Tech’s Not Dead… if You Know Where to Look
Amanda Heckman|December 3, 2022
Forget what you’ve read about tech stocks. There’s money being made in this crucial sector.
You might just be looking in the wrong places.
But more on that in a second. First, something special for you. It’s a gift so nice, we’re sending it twice…
Last week, in the spirit of giving thanks, we gave you a free digital copy of Andy’s book Be Good, Be Wise: Using Ben Franklin's 13 Virtues to Become a Better Man.
But we had technical issues with our email system, and you may not have received your copy. (We’re blaming the flood of Black Friday email ads.)
That’s no good… because the book is truly one of a kind.
It’s a unique (and nuanced) retelling of Ben Franklin’s 13 virtues… the qualities Franklin believed served as the foundation for a good and wise man.
Franklin used them to become happier, healthier, wiser… and wealthier.
We hope the essays in this book allow you to do the same.
And speaking of tech issues…
Big Tech’s rough year isn’t over yet… not by a long shot.
Interest rates are going higher. We’re looking at a 50-basis-point hike when the Fed meets on December 14. Borrowing money to fuel growth – very much the tech sector’s raison d’etre – doesn’t work when rates are this high.
Losing that “free” cash means major tech firms will be pushed into more layoffs… further cutbacks… reduced spending… the works.
As the chief equity analyst at Goldman Sachs said this week, “[The] exceptionalism of technology is arguably behind us.”
But like we said… that mostly applies to Big Tech.
The rest of the sector is still experiencing pockets of big growth – and big gains.
Small cap tech stocks, in particular, will have room to grow as they take on larger shares of their markets.
Stocks like Clearfield (CLFD), a leader in fiber-optic connectivity. It just posted record fourth quarter and full-year results. The company is playing a critical role in the push to establish internet connectivity in underserved and unserved communities across the U.S.
Or Richardson Electronics (RELL), an engineering solutions provider with its hands in the healthcare, semiconductor, power management and consumer electronics sectors. That diversification has served it well… as the company has a nearly $200 million backlog and increased sales 25.8% in its first fiscal quarter of 2023 over the same period in fiscal 2022. It also has a strong balance sheet, with no debt.
Not to mention Internet of Things pioneer Digi International (DGII). Sales rose 26% over last year… and income jumped an impressive 87%. The company is steadily growing its share of the industrial IoT market, which it projects will be a $38 billion opportunity in 2023. But Digi has a presence in just about every sector you can think of.
And finally, a small cap rock star… Bel Fuse (BELFB). It manufactures products that power, protect and connect electronic circuits. Sales went up 21% in the third quarter… and net earnings tripled.
Put these small cap winners together, and you get a chart like this…
It’s a sight for sore eyes, no?
While the tech-heavy Nasdaq and small cap Russell 2000 are both down by double digits this year… these four tech small caps are crushing it.
Savvy readers will note that these stocks all have two things in common. First, and most importantly, their sales are growing. And second… you’ve likely never heard of them.
But there’s more to finding a small cap winner than just those two ideas.
Our good friend Alexander Green – with whom I worked closely years ago – has perfected a system for pinpointing fast-growing, under-the-radar stocks.
And right now, he says the opportunity in small caps is so big… and so compelling… that he’s going all-in.
In fact, he wants you to join him.
Check out what he’s doing with his own money – and why he’s convinced it will make him a fortune – right here.
Amanda Heckman|Editorial Director
Amanda Heckman is the editorial director of Manward Press. With unrivaled meticulousness, she has spent the past dozen or so years – give or take a few sabbaticals – sharpening Andy’s already razorlike wit. A classically trained musician and a skilled writer in her own right, Amanda takes an artistic approach to the complex world of investing. Her skill has led her to work with numerous bestselling authors, award-winning financial gurus and – lucky for us – the fine folks at Manward Press.