As we begin to finish up the final month of what has been a tremendous year for the stock market, the 24/7 staff is reviewing what the major Wall Street firms are recommending for the stretch run and in 2014. The third-quarter earnings season wrapped up in November with stocks providing solid earnings for the period. The fourth quarter is expected to be solid again, if not spectacular.
Deutsche Bank’s team of analysts is very positive on many of the top tech names for 2014. They see continued IT spending for infrastructure improvement, cyber security, cloud storage and hosting, and other positive spending patterns that may even prove to be better than expected. We went through a new research report and pulled five of their top names to buy for 2014. We also have two names from the report they are very negative on going forward and have tagged with a Sell rating.
Apple Inc. (NASDAQ: AAPL) remains a top tech stock to buy for 2014 at Deutsche Bank. With a newly signed deal with China Mobile, the smartphone and tablet giant will have exposure to a gigantic potential consumer market in China. This deal could be the best thing to happen to Apple shareholders after the company’s announcement to spend $45 billion over three years in dividends and share repurchases, as it would provide Apple with potential access to more than 700 million customers in the second-largest economy. This market has more than doubled in size in the past two years, and still has a low penetration rate. Investors are paid a 2.3% dividend, which may be going higher in 2014. The Thomson/First Call price target for the stock is $597.50. Apple closed Monday at $566.43.
CDW Corp. (NASDAQ: CDW) came back from private equity land in June with a highly anticipated initial public offering. The company provides information technology (IT) products and services to business, government, education and health care customers in the United States and Canada. It offers discrete hardware and software products to integrated IT solutions, such as mobility, security, data center optimization, cloud computing, virtualization and collaboration. Investors are paid a small 0.8% dividend. The consensus price target for the stock is $26.50. CDW closed Monday at $22.62.
EMC Corp. (NYSE: EMC) may be an investor’s perfect tech stock for 2014. Combining its gigantic lead in large scale storage with the majority ownership of cloud software giant VMware makes the stock a solid double-threat play for investors. VMware alone contributes almost 24% of EMC’s total revenue. In the third quarter, VMware experienced a 17% rise in revenue to $1.28 billion year over year. VMware’s maintenance revenue supported this increase. Investors receive a 1.7% dividend. EMC closed Monday at $23.68.
International Business Machines Corp. (NYSE: IBM) may also be another solid tech name for investors for 2014. A disappointing third-quarter earnings letdown shaved almost 12% off the stock price since mid-September. Any increase in capital spending next year could quickly fire up the earnings engine again for the services giant. Investors are paid a 2.1% dividend. The consensus price target for the stock is posted at $190. IBM closed Monday at $177.46.
NetApp Inc. (NASDAQ: NTAP) innovation strategy centers on flash-accelerated, cloud-integrated storage solutions for the broadest range of shared and dedicated infrastructure environments. By offering the broadest and most complete flash portfolio in the industry, NetApp maximizes the value of flash across the entire computer, network and storage stack, improving efficiency and accelerating business-critical application performance. Investors are paid a 1.5% dividend. The consensus price target for this top name to own in 2014 is $44. NetApp closed Monday at $41.26.
To go with their five top tech stocks to buy, Deutsche Bank has two stocks that they are very negative on and have rated as a Sell.
Hewlett-Packard Co. (NYSE: HPQ) is a stock that Deutsche Bank has a Strong Sell on. After an incredible run in 2013, the Deutsche Bank analysts think the stock has gone way too far, too fast. With no significant product offerings that stand out, and a service industry battlefield for pricing, they see a very difficult year for the stock. Investors are paid a 2.3% dividend. The consensus price target is $28. The stock is right there, having closed Monday at $27.25.
Lexmark International Inc. (NYSE: LXK) is another name that has slowly but surely lost its cache as an industry leader. Once one of the premiere names in high-end printers, the company continues to lose market share. It also has very little to offer in terms of innovation and new and exciting products. The stock does pay shareholders a solid 3.3% dividend. The consensus price invective is posted at $29.50. That is far below Monday’s closing price off $35.20.
One thing Wall Street seems to agree on this year is that tech should be a top sector to own for 2014. With an expected increase in capex and balance sheets that have little to no debt, the sector is a perfect fit for a cyclical upturn. Staying with the large cap leaders will make sense, as there remains a solid chance for a large mid-term election year correction. The large cap names should hold up much better in that scenario.
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