Special Report

VIDEO: How to Find the Hottest Technology Stocks of Tomorrow… Today

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Alex: Hello, I’m Alex Moschina, the associate publisher at Manward Press, and I’m speaking today with Andy Snyder, the founder of Manward Press and author of Manward Letter, among many other things.

Today, we’re going to discuss how to find the hottest technology stocks of tomorrow. We’re going to reveal some screeners that you can use, some various things that you should look for when looking for a really good technology stock, but before we get into any of that, I’d like to actually talk with you, Andy, real quick about why you’re so bullish on tech and why now is the time to get into tech stocks.

Andy: Sure. Well, I think this video is a good example of why we should be bullish on tech stocks. I’m sitting here from my home office talking to you and your home office. Right there, there’s a lot of technology happening, but really, what’s happening in the tech world is just a huge shift.

I’ve written a lot about all the free money that’s out there, the low interest rates, the Fed printing. A lot of that is going into the tech sector just because valuations there are a little, I guess, a little more nimble. You can’t put a dollar sign directly onto an asset at a lot of these tech companies. How much is a terabyte of storage worth for Oracle or something?

That plays into a huge part of why we’re seeing valuations in the tech realm go up, but there’s also some really big tech advancements out there. You look at streaming video, you look at things that’s going on in the auto sector, Tesla, Apple, everybody in that world is really on the cusp of taking things further and further.

You have kind of a free-money bonanza tied into a tech revolution or evolution at least, and we see some really ripe opportunities for investors that know where to look, when to buy, and really what to avoid, what levels to avoid things and what are the optimal times to buy into a stock.

Alex: And I think this is an interesting trend we’ve discussed elsewhere, but we’ve talked about the fact that the companies that make up the S&P 500 increasingly are companies that don’t make things, or they don’t make things that you can necessarily hold… when you think about a company like GE, which has had to have a major reinvention, and it’s in the process of a major reinvention right now, but that was the big stalwart stock for many, many years, and now you’ve got companies coming in who are your Facebooks and your Apples and your Amazons that on their faces don’t really make anything. They distribute things, and they generate technologies that people use, but they don’t make a thing.

That is kind of the bellwether for the entire economy. That’s the way everything is moving. Everything is manufactured, and that’s secondary to the technology that enables you to get that product.

Andy: I think Facebook is the prime example of that. Really, Facebook has one product, from a consumer side, a very simple platform, interactive platform, but they use it to collect data, which is a huge thing for tech right now. They have marketing angles on there. They bring people together. They have some video aspects of that. Now they’re getting into digital currency.

Talk about not making anything physical… Facebook is the ideal example of that. But look at their valuation; look what that stock has done for folks.

I’m not saying everybody can go out and find the next Facebook. I’m not saying there’s another Facebook out there right now, but there are certainly tech stocks that are going to move faster and with just as good of momentum starting at a much lower base right now than Facebook.

Alex: We know people are buying them. We can see the volume going into these tech stocks right now, but if you’re buying based on news or if you’re buying based on what the top movers are today, you might not necessarily be buying the right tech stocks.

Can you talk a bit about what are some of the mistakes that people make and what they can avoid investing in tech today?

Andy: Sure. In the good old days, you pick up a magazine, Popular Mechanics, and you thumb through that, Popular Science, and you’d see all these different headlines, these cool technologies that are out there.

I remember reading about Bluetooth, I don’t know, maybe in the ’90s in Popular Science and thinking, “Well, this is going to be interesting,” but reading the headlines, it’s almost too late by then to make the good money, but yet so many investors, so many retail investors go to Yahoo Finance, they read The Wall Street Journal, and they think they’re the only ones reading it.

In one of my portfolios this week, we have a tech stock that really surged after Barron’s called it the “stock of the month” in their magazine. Great. We were in it before them. Those buyers that are getting in today are paying a premium over what they could have just a month ago if they had used other ways of finding it. Trying to take your best guess or outguess the market as far as what we know… I think I’m a smart guy. Our viewers are certainly smart, but-

Alex: I’m not going to contradict you.

Andy: That’s good. But to think that you have knowledge over everybody else and that you can pick out the next best technology when people are paid to do it… This is their job. There are insiders, there are analysts that do this every day. To think that you can outsmart them and find something they don’t know… that’s a tall order.

Instead of doing that, I say follow them. Follow those insiders. Follow where the money, the hedge funds, those guys are going, and don’t just try to predict things and buy when you see something in the headlines.

Another thing folks do is they buy the popular trends. Fitbit is a good one. GPS units. I had a good friend who was an analyst who was really high on shares of Garmin in the early 2000s, and for a little bit, it was a good trade. But now, all of us in our phones now have a GPS, our cars have them. Nobody has those little dash-mountable GPSs in their cars anymore, and the company has a hard time.

When you see a consumer trend that’s really taking off, it’s risky to say that that’s going to be the next big thing. There’s other smarter ways of finding good investments. By the time they hit the mainstream, again, they’re not always the prime investment. They’re peaking out. Everybody’s getting into them. It’s too late.

Alex: A lot of the companies that are taking off are ones that might not ever make headlines. These are companies creating things that you don’t see.

You recommended a play on a company called Limelight Networks earlier this year, and they’re a great way to capitalize on exactly this, this conversation that we’re having. They’re a content delivery network. It’s not the sexiest of terms, and it’s not something that comes up while people are having dinner conversation, but man, if you’re going to put money into something right now, there’s only going to be more of these kinds of video communications, and there’s only going to be more data transferred.

You need to find out what are the companies that are enabling that to happen… what’s a pick and shovel play for a tech revolution?

Andy: Yeah. It’s not always the things on the surface. Again, going back to the GPS, Garmin, they had their name on it, but there were things inside of them. Nvidia is a great example of this with everybody saying, “Well, Nvidia did well from the Bitcoin trend. It was a pick and shovel play there. It’s done well from screens. It’s done well with related to Tesla and that technology in various car, so Nvidia is a great example.” And that stock has just shot up in 2020.

Looking behind the scenes, again, that takes research, and it takes industry knowledge, but again, how are you going to go out there and screen the thousands of publicly traded companies, research every product not only in their pipeline, but that they’re offering right now? None of that data is good enough, or you can’t take like a 10-K and read through that and say, “Wow, this is going to be a great product.” Sales growth, maybe. That’s a good thing. You can’t really peruse their website and say, “This is going to be a good product.”

You have to have some other way of finding stocks that have momentum behind them or they have, again, insiders buying, somebody else is buying and showing that this is an opportunity. The people that really are in the know are pushing the share price higher and jumping into it. That’s when you jump in.

Alex: Well, I think that’s a perfect segue then to getting into some of these ways that somebody could on their own screen for the kinds of tech stocks that will do well, the kinds of things that they might not just find reading Barron’s, reading The Wall Street Journal.

Do you want to share some of your favorite screeners or some of your favorite indicators that you use to determine exactly that?

Andy: Sure. I mentioned insider buying. That’s probably the simplest, and a lot of folks are doing that, but really, it comes down to volume. If insider buying is here, volume’s this umbrella over that.

For dozens of years now, I’ve studied volume spikes and the anomalies that come with trading volume. I mean, so many times we see a volume spike precede a big announcement, a merger announcement, a new product debut.

If you can go in there and just go in and screen from volume anomalies, look for volume that is 100% of its average. It’s not hard to do, but if you see that over the span of a week, I mean, that is a huge clue that something’s coming up, even lower, 50% over a week or something is really big.

Momentum is a big one. Also, looking for a big block trades. A lot of block trades happen off the market, and then they’re reported in various places, but again, you can see those happening within the market by just tracking volume and seeing what’s going on there.

Alex: If I was looking for a block trade, is there a specific volume indicator that I could use or that I could find in a Yahoo Finance to really magnify those kinds of details?

Andy: Sure. Most block trades, like I said, are off the market. There’s kind of a shadow market, a ghost market for those, but you can go in and look. I’ve talked about equivolume a lot. You can see it in there. You just look for that volume spike. It’s usually a good chance that somebody is buying big blocks of something somewhere.

We can’t get too far into equivolume now, but it’s a charting strategy that I use very often that shows the daily stock price along with volume all in one chart. You get a really good sense of the buying activity or the share price activity in relation to volume.

You can subscribe to a service that shows you a block trade activity. It’s pretty expensive, but you can do it, or you can look at equivolume and kind of see a translation of the idea right there.

Alex: I know this is something that you’re looking at on a daily basis because it’s the basis behind your Alpha Money Flow service. That’s something that we publish at Manward, and it is really volume-focused, and it’s proven to be quite successful at using volume to determine what tech stocks are going up.

We’ve had in the past year or so companies like Broadridge Financial Solutions, we’ve had SunPower, we’ve had Yext. These are all not companies that are necessarily at the tip of investors’ tongues. They’re not getting mentioned on the news, and yet, when you saw volume pouring into them, that was a signal for you to buy.

Andy: What’s really interesting about Alpha Money Flow is that money flow angle. I talked about insider buying block trades, all that. Easiest way to track that it, at least in my opinion, is what we call the Liberty Indicator. It tracks buying pressure using volume and share price, and basically, it’s either red or it’s green, and that crossover, when the buying pressure turns from red to green, has historically been a great indicator of when to buy it. That’s what we use. You can use it for tech stocks. You can use it for just about anything,.. growth… value. As long as that buying pressure is changing, we can get some really good entry points and some really good stock price appreciation potential.

Again, just looking for that volume to change, whether it’s insiders, a big block trade, whatever. That’s all we’re looking for.

Alex: If you’re interested in learning more about that and you’re not necessarily looking to apply this stuff directly yourself and you want to learn more about Alpha Money Flow, we’ll put the number right below on the screen. You can give our team a call. They can give you some details about how that works and the best way to get in. I think that we even have a special offer going for people who watch this video and are interested.

But beyond that, like Andy said, you can apply a lot of what we’ve talked about here today yourself. I think it would be wise to just start doing that. The best way to get started… is to get started.

Go into some of these free charting platforms online… even Yahoo Finance. It is popular for a reason. Go in there, and start messing around with the indicators, start looking for those volume spikes in companies that you already own or companies that you’re interested in picking up so that you can start seeing how this applies to your regular trading.

Andy: StockCharts is a good one for the equivolume that I mentioned. It also has a variation of the Liberty Indicator in there, but really, like you said, get started, and find something that allows you to track volume.

In the tech sector, pull up a screen, just hit the tech sector, and start scanning for volume. I’m positive your success rate will go up just by studying what’s ultimately moving the stocks for you. You’ll find a better tech stock, and you’ll find them at bit cheaper prices than the big boys that have reached their apex of price and really are just kind of headline plays now.

Alex: I suspect, knowing how passionate you are about volume as an indicator and insider buying, that it’s going to pop up in issues of Manward Letter moving forward, so please, read along with us, and please, check out all of the resources available to you on our site: ManwardPress.com. There’s a whole repository of reports and videos just like this one to teach you all about different kinds of investing and things that we’re into here at Manward.

I think that wraps it up for our conversation about tech. Did you have anything else, Andy?

Andy: Nope. Just volume.

Alex: All right, so you heard it from the man himself… Volume. Check it out, apply it yourself, and I really hope you enjoy all the resources that we have available to you.

We’ll see you next time.