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Highest Returns in U.S. Technology
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Not every investor is cut out for the high-risk, high-return investment, so it's a good idea to compare the risk of two potential investments. These stocks had the best risk-adjusted returns in technology.
Not every investor is cut out for the high-risk, high-return investment so it doesn’t always make sense to just compare company returns on their own.
There are five basic risk measures associated with each that investors should compare among potential investments. If two stocks had the same return, the less risky stock has a better risk-adjusted return.
Bloomberg recently ranked the companies in the S&P 500’s Information Technology Sector and the Internet and Catalog Retail Industry by the stocks’ risk-adjusted returns over the last three years. Only companies headquartered inside the U.S. were considered. TripAdvisor wasn’t included as it didn’t have three years of history.
Here are the 10 technology stocks with the highest risk-adjusted returns over the last three years.
10. Symantec
Ticker: SYMC
Current price: $26.03
Industry: Security software and services
Three-year risk-adjusted return: 3.87%
Three-year volatility: 29.23%
Three-year total return: 113.21%
Security technology and services is a growing industry that is expected to surge from $61.8 billion last year to $67.2 billion in 2013, according to Gartner. Potentially, this market can reach $86 billion in 2016 because of increasing threats from hackers, according to the Motley Fool.
9. Western Digital
Ticker: WDC
Current price: $64.80
Industry: Data storage devices
Three-year risk-adjusted return: 4.02%
Three-year volatility: 41.42%
Three-year total return: 166.56%
Since the end of 2012 this digital content storage company’s stock has increased by a whopping 93%.
8. Paychex
Ticker: PAYX
Current price: $39.16
Industry: Staffing and outsourcing services
Three-year risk-adjusted return: 4.07%
Three-year volatility: 19.03%
Three-year total return: 77.39%
According to the Motley Fool, staffing and outsourcing companies are gaining momentum as companies come out of the recession and look to hire new talent.
7. eBay
Ticker: EBAY
Current price: $51.97
Industry: Catalog and mail order houses
Three-year risk-adjusted return: 4.24%
Three-year volatility: 33.04%
Three-year total return: 140%
The online retail company’s mean price target is $63.21, which means eBay could run up another 21.6%. The high estimate is $75 and the low $55.
6. Fiserv
Ticker: FISV
Current price: $99
Industry: Business services
Three-year risk-adjusted return: 4.83%
Three-year volatility: 20.36%
Three-year total return: 98.42%
Last quarter the financial services technology company beat earnings estimates and just recently the stock hit its 52-week high.
5. Total System Services
Ticker: TSS
Current price: $28.08
Industry: Business software and services
Three-year risk-adjusted return: 4.84%
Three-year volatility: 21.78%
Three-year total return: 105.5%
The company provides payment processing and other services to card-issuing and merchant acquiring institutions. Last quarter TSS beat earnings estimates and the company raised the financial outlook for 2013.
4. Visa
Ticker: V
Current price: 175.61
Industry: Credit services
Three-year risk-adjusted return: 5.26%
Three-year volatility: 27.25%
Three-year total return: 143.41%
Over the last year, Visa’s stock has risen 37.6%, but it’s risk-adjusted return still isn’t as impressive as one of its biggest competitors, which took the top spot on this list.
3. Automatic Data Processing
Ticker: ADP
Current price: $72
Industry: Business software and services
Three-year risk-adjusted return: 5.45%
Three-year volatility: 17.57%
Three-year total return: 95.81%
If you like dividend stocks, then ADP is a good buy since it has a track record of at least two decades of dividend growth. Its one-year dividend growth rate is 10%.
2. Priceline.com
Ticker: PCLN
Current price: $955.58
Industry: Business services
Three-year risk-adjusted return: 6.42%
Three-year volatility: 34.15%
Three-year total return: 219.19%
This dot-com-era survivor is the most expensive stock in the S&P 500. And it looks like it will break the four-digit mark even before Apple or Google.
1. MasterCard
Ticker: MA
Current price: $619.33
Industry: Credit Services
Three-year risk-adjusted return: 6.6%
Three-year volatility: 29.73%
Three-year total return: 196.13%
The credit card company is up 8% over the last three months. Analysts have reported a 12% growth estimate for the current quarter compared to -92.3% for the sector.
