Welcome to week 119 of my stock-picking throwdown with Mr. Market. Let's get right to the numbers.
|Harris & Harris
|Oracle (Nasdaq: ORCL)
|Taiwan Semiconductor (NYSE: TSM)
|S&P 500 SPDR
Source: Yahoo! Finance.
*Tracking began on Aug. 7, 2008.
**Adjusted for dividends and other returns of capital.
Mr. Market can't decide which way is up. A Monday rally turned south on Tuesday before a bigger rally on Wednesday that we've yet to come down from. As I wrote this, the S&P 500 was up 2.6% for the week.
Pundits I've heard on CNBC and elsewhere attribute the increase to investors who fear missing out on gains more than they fear the impact of lousy economic data. They may be right; a net gain of 39,000 new jobs in November amounts to terrible news right now. Legitimate inflation fears have yet to be realized, and fallout from Ireland's debt crisis has yet to reach our shores. We've no idea when it will, and predicting doom may as well be folly, since financial soothsaying almost always comes up short.
Maybe it's time to simply concede that today's buyers have a point. Maybe there's something to this rally.
Consider some of the week's big reports. Shares of retailer Abercrombie & Fitch (NYSE:ANF) surged after the company reported a 22% gain in same-store sales. Analysts were expecting comps to rise by just 6.4%.
The week in tech
Expect to see more reports like that one next quarter: Black Friday was good to many retailers, and Cyber Monday was equally good to e-tailers. According to new data from comScore, online sales rose by 16% to $1 billion, driven mostly by a 12% increase in average spending.
Where consumers spent their dollars isn't known, but I wouldn't be surprised to see a sharp increase in sales of smart electronic devices. They're becoming more popular by the day.
Consider OmniVision Technologies' (Nasdaq: OVTI) fiscal second-quarter results, released on Tuesday night. Profits tripled for the leading maker of backside illumination technology for smartphone cameras. Revenue improved by 30% and gross margin rose by 4 points thanks to a flush customer list that includes Apple.
Consumers are also going for devices that don't need smarts. Sirius XM Radio (Nasdaq:SIRI) this week signed its 20 millionth subscriber. The wind has been at Sirius' back lately. Costs per subscriber are down, cash flow is up, and the stock has more than doubled since January. A reasonable valuation suggests that more gains could be in order.
Many of my Foolish peers are bound to disagree with that take. So be it. For all of Sirius XM's past problems, disruptors tend to be the ones that become millionaire-maker stocks.
We've seen it happen time and again. Look at David Gardner. He produced a decade of 20% returns in the real-money Rule Breaker portfolio by betting on a collection of innovators and then holding them for the long term. Tom Gardner's "simpleton portfolio" was also a 10-year winner. I believe that with my tech portfolio, I will achieve similar success.
Now let's move on to the rest of today's update:
- Oracle CEO Larry Ellison is at it again. This week, the database king announced new servers based on the SPARC chip architecture acquired with Sun Microsystems. Ellison believes they're just the blunt instrument needed to win market share from Hewlett-Packard (NYSE: HPQ). "We think the HP machines are vulnerable," Ellison told The Wall Street Journal. "We think they're slow."
- Although there's no apparent news supporting the rally, shares of Taiwan Semiconductor touched a new 52-week high of $12 per share on Friday.
There's your checkup. See you back here next week for more tech-stock talk.
Get your clicks with more techie Foolishness:
- Break out the peace pipe for these two chipmakers.
- You'll stream more movies soon. Bet on it.
- Go under the hood to see what makes this Rule Breaker tick.
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