IT shares have led the way out of 4 prior troughs
For everyone sitting on sleepy Canadian technology stocks, of which I am one, here is some very good news from CIBC’s Equity Research division. They’ve had a look at which stocks are among first to lead the way after a bottoming on the TSX, and Information Technology shares are front and centre. This is not to say that we’ve hit the bottom, of course; that’s not my call. It might not happen this year, or even next. But if the mark-to-market rules are amended for the banks, one should assume good things will spill into the market, even as the recession rages:
Sector Performance Around Past TSX Bottoms:
- Oct-90: Best return in the next 3 months: Info Tech, Financials
- Dec-94: Best return in the next 3 months: Materials, Health Health, Info Tech
- Oct-98: Best return in the next 3 months: Info Tech, Telecoms
- Oct-02: Best return in the next 3 months: Info Tech, Telecoms, Financials
MRM
For what it is worth, here’s a contrary view:
http://www.businessinsider.com/tech-stocks-wont-lead-the-next-bull-market-2009-3
IMO, they may both be right.
The Canadian InfoTech sector is not composed primarily of long-in-the-tooth titans like MSFT et al. I think RIM is still in growth phase and most Canadian small cap tech companies are trading at 2x EBITDA or (in some cases) with a negative enterprise value. In a recovery I can easily see MKS, TUN, EXF etc more than doubling.
Meanwhile, the Dinosaur Index (aka the NASDAQ) might experience a pop that will actually TRAIL the overall market.
DS