Best Bet In The Tech Sector Right Now

| July 9, 2012 | 0 Comments

Figuring out where to invest in the stock market is a bit trickier than usual of late.

The European financial crisis has many worried the European Union could break apart at any minute.  And slowing growth in China and the US are sparking concerns the global economy is sliding into recession.

There’s no question these two major macro concerns are weighing heavily on investors.

As a result, both the Dow Jones Industrials and the S&P 500 ended the first week of July in the red.  Of the three major stock market gauges, only the Nasdaq was able to eke out a gain for the week.

The upshot… it’s getting tougher and tougher to identify areas of the market which offer good opportunities to profit.

With that said, the folks at Gartner may have just made the search for stock market gains a little easier.

This morning the research firm issued a bullish outlook for the information technology sector.  The research firm upped their 2012 growth estimate from 2.5% to 3.0%.

In fact, they project spending on information technology this year will hit a whopping $3.6 trillion.

However, as bullish as this upwardly revised forecast may be, it’s not the most interesting part of the report.  The key takeaway in my opinion is the huge spending growth projection for public cloud services.

Gartner says spending in this area will surge 20% this year to $109 billion. 

What’s more, they believe spending on public cloud services will nearly double by 2016 to $207 billion.

Now that’s what I call an exciting investment opportunity!

So, how can the average investor profit from this information?

I’ll get to that in just a moment.  First, let’s review what cloud computing is and why it’s such a revolutionary trend.

Cloud computing is the next phase in the evolution of the internet. 

It’s a way to store data or software outside of a computer, while providing access to it from anywhere, at anytime through the internet.  In other words, infrastructure, applications, and business processes can be delivered as a service.

The phrase “cloud computing” comes from the cloud symbol used by 1960s era flow charts and diagrams to symbolize the internet.

In fact, you probably use the cloud everyday and don’t even realize it.  Internet based email (Google mail), social networking (Facebook), and streaming movies (Netflix) are all examples of technology that relies on the cloud to operate.

But why is everyone so optimistic about the future of cloud computing?

Simple… it’s a groundbreaking way for businesses to lower their IT costs.

For example, if a company is using an online storage service, they have no need to buy server hardware or hire staff to maintain the hardware.  Plus, a business can cheaply and easily scale its cloud resources up or down to meet changing demand.

These huge potential cost savings are expected to drive a mass exodus into cloud computing over the next several years.

Now, there are many companies providing various cloud computing services.  Deciding which ones have the best profit potential is enough to make any investor’s head spin.

Fortunately, there’s an easier way to profit from this exciting mega-trend…

It’s called the First Trust ISE Cloud Computing Index Fund (SKYY).

This exchange traded fund provides a way to gain diversified exposure to all aspects of cloud computing.

It includes network hardware, network software, storage, and computing services companies.  In addition, the ETF holds companies who provide goods and services in support of cloud computing.

As you can see from the chart, you have an opportunity right now to pick up SKYY on the cheap.  The ETF is trading at just $17.83 per share as I write.

That’s a better than 17% discount from the 52-week high of $21.63!

And the cost of ownership going forward isn’t too bad for a specialty ETF.  SKYY carries a relatively cheap annual expense ratio of just 0.60%.

Take a closer look at SKYY for your own portfolio.  It’s a simple and convenient way to add diversified exposure to one of the best growth opportunities in the market today.

Profitably Yours,

Robert Morris

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Category: ETFs

About the Author ()

Robert Morris is the editor of Penny Stock All-Stars, an investment advisory focused on discovering small-cap and micro-cap stocks that are destined to become the market’s next Blue Chips. The Wall Street veteran and small-cap stock specialist is also a regular contributor to Penny Stock Research. Every week, Robert shares his thoughts with our readers on a variety of penny stock-related topics. In addition to Penny Stock Research, Robert also writes frequently for two other free financial e-letters, ETF Trading Research and the Dynamic Wealth Report. He’s also the editor of two highly successful and popular investment advisories, Biotech SuperTrader and China Stock Insider.

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