In a late bull market, the biggest gains always seem to come from the tech sector, and yet, these great gains that so attract us also cause us to recoil in visceral shock at some of the valuations these stocks achieve. Everyone knows, for example, that Square (SQ) is an extremely promising stock. (You’ve been hearing it in this column, among other places, since shortly after its IPO.) But is it reasonable to buy stock in an unprofitable company trading at 91 times its projected 2019 earnings? And if not, does that mean it is reasonable to sell the stock, possibly to buy it back later at a more reasonable valuation? Alas, there’s simply no way of knowing the correct answer to either of these questions.
That’s why today we are going to focus on promising tech companies that have thus far evaded market insanity. That’s not to say they are cheap, because no promising company’s stock is cheap at this stage of a bull market, only that they haven’t yet been fully dragged away by the hype train.
Remember to treat these ideas as just that, ideas, and do your own research before making any investment decision.