Following a very difficult fourth quarter 2018, US technology stocks rallied in the first quarter of 2019. Led by Semiconductor stocks, the Technology sector shed its fears over US/China trade relations and posted strong performance, reclaiming much of the previous quarter’s decline. Growth stocks tend to outperform as the economy slows, and this expansion has been no different. Companies which can demonstrate the ability to grow earnings as economic conditions slow have received a valuation premium. The Technology sector is dominated by companies that fit this characterization. We believe Technology stocks also stand to disproportionately benefit from the 2018 tax cuts and the trend to return capital to shareholders through dividends and buybacks. Due to their large cash balances, strong cash production, and high profit margins, the potential return of capital is instrumental to the industry’s growth opportunities. The Saratoga Technology & Communications Portfolio continues to focus on fundamentals, valuation, and durability of business. _____________________________
Information contained herein was obtained from recognized statistical services and other sources believed to be reliable and we therefore cannot make any representation as to its completeness or accuracy. Any statements not of a factual nature constitute opinions which are subject to change without notice.
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