simple Valuation and Quality Screening Process

With this series of articles, I will be presenting a screening of companies that have become attractively valued primarily as a result of the bearish market activities experienced in 2018 from each of the above sectors. I will be applying a rather simple valuation and quality-oriented screen across each of the sectors. First, I have screened for investment-grade S&P credit ratings of BBB- or above. Next, I have screened for low valuations based on P/E ratios between 2 and 17. Finally, I have screened for long-term debt to capital no greater than 70%.

By keeping my screen simple, and at the same time rather broad, I will be able to identify attractively valued research candidates that I might have overlooked through a more rigorous screening process. In other words, I’m looking for fresh ideas that I might have previously been overlooking. Furthermore, I want to be clear that I do not consider every candidate that I have discovered as suitable for every investor. However, I do consider them all to be attractively valued. Additionally, I also believe that every investor will be able to find companies to research that meet their own goals, objectives and risk tolerances as this series unfolds.

Sector 7:Electronic Technology


Electronic Components

Electronic Equipment/Instruments

Telecommunications Equipment

Aerospace & Defense

Computer Processing Hardware

Computer Peripherals

Computer Communications

Electronic Production Equipment

Portfolio Review: Electronic Technology Sector: 19 Research Candidates

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FAST Graphs Screenshots of the 19 Research Candidates

The following screenshots provide a quick look at each of the 19 candidates screened out of over 19,000 possibilities. However, there are only 668 companies categorized as Electronic Technology, and these 19 were the only ones I was comfortable presenting in this article. The company descriptions are provided courtesy of the Wall Street Journal. In the FAST Graphs analyze out loud video that follows the screenshots, I will provide additional details and thoughts on the possible attractiveness as well as the potential negatives of my 10 favorite research candidates in this sector.

Apple Inc (AAPL)

Apple, Inc. engages in the design, manufacture, and marketing of mobile communication, media devices, personal computers, and portable digital music players. It operates through the following geographical segments: Americas, Europe, Greater China, Japan, and Rest of Asia Pacific.

The Americas segment includes North and South America. The Europe segment consists of European countries, as well as India, the Middle East, and Africa. The Greater China segment comprises of China, Hong Kong, and Taiwan. The Rest of Asia Pacific segment includes Australia and Asian countries.

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Disclosure: Long AAPL, AVGO, GD, INTC, JBL, QCOM.

Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a ...

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