5 Tips For Tech Sector Investors From CIO Of Sloy, Dahl & Holst
May 24, 2017
Paul Meeks is a fundamental part of the Sloy, Dahl & Holst team. As the firm’s CIO and portfolio manager, Paul is an expert in investing. He has an especially strong background in tech stocks, and as such can offer valuable advice when it comes to this area of investing.
Paul’s recent discussion with the traders of CNBC’s Fast Money Halftime Report provides investors with great advice when it comes to cloud-related business stock. Here are 5 key takeaways from this conversation that cloud investors should be aware of.
Know the big players. When it comes to cloud-related business stock there are three stand-out companies: Amazon, Microsoft, and Google. Amazon leads the pack by a wide margin and will no doubt continue to be on top in this sector for some time. However, investors shouldn’t completely discount these other two companies. According to Paul, both Microsoft and are set to have a nice run with their cloud services.
Understand comparisons. Unfortunately, cloud figure reports from all three of these companies can’t be compared with complete accuracy. Microsoft particularly tends to be rather vague with their cloud results. This makes it difficult for investors to gather 100 percent accurate information about how these companies compare. Even so, Paul notes that Amazon is clearly in the number one spot and the gap between this company and the other two will likely remain quite large.
Keep an eye on concerning trends How long can Amazon hold its spot before valuation comes into play and causes an upset? While the answer is not immediately apparent, investors should, like with any other stock, continue to keep a close eye on things. A few things to look for will be a turnaround in profitability in the international segment, and a continuation or new streak in momentum.
Know what matters in valuation. For these cloud businesses, Paul’s method for looking at valuation is to utilize a Price/Earnings to Growth Ratio (PEG). Another formula is to review the company’s growth and positioning relative to its total available market (TAM).
When to buy, when to cut back According to Paul, all three of these companies have opportunities. For Amazon investors, in particular, Paul notes that as the company becomes a four-figure stock, those who have the stock over-weighted in their portfolio may want to cut it back a bit. Additionally, Paul recommends purchasing cloud-related business stock on the dips.