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Husky Growth Fund - Equity Research - Information Technology Sector
1. Husky Growth Fund
Nick Gearhart
Equity Research Analyst
763.567.0339
Invest@stcloudstate.edu
Nate Widman
Equity Research Associate
630.881.7337
Newidman@stcloudstate.eduWednesday, September 9th
2015
Information Technology Sector
Overweight: 22.00% of portfolio
Sector Market Capitalization: 5.3T
*This report is published for educational purposes only by students who are actively managing the Husky Growth Fund at St. Cloud State University
*Sources include: Bloomberg Professional, Fidelity, and Morningstar
Sector Summary: Information Technology continues to
show strong growth as we are still currently in the mid-expansion
stage of the business cycle. Growth peaks through strong credit and
profit growth while inventories and sales increase. Based upon past
business cycle performances, the Information Technology sector
generally performs well in the early and mid-expansion stages while
it significantly underperforms during the late-expansion and
recession stages. With this knowledge, Fidelity currently suggests
allocations to the Technology sector of 19.99% for equity portfolios.
Various stocks that fit the Funds long-term growth strategy may
reside within industries of the Technology sector, which is why we
suggest an overweight allocation of 22.00% of our portfolio in this
sector. The following supporting themes express the opportunities
for continued growth within this sector:
๏ท Digital Advertising: Proven performance by
companies such as Google have shown that if the customer
base is unique enough, selling additional advertising is not
an issue. Firms that can successfully and profitability
execute programmatic advertising should expect growth.
๏ท Cloud Technology: Opportunities for the
advancement of this technology rely on increasing demand
for simpler and efficient access via the internet. Increasing
usage of smartphones and data, along with expansion
outside of mature markets will drive this segment.
Recommendations: Review Ambarella and its risks to
ensure the companyโs projections align with the Funds strategies.
After conducting this sector research report, Facebook (FB) will be
the next stock to conduct a research report on.
Sector Description: This
sector contains businesses revolving
around the manufacturing of electronics,
creation of software, computers or
products and services in relation to
information technology.
Current holdings: The Fund
has strategically diversified the current
four holdings in various industries
within the Tech sector to mitigate risk.
Firm % of Fund Date
Apple 4.20% 09.15.11
Ambarella 3.81% 03.19.15
Fortinet 3.33% 11.17.14
Google 2.39% 07.08.10
Apple, within the Computer Hardware
industry has produced a 5.67%
annualized return and based on the
companiesโ dominance with consumers
and solid financials we keep our
recommendation at a buy. Ambarella,
within the Semiconductors industry has
produced a 7.65% annualized return and
due to over 90% of revenue coming
from just only two sources, the Fund
has decided to reconsider if this stock
fits the long-term growth strategy and
gives the stock a hold rating.
Stock Market Cap P/E
AAPL 640 B 12.97
AMBA 2.2 B 29.84
FTNT 7.5 B 510.18
GOOGL 436 B 32.71
Fortinet, within the Software industry
has produced a 74.48% annualized
return and remains a buy in our view
based on increasing demand for network
security solutions and diversified
revenue stream. Google, within the
Internet Software industry has produced
a 22.01% annualized return and is
currently rated as a buy due to
increasing internet advertising from
greater online usage, as well as
diversified international revenue
streams.
SPX Index (S&P 500 Index)
XLK US Equity (Technology Select SPDR Fund)