To answer that question look to the 2008-2011 period for clues.
Sure, 2008-2011 was quite some time ago. However, Technology companies that were able to execute through that economic rough patch without significant revenue and earnings variability are likely to weather the nearing economic storm well. If you can find companies that executed well during the 2008-2011 period relative to the peer group AND have the same CEO in place – those companies are worth taking a look at if you do not already own them.
Notice we speak of operational execution – revenue and earnings – during the 2008-2011 period. Stock price performance is a different story as once panic selling kicks in there will be no rhyme or reason why certain companies are selling off. Once we have capitulation most every Technology company will be oversold, but we are not there yet.
Here’s another question to consider: which companies are buying their stock back now? If valuations are so cheap, how many companies are backing up the truck to repurchase their shares? Companies that are executing buybacks – not that have announced buybacks – but those that are actually executing buybacks at meaningful levels are worth looking at. Watch how few Technology companies will actually execute buyback programs as their share prices continue to move lower. That’s the sign of a management team that lacks confidence and cash flow.