Whatever you do in our economy, you will run into Information Technology companies and they are not going away. Since you are going to use their software, you might concern making money from them. Recently Craig McGee of Richardson GMP looked at IT companies to see where the bargains are:

In late July, IT total return was up 6.2% for the year, are there still bargains?

Mr. McGee used his source of Bloomberg to find the top  IT companies from the S&P/TSX composite and the criteria he used was:

EV/sales  (enterprise value divided by sales)  a lower number is better.

EV/EBITDA ratio of less than 10  (enterprise value divided by earnings before interest, taxes, depreciation and amortization)

ROIC  or Return on invested capital (higher number is better)

3 Month consensus EPS estimate revision no worse than minus 5 %

12 month price change – lower is better

Dividend Yield in %

Company              Mkt Cap       EV/             EV/           ROIC          3M EPS     12M Price  Div

–                    ($ Bil)            Sales          EITDA     %                 Revision  Chg %        Yield

Celestica                2.05            0.24              6.48          6.39           2.65          -14.49       n/a

HP Inc                  24.14           0.35                4.32          13.84         -1.12            0.89         3.52

First Solar              4.92         0.84                3.32          13.30            0.47          11.99         n/a

NetApp                   7.41           0.80               7.10           4.93         -2.59         -14.8         2.87

Cisco Systems    154.46        2.42                8.28          11.87          1.88              8.13        3.39

Western Union       9.95        2.20              8.79           19.51            0.00            8.63       3.16

Intel                      163.66         2.99              8.16           11.88             4.58            23.52      3.00

Juniper Net             9.13          1.84              8.16           10.40            -1.47        -13.69       1.68

Alliance Data        13.62         2.66              9.90         11.23              0.60           -15.70     n/a

Qualcomm             90.11          3.10              9.77         11.37              2.65            -0.79       3.47

Mr. McGee says if you kept the top 10 qualifying stocks for the year, you would generated a nice 9.5% return.

Linking to dividend paying stocks, often staying invested in top quality companies will give a good return and if you add the dividend for relatively low risk you will make a good return on your money. The key is narrowing the field to top quality or best in breed or whatever term you wish, stick to the profitable companies.

There are more questions than answers, till the next time – to raising questions.