While we’re all bitching and moaning about do-nothing old tech stocks like Microsoft and Cisco, EMC has very quietly been running like an escaped convict trying to stop his baby mama’s wedding before its too late. Run, Jimmy – I just know she still loves you!
What was I talking about? Oh yeah, so EMC has been an absolute wildebeest over the last year returning a jaw-dropping 52%, almost a double over the tech-heavy Nasdaq (as seen below):
Why, while its old tech brethren are sleeping so soundly, has EMC been such a great performer? They have something the others don’t – secular growth.
EMC plays in the data storage sandbox almost exclusively and the need to be able to store (and access) data in a scalable way has never been greater. It also shows no sign of slowing down ever. We’re not exactly on a trajectory of creating less digital stuff now, are we?
I’m not in the name personally, as far as storage names my only pure-play at the moment is Network Appliance, but the story there is pretty much the same. When I looked at the numbers between the two companies, however, I was amazed to find out that EMC is outspending its smaller rival NTAP in R&D in a meaningful way, $2 billion annually versus $600 million.
Equally amazing is that EMC has been smart enough to hang onto their single best asset, an 80% stake in virtualization monster VMWare (VMW). They bought VMW in 2003 for about $600 million and they have since seen a 65x return on it. Ridiculous! I’m sure over the years there have been some tempting opportunities to have divested of it but the company hung in there knowing that the best was yet to come.
I think the message is that storage, unlike desktop software (as in the case of Microsoft) or physical routers and switches (as in the case of Cisco) is still a growth business. EMC has done a lot right, don’t get me wrong, but what really separates them from their fellow 90’s era stalwarts is the business they are in. In the tech sector, end demand makes the stock, not the other way around. This is something the value guys need to keep in mind when hunting for bargains in the large cap Nasdaq names.
(yes, I know this graphic is gangsta and if anyone from EMC corporate wants to make t-shirts, all I ask is for a size XL mailed my way)
[…]we prefer to honor quite a few other online web pages around the web, even when they aren’t linked to us, by linking to them. Underneath are some webpages really worth checking out[…]
[…]we prefer to honor lots of other web websites around the net, even though they arent linked to us, by linking to them. Underneath are some webpages really worth checking out[…]
Best Kona coffee how to guide for coffee beans. Assisting you in your choice, the following are useful steps on best practices picking the best Kona coffee beans. #1 RULE: Never reheat your Kona coffee.
I’m a New York City-based financial advisor at Ritholtz Wealth Management LLC. I help people invest and manage portfolios for them. For disclosure information please see here.
Subscribe & Reform
Get a Full Investor Curriculum: Join The Book List
Every month you'll receive 3-4 book suggestions--chosen by hand from more than 1,000 books. You'll also receive an extensive curriculum (books, articles, papers, videos) in PDF form right away.
Title
[…]Here are a number of the websites we advise for our visitors[…]
Title
[…]the time to read or go to the material or web pages we’ve linked to below the[…]
Title
[…]that would be the finish of this write-up. Here you will uncover some web-sites that we believe you’ll enjoy, just click the hyperlinks over[…]
Title
[…]one of our guests recently encouraged the following website[…]
Title
[…]here are some hyperlinks to web sites that we link to simply because we think they’re worth visiting[…]
Title
[…]one of our guests not too long ago recommended the following website[…]
mobile apps
[…]Here are a number of the web sites we recommend for our visitors[…]
Title
[…]although websites we backlink to below are considerably not connected to ours, we feel they are basically worth a go by, so have a look[…]
Title
[…]very couple of web-sites that take place to become in depth below, from our point of view are undoubtedly very well really worth checking out[…]
Title
[…]we prefer to honor quite a few other online web pages around the web, even when they aren’t linked to us, by linking to them. Underneath are some webpages really worth checking out[…]
Title
[…]Here are a few of the internet sites we suggest for our visitors[…]
Title
[…]Here is a great Blog You might Come across Intriguing that we Encourage You[…]
E-commerce Website Development company
[…]we prefer to honor lots of other web websites around the net, even though they arent linked to us, by linking to them. Underneath are some webpages really worth checking out[…]
adam and eve vibrators
[…]very few web sites that take place to be in depth beneath, from our point of view are undoubtedly very well really worth checking out[…]
kona coffee
Best Kona coffee how to guide for coffee beans. Assisting you in your choice, the following are useful steps on best practices picking the best Kona coffee beans. #1 RULE: Never reheat your Kona coffee.