Mobility, security, and networking are the three trends driving technology today, according to Bob Dutkowsky is CEO of today’s investment idea. Our contributor finds the shares appealing on a fundamental and technical basis.
Tech Data Corp (TECD)
From Weiss Stock Ratings Heat Maps
We’re going to drill down and take a closer look at the Best Value Stocks screen. This will provide you with valuable insight as to which sectors compose the list—and are most undervalued in today’s rather expensive stock market. Next, we will identify the highest-ranked stocks in those sectors and then run those names through another quick screen.
The Best Value Stocks Heat Map isolates stocks that are selling for less than their intrinsic value. It contains our highest-rated stocks that have the lowest valuation based on a price-to-sales ratio relative to the S&P 500 index.
Here is a breakdown of the Heat Maps’ top 25 Best Value Stocks by sector:
The table tells us what sector of the market is showing the best value. In this case, it’s Information Technology, with eight companies representing 32% of the total.
The next step is to isolate the top-three ranked stocks:
• Tech Data Corp (TECD)
• Ingram Micro Inc. (IM)
• Kelly Services, Inc. (KELYA)
Now, we’ll review the company’s sales and profit trends and determine whether its shares are trading above their 200-day moving average, which indicates an up-trending share price.
Tech Data Corp.: experienced a steady sales trend over the last five years, while net income took a more notable climb in 2015. TECD’s share price is also trading above its 200-day moving average.
Ingram Micro Inc.: Net income down from 2013 peak of $311 million to $215 million in 2015. Sales are trending higher, but with a modest 7.4% drop in 2015 from the previous year’s $46.487 billion. Meanwhile, IM is trading below its 200-day moving average, which moves it into another basket.
Kelly Services Inc.: Rising, with a choppy sales trend, but more stable on an annual basis. Annual net income has been volatile, from a high of $63 million in 2011 to as low as $23 million in 2014. Kelly Services is trading below its 200-day moving average
Out of the top-three stocks on the Best Value Stocks Heat Map, Tech Data Corp. meets our simple criteria. That’s because it has shown a steady sales trend, experienced an uptick in net income and is trading above its 200-day moving average.
This offers a simple process of sifting out “the best of the best” from a longer list of companies to research.
Mike Burnick, Weiss Stock Ratings Heat Maps, published by Money and Markets, a Division of Weiss Research, Inc., www.weissresearchissues.com/weiss-stock-ratings-heat-maps, 1-800-291-8545, August 18, 2016