One note I made to myself repeatedly last week while appearing at the Money Show in San Francisco was how bullish everyone was about biotech, but how little enthusiasm I heard for "regular" tech.
I sat on a "Five Hot Stocks to Buy This Summer" panel with Real Money's Christopher Versace, but most of the guests skipped tech stocks and picked high-yielding, dividend/value-type plays (including a Greek shipping company and several energy-related MLPs).
Smart investors use contrarianism to their advantage, and I think it's significant that there was little excitement about tech stocks at an investment conference in tech-centric San Francisco just as the Nasdaq was hitting new all-time highs.
Apple (AAPL), Google (GOOGL), Amazon (AMZN) and Facebook (FB) -- which I've called "The New Four Horsemen of Tech" for years -- are now worth a combined $2 trillion. But hardly anyone seems enthusiastic about the tech sector these days.
Now, it's rare for contrarians and momentum/chartist investors to be able to claim the same sector and same stocks.
But even as the "Four Horsemen" are hitting all-time highs (making them the momentum/chartist investors' favorites), you can make a case that they're sufficiently underloved by both retail investors and professional money managers to make them good contrarian plays.
It all reminds me of the argument that Brian Gallo so often makes -- that being wildly bullish even as the markets hit all-time highs has been (and might still be) the most contrarian stance of all.
In full disclosure, I sold 10% of my FB and GOOGL common stocks on Friday, taking advantage of their recent gains to trim my holdings. But they're still be two of my three biggest positions, as they have ever been since they were a fraction of today's prices.
A few other contrarian plays to consider:
I've noted many times that it'd be hard for gold-mining stocks to be very profitable until gold gets above $1,300 an ounce -- and that they'd be crushed if gold dropped to $1,100. Well, now gold is at $1,100 and the Market Vectors Gold Miners ETF (GDX) is at all-time lows, I sure wouldn't want to be short gold-mining stocks.
That said, a short-term bounce of, say, 4% would take gold back to $1,200 -- and might take GDX back up to $20 or higher. That'd be a 50% gain from today's levels.
Talk about the perfect contrarian set-up: News, chart, tweets, Scuttles -- everybody hates gold right now. So, I'm likely to add a few more real gold coins to my personal collection soon. I might even buy some GDX call options. (I'll post any moves I make at TradingWithCody.com.)
The 3-D printing sector is even more hated than gold miners right now. Best-in-class stock Stratasys (SSYS) is at new all-time lows again today -- and down 70% from its highs earlier this year.
I still can't get comfortable with the declining margins and earnings warnings from the sector, so I'm still not stepping into SSYS right now.
The stock's valuation ain't bad if Stratasys can actually hit its numbers for next year, as the stock is trading at less than 2x projected revenue and less than 25x estimated earnings. But I'd like to see the company deliver a good quarter or two first, even if I have to pay up a little bit for waiting to see the business stabilize.
Another tech name that's down to a new low and off big from highs earlier this year is Yelp (YELP).
Investors were forever pricing in an expected Yelp acquisition by Google or Yahoo! (YHOO) or someone like that, but the founder says that he's not looking to sell it. But Yelp still has a big valuation, trading at 75x next year's earnings and nearly 5x this year's sales estimates.
I'm looking a bit deeper at Yelp and Stratasys and would love to hear from any readers who are either long or short on either of these two stocks.