Cheap Stocks to Buy Now
By Andrew Mickey, Fear and Greed
The doomers and gloomers got another slap in the face over the weekend. And opportunists who don’t bet against a rising market received another jolt when some preliminary corporate spending information was released.
As a result, a few dirt-cheap stocks that have missed out on the market rise are about to play catch-up. I’ll get to those in a moment. First, let's look at what’s been going on over the past few days that will allow the bull run to carry on through the rest of the year:
A leading indicator of every economic boom has been a rise in business development and investment, just as every recession has been led by a softening in business spending. Leave the yield curve analysis and foreign currency analysis at home. Businesses drive the economy. It’s just that simple.
Businesses hire more employees, driving down the unemployment rate, and increase investment in new technology to take on new projects. They’re the big spenders that lead to larger corporate profits and a robust economy. As business goes, so does the economy.
That’s why I was so excited when Dean McCarron, an analyst at Mercury Research, said this about the semiconductor market: “We’ve never seen the volumes go up in the second quarter like they have this year. A lot of people, myself included, have egg on their faces for their forecasts.”
McCarron wasn’t the only one revising forecasts upward. Stephen Minton, of technology research firm IDC, was just as bullish on the technology sector. In a note published by the Wall Street Journal, Minton mentioned he would be revising his business tech spending expectations for 2007 up to 9% for the year.
In a market that can be considered thriving when businesses increase spending by 6% or 7%, 9% growth will be a banner year. And that’s why we’re finally going to see a few lagging tech stocks start to play catch-up, especially those that cater to business clients.
Businesses are investing at a pace we haven’t seen since the tech bubble and they’re falling in love with a few software packages. Of course we’re seeing sizable increases in the sales of Oracle, Microsoft, SAP and IBM.
But the big opportunity is in the highly specialized business software makers that are in high demand, thanks to heavy tech investments from businesses. And that’s the realm of the small-cap specialist firms.
One of the firms that is aggressively capitalizing on the boom in business spending is Manhattan Associates (MANH:NASDAQ). Manhattan is a premiere developer of logistics software solutions as well as financial, catalog and Web solutions to shipping and transportation businesses.
As always, when we’re looking at the technology sector we have to look for mainstream customers already buying and using the software applications. That way we know we’ve got a viable, marketable product, rather than just a good idea. There’s a big difference.
Remember the Gilat Satellite Network (GILT:NASDAQ) launched by Motorola back in the late ‘80s? Heralded as the future of mobile communication with its worldwide network of satellites, it just didn’t pan out.
In hindsight, it’s easy to see customers would be unwilling to shell out $4 a minute to talk into a phone half the size of shoebox, although it worked anywhere in the world. Besides that, it didn’t work when a skyscraper or tall building was interrupting the space between the phone and the satellite.
Regardless, Gilat never landed the mainstream customer that would encourage others to follow. Now, with the stock down more than 99.6% in the past seven years, investors are starting to learn the lesson.
But Manhattan Associates’ logistics software solutions are already being used by the big players. Some technology partners include IBM, Tyco, Microsoft and Rand McNally. And Manhattan has enrolled HP and Motorola as hardware partners.
Clearly, Manhattan is up to something here and, if successful, will blow away the performance of the SAPs and Oracles of the world. It all comes down to scale. Manhattan has a lot better shot at doubling in size before the multibillion behemoths it works and competes with.
That’s just what we’re looking at as tech -- specifically, business software makers -- becomes one of the top-performing sectors of the remainder of 2007. And right now, many of them are looking very cheap, considering businesses are opening up their wallets wider than they have in years.
BreakAway Investor, one of my premium investment advisories, caught onto the business spending growth far earlier than most. Earlier in the year, we uncovered two small-cap companies that have developed services that are very high demand.
One of them develops business expense payment solutions and the other helps process the billions of dollars that flow through the complicated U.S. healthcare system every year. Together, these two picks alone are up a combined 70%, and we’re just getting started.
About the Editor: Andrew Mickey, Editor-in-Chief of the Free e-letter Fear and Greed, is the small-cap and penny stock expert for the Taipan Financial News Network. Discovering what he calls "breakaway" opportunities – those companies on the verge of becoming industry leaders – Andrew has delivered such gains as 383% on Generex, 142% on Alliance Fiber, 88% on ICN Pharmaceuticals and 123% on E*TRADE to his readers. Be part of these fantastic gains. Join Fear and Greed today. It's Free!
Publisher’s Note: Be sure to check out Andrew’s Chart of the Day on the true story about uranium. You definitely want to read it before investing in any uranium companies. Look for your Chart of the Day from Taipan Financial News in your in-box later on today.