Sangoma Technologies Corp T.STC

Sage Advice

[retiredcf]

It seems like everyone is dumping technology and piling into energy. When energy was dirt cheap, hardly anyone was recommending it and that was the time to buy rather than high flying growth stocks or highly priced renewables. Is the same thing happening here where clearly technology is not in favour and everyone is selling to buy energy as that is the only thing working? Isn't this the wrong way to look at things as you are selling technology low and buying energy high. 

Yes, this is indeed what happened in 2020. Right now, we think technology is attractive, but the inflation/rate problem may last a lot longer than the Covid/Opec oil meltdown. But many tech companies are very cheap, still growing, and have lots of cash. Once the interest rate fear is over, we would expect them to do quite well, and patient buyers we think will be rewarded over time.  Some tech stocks can double or triple, and we are willing to wait some time for that. (5iResearch)

 

[masfortuna]

Ok except he forgot to mention that energy stocks are ALSO out of favour due to the eco-woke crowd.  Many finacial investors won't touch them. They are trading at a 2x multiple as opposed to the 5-7x multiple in 2014. Oil is trading between $80- $90 but if you factor in inflation over the last 9 years at roughly 2%, it's the equivalent of $70 oil in 2014. Oil hit $133 in 2014...BTE

[masfortuna]

And the issue is not Covid/Opec (opec??? It's at max production capacity.  They have been short about 2 million barrels over the last 6 months.  So there cut of 2 million actually doesn't change the amount of oil o the market). The issue is a structural supply issue. It existed before the Russian war regardless of what Biden states.  When he took office, oil was at $2.38 a

[Torontojay]

Yes oil is still cheap and will go higher for the next bull cycle.  I think tech is trading like oil was back in 2020 and offers great value in the long run. Nobody wants to own tech right now and it's the same sentiment for oil stocks during the covid meltdown.     

[masfortuna]

I would agree except that I think there is another shoe for tech that must fall.

[Torontojay]

Yup, I think so too.  I also believe the markets bottom some time next year with S&P 500 testing the pre-covid levels of 3200. It is highly unlikely with the Fed tightening into an inverted yield that we reached the bottom with trough unemployment. My guess would be that unemployment reaches the 5-6% range (US) and then earnings contraction will take the markets even lower.