Meta-Trader - New Leaders of Tech

Welcome back Meta-Traders.

Everything goes in cycles and nowhere more so than in the world of trading and investing.  Many great tech companies are started up by their founders and have a period of success.  But eventually, the leaders grow old, retire, or cash out early on their stock and go on to do something else with their millions.  Other times, the company just falls out of a competitive position

Once that happens, the company faces a moment of crisis.  The founders have moved on and the company faces a challenge to either survive or die.  And its the natural tendency of every business to either expand or contract.   The process is very well described in a book called The E-Myth Revisited by Michael Gerber which is an excellent beach read when you get the chance.

Two such companies that face that moment of crisis now are Blackberry Maker Research in Motion (RIMM) and Yahoo (YHOO).  Their futures remain uncertain and new management has been brought in to turn things around.  Do I want to invest in these stocks?  Not on your life!

Occasionally, these companies survive this challenge and go on to a new type of prosperity where the culture of the company has developed such that they retain their greatness even with an entirely new set of players.

Above is my list of the re-emerged new leaders of tech.  These companies all share these same properties:

• The were once in crisis and have once again emerged to be market leaders in their field
• They all have positive 5-year earnings growth rate exceeds their PE ratio
• They all have dividend yields (AAPL does - its just not yet reflected in TC2000)

These stocks all share these great characteristic and they are relatively cheap compared to their earnings growth.  2 particular standouts are Intel and Microsoft.  I'll bet you use their products every day.  These companies have well established markets with proven histories of innovation.  Even better, they have survived the departure of their founders and are now being run by a new generation of leaders.

Its companies like this that will make the stock market continue to go higher.  So whenever you hear someone talking about had bad things are, and how were all in so much debt, turn your attention to companies like this.   They are institutions in and of themselves and have survived the crisis to become long terms winners.

On a slightly different note, given the choice between investing in a new, fast-growing company at an all-time high or a former tech giant, I will take the stock at the new, all-time high.    Recent portfolio additions that meet this criteria are Metropolitan Health Networks (MDF), ICU Medical (ICUI), Family Dollar (FDO) and a speculative play Tucows (TCX).  I link the symbol on that last one since I used to run a company called TCX Systems.

That's all I have for you for now.  Live Long and Prosper!