Still, the technology currently offers good value. In fact, XLK’s estimated 2015 P/E ratio is below that of the Utilities Select Sector SPDR (NYSEArca: XLU). [Value With Tech ETFs]
“Tech seems to have become a new Value sector. Growth has slowed, but long-term growth forecasts still far exceed those for the S&P500 while margins & ROE remain impressively high. Unlike many sectors valuations have not drifted much higher since 2009. As a result, Tech trades at a P/E discount to the S&P500 whereas historically it has enjoyed a premium. We think Tech appears relatively attractive at these levels,” said AltaVista Research in a recent note.
The research firm has a neutral rating on XLK.
Technology Select Sector SPDR
Tom Lydon’s clients own shares of Apple and Facebook.