There’s life in Tech beyond NASDAQ

Technology is the living blood of our economy; Tech shares have been the driving force behind the huge market rally, which lifted the NASDAQ 133% in just a year and a half. But in the current market, it looks like there’s nothing but blood on the streets, as Tech gets pummeled on a daily basis. Traders are running away from Tech shares, some searching for ideas outside of the Tech sector, and some fleeing the markets altogether as the uncertainty scares them away. Maybe it’s justified for most, if not all, NASDAQ trades - but definitely not globally. The technology-enthusiastic traders don’t have to ditch their beloved sector trades altogether - global Tech has A LOT to offer, if they know where to look.

In FAANG we (can’t) trust

Your dependable enthusiastic Tech investors have been holding on for dear life lately: the sector sold off 26% from the beginning of the year, and is trading down roughly 27% from its high in November, as gauged by the NASDAQ Composite Index. The FAANG+M stocks seem to have lost their bite, as they are down from 24% (Apple) to almost 70% (Netflix) this year.

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This year’s brutal Tech rout has led many market players to drop their once-beloved trades, wondering whether the party is over for good. Looks like it is: stock market history shows that FAANG’s heavy losses may portend even worse times for NASDAQ, as all deep bear markets in the past were preceded by weakness of the previous rallies’ leaders. The decline in the NASDAQ index from the peak is approaching its crash in the Covid-19 bear market. But this time, there’s little hope that it will bounce back as fast as it did then. 

Trading Platforms have noticed dwindling trading volumes in the recent weeks. One of the main reasons for that is the fact that many online traders encounter their first-ever major stock market crisis (the two-week scare of Covid-19 crash, the shortest bear market in history, doesn’t really count as one). They are baffled as all they thought they knew about investing, comes out wrong.

Hope is not a strategy

Investors that want to stay in the market should strive to find fundamentally strong companies that can grind their way up even when the sentiment is risk-off. Yes, we are back to fundamentals now; it’s more important than ever to look into the balance sheets and earnings reports, choosing quality stocks that are still priced cheaply relative to their financial position. 

Finding those among NASDAQ household names is hard, bordering on impossible, as the abundance of information makes these price-performance stars quickly known to all.

The solution might be getting out of the familiar US sandbox into the wide world of opportunities beyond NASDAQ. And - surprise! Many of these cheap high-quality companies don’t trade on NASDAQ - they are headquartered in Taiwan, Sweden or Brazil, and are getting little to none analyst coverage in English. 

So how would traders know about these companies, let alone check their fundamental data?  

Trading Platforms and Brokers can help their users bridge the information and language gap, letting them regain their confidence and thus increasing their satisfaction with the trading service provider, leading to high engagement and retention rates. This goal can be achieved by making fundamental analysis accessible to traders through simple, convenient tools that provide their clients with easy-to-read fundamental analysis, already interpreted into investment recommendations by bias-free AI.  

When Square is squared, go elsewhere

Block Inc (Square) used to be a popular trade within the US tech investors, but it’s lost almost 50% this year. As revenues dropped and the company reported net loss for Q1, analysts revised lower their outlook for 2022. 

Square may be a good business that may prosper when the economy turns around, but now it’s definitely not a sure bet. But if you look outside the US, you may find some real gems in the same field of payment solutions. 

For instance, there’s a Brazilian payment services provider Cielo S.A. (CIEL3), with a market cap of over 300 million USD. There’s virtually nonexistent English-language news and analysts coverage for the company (Block is covered by 34-40 analysts each quarter). The company has released a solid Q1 earnings report that earned the company a rating of “Strong Buy”. Meanwhile, Cielo’s shares have surged this year more than Block’s have fallen. 

Italians make better pasta... and green-tech

Another popular trade, this time with the US Tech small-cap fans, is CPS Technologies Corporation (CPSH). It is a good hard-working company with solid fundamentals - that’s why its shares have lost only 13% this year, much less than its peers. But  it's hard to be excited about a losing trade, and why settle for a smaller loss, when you can cash out a win?

CPS’s foreign counterpart, Italian algoWatt S.p.A. (ALW), a supplier of a green-tech solutions for the management of energy and natural resources, whose superb fundamentals have propelled its stock up 159% from the beginning of 2022.

While analyst coverage for small-caps like CPS is not great, it is huge compared to non-US small caps like ALW (even Morningstar won’t provide you with more than a price).  

Ditto earnings growth

Have you heard of Ditto (Thailand)? Probably not. The company sells printers, document management software and supplies IT engineering services for projects; with a market cap of almost $1 billion, it’s one of the largest companies in Emerging Asia.

Ditto released a commendable Q1 earnings report, which was not covered by English-language analysts, same as anything else about the company. Which is a shame: if traders have known about Ditto, they may have earned eye-popping 162% this year. Instead, they’ve probably held well-known and well-covered Xerox, whose stock is down 24% YTD.

Why would any trader accept loss when he could have had a large gain instead? No reason except lack of information. Our AI could have helped your traders reading its reports beat all major stock indexes by a large margin this year. But wait, it’s not too late! 

“Sell in May and go away”, as the Wall Street saying goes? No way. Sell NASDAQ in May and go away elsewhere any day. 

 

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