By Barbara Kollmeyer, MarketWatch
Relief over well-received results from Apple and Facebook may not be enough to fuel another S&P 500 record on Thursday, as rumblings on the trade front are getting in the way.
Those big tech names are an integral part of our call of the day from BlueBox Asset Management’s co-portfolio manager William De Gale who says it’s time for investors to look past the household names to companies on the cutting edge of the next big technology shift — connecting computers to the real world.
“I want to own companies that are going to be dramatically better than five years from today,” the former BlackRock tech fund manager tells MarketWatch in an interview.
De Gale lays out a couple of reasons why he’s less keen on Apple: shares have been underperforming for years (see his chart below) and there’s really no new product to dazzle investors.
Bloomberg, BlueBox Asset Management
In the Global Technology Fund he manages, he offers up alternatives like decades-old Texas Instruments /zigman2/quotes/202237907/composite TXN -2.78% . “It makes power management integrated circuits, a very small, very cheap chip that controls the flow around a circuit, and basically allows a battery to last as long as possible,” said De Gale, who adds that Texas Instruments has very little competition.
Then there’s EPAM Systems /zigman2/quotes/202681841/composite EPAM -1.19% , a software services company that made Fortune’s 100 Fastest-Growing Companies list for 2019 . “They write software for companies that can’t do it themselves, mostly working for non-tech companies,” so in a sense a “sophisticated niche business,” he says.
Also Cadence Design Systems /zigman2/quotes/207095682/composite CDNS -1.11% , which writes software to help chip designers design chips. De Gale says it stands out among the competition -- Synopsys /zigman2/quotes/208349984/composite SNPS -0.59% and Mentor Graphics — acquired in 2016 by Germany’s Siemens /zigman2/quotes/200873563/delayed DE:SIE +1.52%
The Dow /zigman2/quotes/210598065/realtime DJIA -0.58% , S&P 500 /zigman2/quotes/210599714/realtime SPX -0.90% and Nasdaq futures /zigman2/quotes/210598365/realtime COMP -0.93% are off to a sluggish start after a report Chinese officials are doubting a viable long-term U.S. trade deal can be struck. Europe stocks /zigman2/quotes/210599654/delayed XX:SXXP +0.86% are also sliding, and the Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP -2.75% fell after China manufacturing hit an 8-month low.
Our chart of the day from Citigroup analyst Ephrem Ravi, highlights how prices of palladium , a key component used in electronics and new technologies, have soared this year as the metal shrugs off macroeconomic worries.
Ravi sees palladium reaching $2,000 an ounce over the next three months from around $1,782 currently on an improved global economic view. But longer term, U.S.-China trade tensions pose a risk for the metal, he says.