Tech stocks should still be a portfolio favorite despite recent weakness deutsche bank
1. 8/7/2018 Tech stocks should be a portfolio favorite: Deutsche Bank
https://www.cnbc.com/2018/08/06/tech-stocks-should-be-a-portfolio-favorite-deutsche-bank.html 1/3
Tech stocks should still be a
portfolio favorite, despite recent
weakness: Deutsche Bank
Although 18 percent of the S&P 500 information technology sector and 43 percent of the
Nasdaq companies are down more than 20 percent from their year to date highs, Deutsche
Bank is still positive on the tech space.
Despite the stumbles, Deutsche Bank said tech shares are still great for investors because
of solid earnings, cheaper projected valuations, and expected higher dividend payouts,
among other factors.
Weizhen Tan | @weizent
Published 2:55 AM ET Mon, 6 Aug 2018 | Updated 11 Hours Ago
Adam Jeffery | CNBC
FANG stocks (Facebook, Amazon, Netflix and Google) apps on a smartphone.
Investors may be tempted to steer clear of tech stocks after recent steep
losses, but that weakness hasn't shaken Deutsche Bank's confidence in
the sector.
On July 26, the tech-heavy Nasdaq Composite dropped more than 1
percent as Facebook posted its worst day ever. One day later, the index
dropped 1.46 percent, with shares of Intel and Twitter leading declines.
"Following recent weakness in social media and other tech related
names, there has been increased rhetoric surrounding the 'demise of Tech'
and the suggestion that tech has lost its market leadership position. In
short, we believe this rhetoric is premature," Larry Adam, chief
investment officer of Deutsche Bank's Wealth Management Americas
unit, wrote in an August 3 note.
The German bank acknowledged that 18 percent of the S&P 500
information technology sector and 43 percent of Nasdaq companies are
down more than 20 percent from their year-to-date highs. But it also
pointed out that the S&P 500 IT sector is still 28 percent higher over the
past year, and it's the top performer in the index over that period.
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2. 8/7/2018 Tech stocks should be a portfolio favorite: Deutsche Bank
https://www.cnbc.com/2018/08/06/tech-stocks-should-be-a-portfolio-favorite-deutsche-bank.html 2/3
Despite the stumbles, Deutsche Bank said tech shares are still great for
investors because of solid earnings, cheaper projected valuations, and
expected higher dividend payouts, among other factors.
Tech companies have had record cash flows, and that has led to a number
of "supportive shareholder friendly" actions: buybacks of $66 billion in
the second quarter of 2018, and expected dividends of 11 percent in 2018
and 9 percent in 2019, Adam wrote.
Tech firms' earnings have also remained "robust," Adam added, with the
sector posting earnings growth of 33.5 percent, and over 90 percent of
companies beating earnings estimates.
Going forward, Adam said, tech results should still be strong, with full
year earnings expected to go up by about 20 percent in 2018 and 11
percent in 2019.
Valuations in the sector are expected to become cheaper, the Deutsche
note said, which mean the stocks might be more attractive to investors.
Finally, the strong growth in the U.S. economy is bound to benefit
American information technology companies, which will enjoy strong
consumer demand and a surge in business spending, Adam said.
Weizhen Tan
Markets Editor, CNBC Asia
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