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Mark Grant, the chief global strategist for fixed income at B. Riley FBR, is usually focused on the bond market, but he had an interesting suggestion for long-term investors that he shared with Stuart Varney on Fox Business:
After quoting the adage, “You buy when there’s blood on the streets,” Grant suggested that for “appreciation plays,” investors look “in technology,” where there are some “good names without any debt … you can make some money on, with a little patience.”
The S&P 500 Index SPX, -4.41% has tumbled 27% since its closing high Feb. 19, while the S&P 500 information technology sector has declined 25%.
A tech-stock screen
There are 70 companies in the S&P 500 information technology sector. However, the sector excludes several companies that the typical investor would consider technology players. So we added social-media companies, video-game developers and internet-services companies to bring our “technology” list up to 80 companies.
Here are the 20 companies on the list with the lowest ratios of long-term debt to equity, per their most recent financial reports, according to FactSet:
| Company | Ticker | Long-term debt/ equity | Total return – Feb. 19 through April 1 | Total return – 2020 | Total return – 2019 | Date of most recent financial report | Industry |
| Fortinet Inc. | FTNT, -0.69% | 2.2% | -16% | -6% | 52% | 12/31/2019 | Computer Communications |
| IPG Photonics Corp. | IPGP, -4.06% | 2.4% | -26% | -27% | 28% | 12/31/2019 | Semiconductors |
| Arista Networks Inc. | ANET, -4.83% | 2.8% | -14% | -5% | -3% | 12/31/2019 | Computer Communications |
| Skyworks Solutions Inc. | SWKS, -7.75% | 3.4% | -31% | -32% | 84% | 12/27/2019 | Semiconductors |
| Jack Henry & Associates Inc. | JKHY, -5.26% | 3.8% | -15% | 1% | 16% | 12/31/2019 | Information Technology Services |
| Take-Two Interactive Software Inc. | TTWO, -1.92% | 5.9% | 2% | -5% | 19% | 12/31/2019 | Recreational Products |
| Alphabet Inc. Class A | GOOGL, -5.15% | 6.8% | -28% | -18% | 28% | 12/31/2019 | Internet Software/Services |
| Alphabet Inc. Class C | GOOG, -4.92% | 6.8% | -27% | -17% | 29% | 12/31/2019 | Internet Software/Services |
| Paycom Software Inc. | PAYC, -7.21% | 8.4% | -42% | -29% | 116% | 12/31/2019 | Software |
| Facebook Inc. Class A | FB, -4.32% | 8.9% | -27% | -22% | 57% | 12/31/2019 | Internet Software/Services |
| Cognizant Technology Solutions Corp. Class A | CTSH, -8.52% | 11.5% | -38% | -31% | -1% | 12/31/2019 | Information Technology Services |
| Synopsys Inc. | SNPS, -2.20% | 11.6% | -24% | -10% | 65% | 01/31/2020 | Software |
| Ansys Inc. | ANSS, -9.13% | 12.7% | -29% | -18% | 80% | 12/31/2019 | Software |
| Micron Technology Inc. | MU, -5.16% | 13.3% | -34% | -26% | 69% | 02/27/2020 | Semiconductors |
| Salesforce.com Inc. | CRM, -6.89% | 13.6% | -30% | -18% | 19% | 01/31/2020 | Software |
| Electronic Arts Inc. | EA, -2.64% | 13.7% | -11% | -9% | 36% | 12/31/2019 | Recreational Products |
| Accenture Plc Class A | ACN, -5.26% | 14.1% | -28% | -26% | 51% | 02/29/2020 | Information Technology Services |
| Intuit Inc. | INTU, -5.17% | 14.7% | -29% | -17% | 34% | 01/31/2020 | Software |
| F5 Networks Inc. | FFIV, -2.72% | 15.1% | -20% | -26% | -14% | 12/31/2019 | Computer Communications |
| Cadence Design Systems Inc. | CDNS, -1.21% | 16.5% | -18% | -6% | 60% | 12/28/2019 | Software |
| Nvidia Corp. | NVDA, -7.79% | 17.2% | -23% | 3% | 77% | 01/26/2020 | Semiconductors |
| Source: FactSet | |||||||
You can click on the tickers for more about each company, including news coverage.
Scroll the table to see all the data.
The table actually includes 21 stocks, with both common share classes for Alphabet US:GOOGL US:GOOG.
The stock screen is only a starting point for further research. The debt-to-equity ratios are as of the dates indicated on the table, to the right. A company may have issued more debt since that date or made other announcements of importance to investors.
If you see any companies of interest here, you not only need to make sure you are familiar with the most recent announcements, you need to consider the company’s strategy and form your own opinion about it’s ability to remain competitive for the next decade.
Grant indicated there were opportunities in the tech space for investors “with a little patience,” but these are really long-term plays. What does “a little patience” mean to you? If you scoop up discounted shares now, you may need to wait a few years to make money.
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