Tech gifts have always been one of my favorite gifts to give for Christmas. It’s always been fun to spend the holiday break playing around with new tech gear, whether it’s an iPad, Playstation or Google Glass.
Last week, polling firm Gallup reported that the average American plans to spend $740 on holiday gifts in 2013. That’s about a 2.5% increase from last year, but below the peak of $900 before the recession.
It’s no surprise that technology-related gifts are among the best sellers. The Consumer Electronics Association estimates that 33% of this year’s holiday spending will be on consumer electronics, with tablets, TVs, smartphones and video game consoles topping the wish list.
Just as tech and electronics are top gifts, tech stocks have been a favorite for investors this year. With just six more trading sessions of 2013, the Nasdaq is up 34% YTD. That compares favorably with the 27% gain of the S&P 500. In fact, four of the top 10 performing S&P 500 stocks in 2013 have been tech stocks.
The 4 Best Tech Stocks
Netflix (NASDAQ: NFLX) + 308%
Best Buy (NYSE: BBY) +249%
Micron Technology (NASDAQ: MU) +241%
GameStop (NYSE: GME) +99%
Which stocks will be the winners this holiday season?
One of the biggest will be Google (NASDAQ: GOOG). That’s because Internet commerce companies like Amazon (NASDAQ: AMZN) and Best Buy (NYSE: BBY) aggressively spend money to advertise products during the important holiday season.
comScore estimates that online shopping will grow 14% to $48 billion during the 2013 holiday season. That sales growth is the result of more marketing from online merchants. With Google capturing 40% of the U.S. online advertising spending, the company stands to profit from the growth of online commerce this holiday season.
Google looks like an expensive stock, with shares trading at roughly $1,100. But after “backing out” roughly $140 in net cash per share on the balance sheet, we arrive at an enterprise value of $960.
That means that Google shares trade at 18-times next year’s EPS estimates. For a company that’s expected to grow its sales by 40% this year, that valuation seems reasonable.
That’s especially true when you consider the lofty prices of other online commerce plays. Consider Amazon shares at 148-times earnings or Blue Nile (NASDAQ: NILE) at 44-times earnings. But you don’t want to buy those richly priced stocks…
In my latest special report – Best Stocks for 2014 – I highlight one of my favorite consumer tech stocks. It’s a company that you know well, and its name is no secret.
Unlike many tech companies, this stock is a bargain. Its shares are unchanged over the last year, and they trade at just 9-times earnings. That’s a 40% discount to the stock market. After all, the S&P 500 is trading at 15-times earnings.
Investors continue to discount this stock and its prospects. That’s a mistake, and one of the many reasons that shares could rise 20% in 2014.
I suggest you claim your complimentary copy of the Best Stocks for 2014 report right now – just click here for all the details. Inside the report you’ll discover all the details on this deep value stock. Plus you’ll get nine additional investment recommendations from my team of advisers.