Fusion-IO, Inc. (FIO), InvenSense Inc (INVN) & Millennial Media, Inc. (MM): Three Tech Stocks to Buy on the Taper Tantrum

Page 1 of 2

As the Federal Reserve hints at tapering the bond buying program over the next year, cyclical stocks including technology should become interesting buys. Tech stocks have underperformed the market rally over the last year as investors have piled into high yielding stocks as bond yields hit extremely low levels. Now that money should flood out of those stocks and bonds into growth stocks.

Fusion-IO, Inc. (NYSE:FIO)

The main reason the Fed would stop bond buying would be a generally stronger economy, a situation that should benefit growth stocks. The group that should outperform in this rotation of money into growth stocks includes Fusion-IO, Inc. (NYSE:FIO), InvenSense Inc (NYSE:INVN), and Millennial Media, Inc. (NYSE:MM) . These beaten down stocks not only offer the ability to rebound off weak trading, but the businesses could improve as economies around the world rebound.

As the chart below shows, these stocks have dramatically under performed the market since April 1, 2011 when Millennial Media, Inc. (NYSE:MM) came public:

FIO data by YCharts

The group includes a selection of tech stocks from flash storage to motion tracking technology to mobile advertising. The diverse selection should provide an option for any investor.

Flash Storage Leader

While Fusion-IO, Inc. (NYSE:FIO) is seen as a clear technology leader in the sector, the company continues to run into pressures from being focused on two prime customers no longer growing at extreme rates. Both Apple Inc. (NASDAQ:AAPL) and Facebook Inc (NASDAQ:FB) helped build the company up with vast orders of the advanced storage technology, yet now as those companies have matured the orders have stalled.

The company recently lost the CEO and CMO sending the stock to all-time, post-IPO lows. At only $13, the stock is only a shadow of the company when it hit maximum potential with the stock trading over $40 at the end of 2011. At the time, the market cap was soaring towards $4 billion. The biggest issue is that margins and profits have never been maxed out as the company focused on growth. Revenue is expected to surge 30% next year to $570 million making the stock at a market cap of $1.3 billion more appealing. The question is whether the new management team can turn the stock into a major winner by generating profits.

Motion Tracking

InvenSense Inc (NYSE:INVN) has recently seen its fortunes turnaround as several analysts predict that the company has finally landed Apple Inc. (NASDAQ:AAPL) as a customer. The company makes products used primarily in smartphones, tablets, and videogames to sense and track motions.

So while the stock has jumped recently from $9 to over $14, it still offers plenty of value considering the post-IPO surge to over $22 back at the start of 2012. Though InvenSense Inc (NYSE:INVN) has tons of growth potential, the stock only trades at 17 times forward earnings prior to even including Apple Inc. (NASDAQ:AAPL) as a major customer. Noteworthy is that Samsung has been a 30% customer recently providing an example of the potential impact of Apple. Revenue as well is seen growing at a 20% plus pace even before adding Apple Inc. (NASDAQ:AAPL).

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

The 10 Most Peaceful Countries in the World

5 Big Reasons Communism Failed

The 15 Most Famous Carl Icahn Quotes

10 Scary Animals that are Actually Harmless

The 8 Most Famous Singer-Actors in Entertainment

The 10 Longest Wars of All Time

The 13 Worst Looking Foods that Taste Great

The 6 Most Gruesome Injuries Suffered During a Sports Match

The 20 Biggest Contracts in MLB History

The 7 Worst Blown Calls in Sports History

7 Free Ways to Advertise Your Business Online

The 18 Best R&B Songs of the 90’s

The 10 Most Dangerous States to be a Cop

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!