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Above the Clouds

By Thomas Scarlett on August 28, 2015

The days of effortless high returns in the stock market are over. Picking the right investments is more crucial than ever. Investors may want to shy away from tech investments in this turbulent environment, but the best companies will be able to survive the storm.

A good one that has been largely overlooked is Tech Data Corp (NASDAQ: TECD), based in Clearwater, Florida, is one of the world’s largest wholesale distributors of technology products and services. Its advanced logistics capabilities and other services enable 120,000 resellers in more than 100 countries to efficiently support the various technology needs of their customers.

The company has a market cap of $2.2 billion. Its price-to-earnings (P/E) ratio is around 10, quite low for a company that has established its ability to survive and grow in the fast-moving high-tech industry. Despite the wild ups and downs of this week’s stock market, the share price is higher than it was one week ago.

The firm is notable both for its strong position in the rapidly growing world of cloud computing, and for its relationships with several tech titans.

Tech Data revealed an exclusive distribution agreement with Microsoft to offer select mobile device accessories to national retailers and solution providers in the United States.

Through the agreement, Tech Data will offer Microsoft’s wide array of accessories across categories including portable power solutions, wireless charging solutions, audio solutions, connected gadgets, mobile accessories, and mobile essentials such as Bluetooth headsets, chargers, and batteries via its Tech Data Mobile Solutions division.

Tech Data currently offers the same portfolio of Microsoft products through its Tech Data Mobile division in Europe.

Tech Data’s sales figures have increased sharply in the last few years, despite the economic doldrums. Revenues for the last fiscal year were more than $30 billion.

The company was founded in 1974 by Edward Raymund, father of the company’s current chairman Steven Raymund. Its original business was to market data processing supplies directly to end users of mini- and mainframe computers. In 1983, the company expanded its target markets and redirected efforts toward servicing microcomputer resellers as a wholesale distributor.

The company is also one of the leaders in cloud computing. Tech Data today has finalized a distribution agreement with collab9, a provider of Cisco Powered hosted collaboration systems, to deliver Cisco Hosted Collaboration Solution (HCS). What this means is that Tech Data’s customers will have access to a single source for all their cloud services through the TDCloud business unit.

The company was has ranked No. 24 in the Talking Cloud 100. The fifth annual list, published by Penton’s Technology Group, profiles the world’s Top 100 cloud service providers (CSPs), aggregators, and brokers, as well as managed service providers (MSPs) and value-added resellers (VARs) with cloud expertise, based on recurring cloud revenues, survey results from cloud companies, and other metrics. The Top 100 CSPs generated more than $30 billion in combined cloud services revenues in 2014, up nearly 29 percent over what they reported the previous year.

Through Tech Data Cloud, the company provides resellers with the full capabilities to capitalize on cloud opportunities in the marketplace, including the tools to navigate and transform their businesses. The company offers education, marketing, business planning, demand creation, sales training and services offerings to enable partners to successfully sell cloud products and solutions. The company’s dedicated cloud sales teams guide and assist reseller partners to master the new computing and selling era.

The high-tech world changes quickly, but Tech Data’s established relationships with its business partners and its record of innovation make it one of the safer bets for continued growth.

Tom Scarlett is an investment analyst at Personal Finance and its parent web site Investing Daily.

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