Juniper Networks Set to Gain as Tech `Purgatory' Ends: Technical Analysis
By Elizabeth Stanton - Dec 9, 2010 12:50 PM MT
Technology shares are likely to lead U.S. equities higher over the next two years, and Juniper Networks Inc. appears poised to be among the best performers, according to Royal Bank of Canada.
“Technology is emerging after five-plus years of technical purgatory,” Robert Sluymer, a technical market analyst at the bank’s RBC Capital Markets Inc. unit in New York, wrote in a report today. The 75 makers of computer hardware and software and semiconductors in the S&P 500 account for 19 percent of its market value, the most among 10 industries.
Juniper Networks, the second-largest U.S. maker of computer networking equipment after Cisco Systems Inc., “is poised to break out of a multiyear trading range,” Sluymer wrote. RBC expects economic and earnings growth to fuel gains in stock prices next year. Technology stocks, out of favor for years following their collapse from 2000 to 2002, are “increasingly showing technical evidence of becoming a leadership theme through 2012,” Sluymer wrote.
Energy stocks led the S&P 500’s advance from March 2003 to October 2007, more than tripling as a group while the index rose 88 percent. Technology shares gained 97 percent, less than five of the index’s 10 industries. Since the end of 2008, technology stocks in the S&P 500 have gained 74 percent, more than double the 36 percent return for the index.
“In contrast to the last bull cycle, where technology only participated for a first couple of quarters, in this cycle we believe technology will participate strongly,” Sluymer said in an interview.
Juniper Networks, which declined 16 percent from the end of 2004 through June 30 compared with a 15 percent drop for the S&P 500, has risen 53 percent through yesterday, more than twice the index’s 19 percent advance. The company is his top recommendation for 2011.
Check Point Software Technologies Ltd. was Sluymer’s top recommendation for 2010. The world’s second-largest network- security company gained 32 percent this year through yesterday, compared with a 10 percent advance by the S&P 500 and an 8.7 percent gain for its technology stocks.
Knowledge is knowing a tomato is a fruit; Wisdom is not putting it in a fruit salad.
