Technology stocks have been rallying for weeks. But there are plenty of arguments that we’re in the midst of a bear-market rally and that more volatility lies ahead, especially for the rapidly growing, but not necessarily profitable, technology stocks that performed so well during the previous bull market through late 2021. Read: Nasdaq bull market? A history of head fakes says it’s too early to celebrate.
Robert Stimpson, chief investment officer for Oak Associates Funds, made the case that a “financials first approach” to companies with staying power is the best one for the current environment, with risks that include rising interest rates and a possible recession. During an interview, Stimpson, who has been with the firm for 21 years and co-manages the $544 million Red Oak Technology Select Fund
described his team’s approach to selecting large-cap tech stocks for “attractive valuation, high profit margins and an ability or willingness to support and recognize shareholder value.” That last part might include share buybacks, which increase earnings per share, dividend increases or acquisitions expected to increase earnings per share. The fund has a low-turnover approach, currently holds 26 stocks and has a four-star rating, the second-highest, from Morningstar. A company doesn’t necessarily have to pay a dividend to be among the fund’s holdings, Stimpson said, but “it has to show respect for investors,” which …