Waking up to the markets could make some feel as if the sky falling and the world around them is plummeting into a deep abyss with no promise of return. Although the immediate future looks glum, there is no need to mope around, chum. Even bear markets such as this one present investors with opportunities. I feel that everyone is so wound up in the present that they fail to look forward beyond this crisis. I will admit the current situation is quite grave, but it is time to wipe away those tears and work to put that excess cash into the market, specifically within a few solid tech plays.
Why do I need more cash?
Markets that erode portfolio value generally require investors to overweight themselves to make up for losses once the markets rally. For example, if one has $100,000 invested in the market, and the market falls 10%, the investor now has $90,000. Let’s say conditions improve and the market rises by 10%, the portfolio is now only worth $99,000, still short of breaking even. This unfortunate mathematical detail requires investors to overweight themselves as the markets turn to make up for losses and profit. Hence the importance of saving some extra cash to harness the performance of mid-cap companies during a bull run. Below are five picks that I believe could benefit investors when trying to accomplish this objective.
Cerner (CERN: 32.73, 0.00 (0.00%))
A leading healthcare information services provider, Cerner is poised to capitalize on the electronic trend in healthcare management. Cerner’s integrated systems allow health care professionals to pull patient data electronically at fast and secure speeds. The company has also found ways to integrate medical devices into their information solutions so doctors can monitor the well being of a patient from their computer. The firm also offers various other consulting and technology services to help ensure that customers harness the power of information technology in the everyday workings of a healthcare facility. Although there may be concerns around IT spending, hospitals will continue to do well in a downturn since consumers cannot shy away from addressing their health needs. Cerner’s management is also top notch, continuing to support any developments in healthcare information system. The digital craze has yet to take over hospitals, but with a steady stream of cash, these entities can afford to begin (or finish) projects that convert patient records to an electronic copy. This offers great flexibility and security around records, where human error can be deterred and information is sent securely to appropriate parties. Cerner is a great pick going forward and I look forward to seeing its growth.
- P/E (ttm): 18.60x
- Forward P/E: 13.82x
- PEG: 0.75x
- EV/EBITDA: 6.64x
- LT EPS Growth Rate: 21.26%
Comtech Telecom (CMTL: 45.13, 0.00 (0.00%))
CMTL engages in the design, development and sales of communications equipment in the U.S. and abroad.
