One Tech Stock You Should Buy Now
By Louis Navellier
Editor, Blue Chip Growth Letter
June 9, 2000
investorplace.com
Now that the NASDAQ has crashed and burned, investors want to know if this is a good time to be buying again. Right now, I'd have to say that it's still hard to tell since volume has been so low. The big New York money managers are on vacation and trading has dried up. Yes, the NASDAQ had its best week ever last week, including its single-best day in its 29-year history a week ago Tuesday. Still, I'm not convinced we'll see an immediate "melt up" of tech stocks.
The good news for us is that we're seeing more signs that the U.S. economy is beginning to cool off. Hopefully, Alan Greenspan and his buddies at the Fed will take this as a sign not to raise interest rates at their next meeting at the end of this month. We've already seen yields drop on long-term bonds. This is very important for tech investors, because those lower yields are what support the higher price/earnings ratios for our best tech stocks.
So where's a good place to start? First, I think this is a good time to get rid of some tech stocks that won't be the best beneficiaries of the next NASDAQ up phase. For example, I sold off Vodaphone (NYSE: VOD) recently. Earlier this year, I also sold off shares of Microsoft.
One of the most exciting tech stocks I currently recommend is SDL Inc. (NASDAQ: SDLI) of San Jose, California. SDL is a world leader in the design, manufacture and sale of semiconductor lasers. In fact, SDL was the first company in the world to successfully commercialize the integration of multiple lasers on a single semiconductor chip, and ever since, the company has been a leader in integrating lasers with other optical or opto-electronic elements such as lenses, mirrors and light amplifiers.
As you can probably imagine, the company has been doing extremely well. Unlike so many young tech stocks in Silicon Valley, SDL actually makes money. Just a few weeks ago, the CFO had to tell Wall Street that the earnings projection they had was way too conservative. He said that their earnings will probably beat estimates by about 24%. Also, a few weeks ago, SDL said it was going to buy Photonic Integration Research for about $1.8 billion in cash and stock. My readers who had been in SDL made a great profit as the stock jumped over $24 in one day. Including Photonic, SDL should see its revenues grow by 140% this year.
What I really like about SDL is the way it's held up during the tech correction. While many tech stocks are bouncing around at half their 52-week high, SDL just recently broke out of critical resistance levels to hit another all-time high. My advice is to buy SDL Inc. anytime it's below $270. |
