Wednesday was a big day for the tech sector, as all eyes were
Apple (Nasdaq: AAPL)
and its fiscal first-quarterearnings .
About 40 minutes after theclosing bell , themarket heard what
Apple had to say, and the reaction wasn't very good. Thestock
plunged more than 10% inafter-hours trading as the company'srevenue
fell short of expectations, as did sales of iPads and iPhones.
The rotten reaction to the Apple numbers stood in stark contrast
to the stellar numbers from two other tech giants, one "old school"
and one "new school."
Representing the old school is
International Business Machines (
, and the new school rep is
Google (Nasdaq: GOOG)
. Both of these companies saw their share price surge Wednesday, as
the market reacted positively to their strong earnings reports.
In the case of IBM, we saw the Dow component'sshares spike 4.4%
on heavyvolume after the company reported that earnings in 2013will
be at least $16.70 a share. That figure bested the $16.65Wall
Street was anticipating.
The upbeat forecast for IBM came along with huge fourth-quarter
earnings of $5.83 billion, or $5.13 per share, in the
October-December period. Those numbers represent a 6% rise during
the same period a year ago. The strong quarterly showing by the
company was due in large part to its shift away from hardware to
the much more profitable cloud computing software services.
The uber-strength of the share price is a trend that I suspect
will continue, especially as tech-orientedinvestment capital flows
away from companies like Apple and into a company like IBM. For
traders, this means that jumping on the "Big Blue" bandwagon now
could be a profitable move, and possibly good for a quick and tidy
10%profit during the next three to four weeks.
Action to Take -->
Buy IBM at themarket price . Set stop-loss at $188.34 a share, 8%
below the current price. Set initialprice target at $225.19 for a
potential 10% gain in four weeks.
As for Google, the search engine giant also posted robust
profits, and the reaction from traders was a 5.5% gain on
Wednesday. That gain was the single biggest one-day spike in the
shares since 2011.
Fueling that buying was a fourth-quarter profit, excluding
certain items, which came in at $10.65 a share. That number easily
bestedearnings per share (
) estimates for a $10.50 showing. Google'snet income also rose 6.7%
to $2.89 billion, or $8.62 a share. The key to the search engine
operator's success was a surge in advertising from retailers during
the holiday season.
The numbers during the fourth-quarter surprised some on Wall
Street, as there has been much made lately about Google's inability
to maximize advertising on mobile platforms. Yet the advertising
numbers for Google's bread-and-butter online search prove that its
business is still very much booming.
Technically speaking, we've seen Google shares bounce back after
their October decline. The stock now has achieved escape velocity
from its50-day moving average of $699.50 a share. I suspect that
the buying in Google will continue during the next month, as
traders continue to rotate away from declining tech bellwethers and
into techs on the ascent.
Action to Take -->
Buy Google at the market price. Set stop-loss at $682.18 a share,
9% below the current price. Set initial price target at $815.65 for
a potential 9% gain in four weeks.
This article originally appeared on ProfitableTrading.com:
Forget Apple, These Tech Giants Could Soar in the
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