So what does this all mean for investors? Now may be a good time to consider U.S. tech stocks. I still see upside potential for the sector and believe it’s one place to find value within the overpriced U.S. market.
Despite slightly outperforming the broader market index this year, technology stocks are still attractively priced, especially considering the sector’s decent first-quarter earnings. For instance, compared to the more defensive health care sector represented by the Dow Jones U.S. Health Care index, the technology sector, as measured by the Dow Jones U.S. Technology Index, is trading at a price-to-earnings discount of roughly 25% (S&P Dow Jones, 4/30/15).
In addition, the tech sector continues to provide some of the fastest rates of dividend-per-share growth among all the sectors, and we’re likely to see more share buybacks and dividend increases from mature established tech firms in coming months.
Exchange traded funds, such as the iShares U.S. Technology ETF (IYW), can provide access to the U.S. tech sector.
Sources: BlackRock, Bloomberg, Linked to Above
Heidi Richardson is a Global Investment Strategist at BlackRock. She is also Head of Investment Strategy for U.S. iShares. You can find more of her posts here.