More Tech Stocks for Adults
Nate is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
In an earlier column I talked about how tech stocks, and the media that covers them, are still considered up and comers. How there's an expectation that the best technology stocks are the high-risk, high-growth stocks in which the people leading the charge are treated as some form of celebrity. I also took a shot at them for being a bit too full of themselves.
If you've been paying attention to my columns (and it's likely you haven't), you'll know that I always advise my readers away from the flashier, riskier picks. I'm a strong advocate of dull companies that have good management that knows what its doing. I'll take the faceless board of General Mills before I'll take a celebrity CEO like Mark Zuckerberg. I like companies that behave like companies, and not personal ego gratification.
Yes, a company like Google (NASDAQ: GOOG) can show huge growth, and there's profit to be made there. But what you don't see is the untold number of similar firms that have taken people's money, treated themselves as if they were a gift to all, and then quietly vanished. Heck, even Google, who I think highly of, has had its good and bad years. Even so, I think that Google is still upward bound. There are those who think that it's still priced too low and the P/E of 23.84 shows a market lean in that direction. Google is where it should be, with a high share value, great EPS at $32.47, and new products on the way.
I'm not saying that having some of these sorts of stocks in your portfolio is a bad thing. I'm just saying that over committing to them is a mistake. Make sure that you continue to invest in mature companies. Here are a few more tech companies that aren't going to surprise too much.
NVIDIA (NASDAQ: NVDA)
NVIDIA is probably known best in the world of video gaming. It makes the graphics chips that make processor-dependent games run well. But the firm also makes chips that do more than help you play games. The company's chips are used in smartphones and to make the special effects in movies. There's even a line that's used for industrial purposes. The company has been up and down, but it does have a dividend yield of 2.43%. NVIDIA is a company I think could be a part of a conservative growth-and-income portfolio.
Taiwan Semiconductor Mfg. (NYSE: TSM)
Another one that only the pros are going to hear about is TSM makes microchips. While the company might not have its name on the outside of the box, there's a good chance that some of your personal or work electronics have TSM gear somewhere inside them. Fourth quarter profit was up significantly this year and I see little reason to doubt that some good years are ahead. The firm's P/E of 17.77 shows that there's some investor interest, but things haven't gotten carried away … yet. Chips just aren't that sexy. Since July TSM is up 42% and it also pays a pretty good dividend yield of 2.75%.
Analog Devices (NASDAQ: ADI)
Hey, look! Another firm that doesn't get a lot of play in the media but makes things for those that do. ADI makes integrated circuits that are used in a wide variety of industrial applications as far-ranging as wireless equipment to industrial controls. It was just in the news for a new patent it was issued. The firm pays a good dividend yield of 2.69%, and you know I'll think that's a good thing. It's also been on a bit of a tear, lately, having gone from $35.09 in May to $44.67 now. This is another solid pick for a conservative portfolio.
SAP (NYSE: SAP)
Another quiet giant, SAP, is engaged in the creation and management of software and enterprise solutions for large customers. Growing up in the Washington, DC area, as I did, one constantly heard about SAP in the corporate world. But I think that's not true for the rest of the country. SAP is a well-run company that knows its core strengths and plays to them. Of the firms I've mentioned, SAP's dividend is the worst, coming in at only 1.13% yield. However, the firm's stock has risen from $55.24 in June to $83.57 and it's P/E is still in the mid-20s so I think there's still a lot of people betting it goes higher.
Anyway, the important lesson I want my readers to take away from this is that there's more to the tech world than the flashy stuff that gets covered in the press. You should view any firm that gets too much press as spending more money on marketing and public relations than on core competencies. Sure, it's fun to tell people you have something in your portfolio that gets a lot of attention on cable TV, but it's more fun to get a steady return from a well-managed company.
Follow Nate on Twitter: @natewooley
More columns by Nate Wooley:
- Household Stocks: Not Exciting, but Necessary
- Media Hype Over Apple and Technology
- Coffee Stocks and Your Investments
nwooley has no position in any stocks mentioned. The Motley Fool recommends Google and NVIDIA. The Motley Fool owns shares of Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!