Morningstar Advisor - April/May 2012 - (Page 32)

Sector Rap Technology’s Slim Pickings By Philip Guziec Morningstar’s analysts see plenty of solid companies in the technology sector, but attractive valuations are much rarer. The media has been talking all about tech in the past several months, from Apple’s big earnings to Facebook’s IPO and everything in between. I recently sat down with some of Morningstar’s tech analysts to see if there’s still investing opportunities in the area. Philip Guziec: Since the market bottom in March 2009, we’ve seen the IPO market come back to life—lots of big tech names, some high-profile IPOs. You can’t turn on financial radio without hearing about a big IPO. What can we say about these? Rick Summer: I think there is a dichotomy among the companies that have come out. Looking at the companies that we covered in 2011, there was only one company that came out that we felt pretty strongly about, that had good competitive advantages, and that was LinkedIn LNKD. And that traded extremely well, above its offering price. But the aftermarket trading for most of these companies has been pretty poor. We’ve seen a little bit of a recovery here in 2012 for many of those companies, and certainly, the lineup of companies that are in a rush to go public has increased yet again. We’re seeing a big appetite from investors for investing in these. However, given that historical growth rates have been very tremendous, given the large appetite for IPO investment, and lastly, given the very large secondary market that’s taken place, where investors have been able to invest in advance of that IPO market, we’re not seeing a lot of attractive valuations. That being said, all eyes are on Facebook, a company we like that’s supposed to price sometime in the 32 Morningstar Advisor April/May 2012

Table of Contents for the Digital Edition of Morningstar Advisor - April/May 2012

Morningstar Advisor - April/May 2012
Letter From the Editor
We’re Too Smart
How Do You Use Alternatives?
Taking the Lead
How to Find Economic Moats
The Beauty of Currencies
No Clarity on Bonds
Four Picks for the Present
Investment Briefs
Performance Chasing, Evaluated
Technology’s Slim Pickings
How Much Is Enough?
The Fear Bubble
Three Traits of a Successful Long-Short Equity Manager
Why Absolute-Return Funds Fail to Deliver
An Economist’s Response to Crises
Undiscovered in Plain Sight
Untangling ETF Tax- Efficiency Myths
Central Banks Driving the Gold Rush
U.S. Industrials Could Add Some Magic to Europe-Weary Portfolios
No-Hesitation Allocation Funds
Our Favorite Mutual Funds
50 Most Popular ETFs
Undervalued Stocks With Wide Moats
The Greatest Story Ever Told

Morningstar Advisor - April/May 2012