alarm:clock

Tech stocks - Tuesday, December 9, 2008

Sell Today And Reinvest Tomorrow

We have one word for today's rally: sell. With the Dow settling just shy of 9000, the staff at tech:stocker is putting in multiple sell orders on Tuesday to actually realize some profits. Let's be clear, we are not day traders nor do we think day trading is a smart investment strategy. But, with the market ignoring the unemployment numbers and the lack of money flowing into real estate, we believe that investors will start to realize that the recent gains are a little too good to be true considering the economy. We believe a lot of people will be selling tomorrow

So instead of recommending a stock to buy tomorrow, here are a few financial services and tech stocks that we recommend ejecting from your portfolio tomorrow.

1. We believe Wells Fargo (WFC:NYSE) will eventually emerge from this recession as an extremely strong company. But since the recession is not going to end in the next two months, we have a hard time believing they will be able to sustain the 50% increase the stock has shown since November 21. While the stock was definitely undervalued at $21.76, we think it is currently overvalued for these market conditions, especially when we don't have a good understanding for the amount of toxic assets at Wachovia. Sell most of your holdings and watch the stock carefully before you reinvest.

2. Back on December 4th, we gave a buy recommendation to Seagate Technology (STX:NASDAQ). Now that the stock is up 20% after a few days, we recommend selling a few shares. After all, 20% in two days is more than what the local loan shark makes in the same amount of time. Put the money back in Wednesday or Thursday as we still like this stock.

3. Another quick profit could be taken with a sale of Rogers Corporation (ROG:NASDAQ). Up 17.33% since we recommended this stock on November 18th, we recommend selling 30% of your holdings and then quickly putting them back into the stock once you've seen a noticeable drop. We've become big fans of Rogers and think their specialty materials are well-positioned for future growth. Still, the stock is up a little too much for us not to take a little off the top.

4. Even though we recommended Adobe last week, there's room to make a quick buck. If you bought this on December 5th when we gave it a buy rating, you would be up 10.57%. That's a solid return in two days. While we still believe in the stock and stick by our target price of $28 per share, selling a few shares to lock in a profit before reinvesting that money back into Adobe would be a smart move.

5. We don't own any shares of Salesforce.com (CRM:NASDAQ), but if we did, that would be the first buy order we would want executed Tuesday morning. Since we last panned Salesforce.com on November 21, the stock has risen 56.09%. Why? We're not sure why but it's a little too large of an increase considering the market conditions. We admit that cloud computing has a bright future ahead of it but we wonder if Salesforce.com is going to be the leader, why can't they make a decent profit? Don't be greedy and sell all your shares. The 56.09% profit should make anyone happy this year.

With all these companies, except Salesforce.com, we recommend reinvesting in these stocks. We are very confident in our 12-month targets for all of these companies (we will be issuing a new target for Wells Fargo in the near future as it's been a while since we've taken a ride on the coach) and recommend reinvesting of all the proceeds from each sale.