Waiting for the Clouds to Part

It’s been a long and wet winter this year, and even though March is more than half way over today brings another unwelcome snowfall in my part of the country.  Last weekend we set our clocks ahead one hour, the unofficial line of demarcation between winter and spring. Unfortunately, someone forgot to tell Mother Nature so we’ll have to wait a while longer for the clouds to roll out so the sunshine can come pouring in.

Likewise, the stock market is also gripped in stagnant weather; giving back one week what it gained the prior week.  And that’s exactly what we expected after five years of a strong bull market fueled by artificially low interest rates due to Quantitative Easing. As we have stated several times previously, we think 2014 will be the year that sanity returns to tech stock valuations with an equal number of winners and losers.

But unlike our gripe with the weather, the “cloud” will be one of the critical success factors for a lot of the tech stocks we cover. Our In Focus article examines how the cloud will influence the next big wave of tech stock winners, and discusses several companies that are already positioned to be among the primary beneficiaries.

In addition to the current category leaders in the race to the cloud, there are a lot of other companies scrambling to secure a foothold in the cloud before it’s too late.  In our Sector Spotlight article we take a look at one such company we think is going to make it provided it continues to move aggressively in that direction. We are also adding Symantec as a ‘buy’ recommendation in our Equity Trades portfolio, as the biggest gains tend to occur before the successful outcome of this type of transition becomes apparent to the rest of the market.

Now that our initial stock recommendations are three months old, we will review how they are doing so far in our Portfolio Review. Of course, one quarter of a year isn’t enough time to draw firm conclusions about anything, but we like the way our portfolios are setting up for the remainder of this year. We think it will take another full quarter for the stock market to figure out which tech companies will be able to deliver shareholder value under markedly different economic conditions, and which ones won’t hold up under the heat of the bright summer sun.

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