3 Tech Stocks With More Upside for 2012 (Update 1)
There are, however, concerns over a slowing European economy, and whether that will hit tech spending, both consumer and corporate. Nonetheless, Apple, Microsoft and Salesforce.com have produced healthy returns for shareholders year-to-date, and many believe there is more to come.
Here are some reasons why these three technology stocks are still worth owning for 2012:
Powered by strong sales of iPads, iPhones and Macs, Apple has had a remarkable run. In its most recent quarter , Apple had $46.33 billion in revenue, as it sold 37.04 million iPhones, 15.43 million iPads, 5.2 million Macs, and 15.4 million iPods during the holiday quarter. Gross margins during the quarter were 44.7%, compared to 38.5% a year ago.
Piper Jaffray analyst Gene Munster wrote about the new iPad that is being released next week, and believes that iPad sales could be conservative, given the availability of the product and the feature set.
"Better availability of iPad HD would likely drive upside to our March quarter iPad estimate of 9.0m units (-42% q/q). For every additional 1m iPads Apple sells in the March quarter, it adds $580m (2%) in revenue and $0.16 (2%) to EPS relative to our estimate of $9.35 on $34.68b," Munster wrote in a research report. He has an overweight rating and a $670 price target.
Mike Holt, equity analyst at Morningstar, believes that Apple has more room to run, as evidenced by his $560 fair value. A new iPad, dependent on price point and variations, could force Holt to adjust his 56 million unit forecast for 2012.
Sterne Agee analyst Shaw Wu believes the new iPad is such an important revenue driver to Apple, he recently raised his price target to $620 from $550, based off the announcement. The analyst hiked his iPad estimate from 51 million units to 55 million units for calendar year 2012, but did not change his March estimate of 10 million iPads. "We view the potential inclusion of 4G LTE as key with speeds approaching that of a quality personal computer experience," Wu wrote in a recent research report.
Apple's TV plans could also drive future upside.
"There is an ocean of potential in the television market," Josh Brown, vice president at asset management firm Fusion Analytics and author of The Reformed Broker blog said. Apple is expected to launch a television set , either later this year or in early 2013. If Apple does do a dividend, there could be significant value added in the name. He did note that he has been trimming some Apple from client accounts based on portfolio management, not anything specific to the iPhone maker.