We like to remind our readers that with the arrival of summer comes all the trading attributes that go along with it each year. Volumes slow, especially in the last half of August, when most of Wall Street is on vacation. Also, excitement slows, as there are fewer initial public offerings and, with the exception of second-quarter earnings in July, not a lot of data to trade on.
With all that in mind, it makes sense to look for some stocks that can do well during the summer but on which you don’t mind taking your eye off if you go on vacation and out of town. We recently screened the Deutsche Bank information technology and tech supply chains coverage universe looking for stocks rated Buy, that could be solid summer trades. We found four that fit the bill perfectly.
Amphenol
This top stock has remained a favorite long-term pick at Deutsche Bank for some time. Amphenol Corp. (NYSE: APH) is one of the world’s largest designers, manufacturers and marketers of electrical, electronic and fiber optic connectors, interconnect systems, antennas, sensors and sensor-based products and coaxial and high-speed specialty cable.
Amphenol designs, manufactures and assembles its products at facilities in the Americas, Europe, Asia, Australia and Africa and sells its products through its own global sales force, independent representatives and a global network of electronics distributors. The company has a diversified presence as a leader in high-growth areas of the interconnect market, including: automotive, broadband communications, commercial aerospace, industrial, information technology and data communications, military, mobile devices and mobile networks.
Deutsche Bank favors companies with a more diversified end-market strategy and exposure to secular growth trends like the Industrial Internet of Things. Amphenol remains a top long-term pick due to management’s consistent execution, above-market growth and its strong capital return strategy.
Amphenol shareholders receive a 1.02% dividend. Deutsche Bank has a $100 price target on the shares, and the Wall Street consensus target is $97.42. The shares traded early Thursday at $90.50.
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CDW
CDW Corp. (NASDAQ: CDW) came back from private equity land over four years ago and has done outstanding since. 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.
This stock has been highlighted in the past as having virtually no exposure to China and as a very attractive and somewhat defensive small/midcap play for investors. Analysts also think that the company has benefited from the integration of U.K. IT services and solutions provider Kelway.
CDW expanded its channel partnership relationship with Dell in 2016. The expanded relationship added over 150 basis points, or 1.5% (more than $200 million), to CDW’s top line growth in 2016. The potential for this relationship remains a $1.5 billion opportunity, and Dell’s PC/server results should be a positive for CDW.
CDW investors receive a 1.0% dividend. Deutsche Bank has a price target of $84, and the posted consensus target is $84.82. Shares traded at $85.25 Thursday morning.
HP
This is the printer and personal computer businesses of the old Hewlett-Packard. HP Inc. (NYSE: HPQ) provides products, technologies, software, solutions and services to individual consumers and small- and medium-sized businesses, as well as to the government, health and education sectors worldwide.
The company’s Personal Systems segment offers commercial personal computers (PCs), consumer PCs, workstations, thin client PCs, tablets, retail point-of-sale systems, calculators and other related accessories, software, support and services for the commercial and consumer markets.
The Printing segment provides consumer and commercial printer hardware, supplies, media, scanning device and software and services, as well as LaserJet and enterprise, inkjet and printing, graphics, and software and web services.
The company delivered another quarter of stellar performance, wherein its revenues for the second quarter of fiscal 2018 surpassed the consensus estimates while earnings matched the same. HP’s total revenues climbed 13% year over year to $14 billion The better-than-expected top-line performance was driven mainly by strength in the Personal System and Printing segments, as well as successful product roll-outs.
HP investors receive a 2.37% dividend. The $27 Deutsche Bank price target compares with the consensus estimate of $25.65. Shares were last seen at $23.60.
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Pure Storage
This company had a 2015 initial public offer and could be offering investors big upside in flash storage. Pure Storage Inc. (NYSE: PSTG) is a leading vendor in the all-flash array market that addresses the larger $12 billion tier-1 storage area network market, as well as the $6 billion NAS market. All-flash arrays are disrupting hard disk drives, given better performance, better durability, higher reliability, lower power consumption and a smaller footprint.
The company disrupts traditional selling models by allowing customers to use the same hardware for up to 10 years, offering free upgrades every three years for a service fee.
The company reported first-quarter net losses of $64.3 million, which was deeper than in the year-ago period. However, revenue rose to $255.9 million from $182.6 million. However, both the top and bottom line results beat the consensus forecast.
Deutsche Bank has set its price target at $25. The consensus target is $24.77, and shares traded at $23.95.
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Here are four ways for investors to stay involved in technology over the summer without having huge concerns for a volatility-driven stock price meltdown. All these companies are posting solid earnings and should continue to the rest of 2018.
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