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 like to honor numerous other web web pages around the internet, even when they arent linked to us, by linking to them. Beneath are some webpages really worth checking out[…]
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.
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.
Take my online class
[…]just beneath, are a lot of absolutely not connected websites to ours, on the other hand, they are certainly really worth going over[…]
trah_net_621 pornozona
[…]below youll discover the link to some web pages that we consider it is best to visit[…]
College Basketball
[…]check below, are some completely unrelated internet sites to ours, on the other hand, they are most trustworthy sources that we use[…]
Title
[…]please check out the sites we comply with, including this a single, because it represents our picks from the web[…]
Title
[…]one of our guests lately recommended the following website[…]
College Football
[…]check beneath, are some totally unrelated sites to ours, nevertheless, they’re most trustworthy sources that we use[…]
Title
[…]Here are a few of the web sites we suggest for our visitors[…]
Title
[…]The information and facts mentioned inside the article are a number of the top obtainable […]
Title
[…]always a large fan of linking to bloggers that I really like but don’t get a great deal of link like from[…]
Title
[…]Here are a few of the web pages we advise for our visitors[…]
best vibrator
[…]that will be the end of this post. Right here you will come across some internet sites that we believe youll enjoy, just click the links over[…]
g gasm rabbit
[…]we like to honor numerous other web web pages around the internet, even when they arent linked to us, by linking to them. Beneath are some webpages really worth checking out[…]
Title
[…]usually posts some pretty interesting stuff like this. If you are new to this site[…]
Title
[…]one of our guests just lately advised the following website[…]
Title
[…]that may be the end of this article. Right here you will discover some web pages that we feel you’ll value, just click the links over[…]