Picking Portfolio of Tech Shares that Beat Analysts’ Forecasts

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Portfolio of Tech Shares

Jim Slater was an ace tipper of shares. He had one main criteria for dealing shares successfully. He would only buy shares in companies who beat analysts forecasts for profits especially those who do it consistently as Nvidia has done.

So, when would he sell the shares?

He would sell them when they issue a profits warning.

So, I will create a portfolio of shares who keep beating analysts’ forecasts.

The first one is Nvidia. I’m ‘buying’ seven lots of these meaning it is half of my portfolio.

Nvidia

These shares have gone through the roof in the last few years and fortunes have been made. However most analysts are saying that they have further to go.

According to Nerdwallet “NVIDIA started working on 3D graphics for multimedia and gaming companies in 1993. The company also began creating AI applications all the way back in 2012. Today, NVIDIA continues to be at the forefront of AI and is developing software, chips and AI-related services.”

Ndivia is the Daddy of them all in the AI market. They are now one of the three biggest companies in the world along with Microsoft and Apple. They are up this year (till July 1st) by 205% a year, meaning they have more than trebled. Indeed since they got into AI their shares have gone up by 3,000%. They have a dominant share of the AI market and their customers are all the major players in tech, cloud and IT such as Microsoft, Apple, Amazon, Meta, Alphabet and Oracle. They currently cannot fulfill all the orders that they get from those companies and are selling the chips like hot cakes. The more they can make the more they can sell – and then there are potential sales to companies down the food chain a bit and to governments. They currently have 80% of the AI chip market.

Price Bought – 123.54

Current Price – 123.54

Date Bought – 1/7/2024

Percentage Rise / Fall – 0

Palantir

This is an Artificial Intelligence play.

60% of its work is with the Government.

The uptake from government agencies hasn’t been as high as that on the commercial side but that’s sure to change at some point.

Price Bought – 25.33

Current Price – 25.33

Date Bought – 1/7/2024

Percentage Rise / Fall – 1/7/2024

L’Oreal

I’m sure that you all know what L’Oreal do. They are one of the biggest brands in cosmetics worldwide. However, what is important to us, using the Jim Slater method, is that they beat concensus analyst’s forecasts for sales.

Analysts predicted that their sales would be up by 6.6% in the last quarter. Instead they were up by a juicy 9%. That qualifies them to be in our list of shares which beat analysts’ predictions.

Price Bought – 413.25

Current Price – 413.25

Date Bought – 413.25

Percentage Rise / Fall – 0

AMEX

For the three months till March, Amex profits jumped 31% to $2.44 billion.

Earnings per share were predicted by analysts to be $2.96, Instead they were $3.33, a fairly decent rise above expectations.

Price Bought – 233.28

Current Price – 233.28

Date Bought – 1/7/2024

Percentage Rise / Fall – 0

Jet2

This time Jet2 beat their own forecasts. See here:-

Jet2 expects its 2023-24 annual profit to rise by a third over the previous year on the back of strong sales.

The UK’s largest tour operating group expects a pre-tax profit for the year to March 31 of between £515 million and £520 million against a previous £510 million-£525 million estimate.

However, the increase of about 33% year-on-year was described in a trading update as being in line with current market expectations. 

The group’s balance sheet was reported as being “very strong” with total cash of £3.2 billion and a balance excluding customer advance deposits of £1.3 billion.

Seat capacity for summer 2024 is currently 12.3% higher than last year at 17.1 million seats with the season is 55% sold, with average load factors one percentage point ahead of summer 2023 at the same point. 

Forward bookings for package holiday customers are up by 13% with Jet2 reporting “healthy demand” from flight-only passengers with bookings up by more than 18%

Price Bought – 1304.87

Current Price – 1304.87

Date Bought – 1/7/2024

Percentage Rise / Fall – 0

Barclays

Barclays profits were down from £2.6bn to £2.3bn, However that was higher than market forecasts of £2.2bn.

Price Bought – 212.52

Current Price – 212.52

Date Bought – 1/7/2024

Percentage Rise / Fall – 0

Microsoft

Microsoft’s quarterly revenue was $61.9 billion, up 17% and ahead of estimates of around $60.8 billion. Per-share earnings were $2.94, up 20% and well ahead of expectations of $2.82. Overall, Microsoft’s cloud business brought in $26.7 billion in revenue, up 21%.

These were very good results and Microsoft is expected to be one of the big winners from Artificial Intelligence.

Price Bought – 446.95

Current Price – 446.95

Date Bought – 1/7/2024

Percentage Rise / Fall – 0

Alphabet

Alphabet investors will be delighted, with the company turning in some strong numbers with its latest results. The company beat forecasts, with revenue of US$81b, some 2.3% above estimates, and statutory earnings per share (EPS) coming in at US$1.89, 25% ahead of expectations.

Wow!

The earnings per share 25% ahead of expectations is astonishing.

Price Bought – 182.15

Current Price – 182.15

Date Bought – 1/7/2024

Percentage Rise – 0

Taiwan SemiConductor Manufacturing Company (TSCM)

In the gold rush in California the people who really made money were those selling picks and shovels.

In high tech terms that is what TSMC are doing.

Nvidia are able to charge the world’s biggest companies like Microsoft a fortune for using their chips. The companies like Microsoft, Meta, Alphabet, Amazon, Apple and Oracle are happy to pay through the nose for those chips from Nvidia who own 80% of the Artificial Market. Nvidia keep pushing the price up as there is no real competition.

Nvidia are upstream of them all.

However, there is one company who are even further upstream than Invidia and that company is Taiwan Semiconductor Manufacturing Company (TSMC).

Why are they even further upstream upstream than Nvidia?

It’s because Nvidia don’t manufacture their own semiconductor chips.

They get them from TSMC.

Because Nvidia are upstream of all those major tech companies mentioned above, Nvidia can charge whatever the market will take and their profit margins are close to an astonishing 80%.

TSMC haven’t really pushed rates higher – but the can and they almost certainly will which will mean Nvidia may have to pay higher prices – and it will be more profitable for TSMC.

The AI boom has caused a massive need for high end chips and TSMC have a dominant share of that market. They are selling the picks and shovels to Nvidia and to any other company who wants to share in the AI boom.

Their revenue from AI is expected to grow by 50% CAGR over the next 5 years and will be responsible for a growing percentage of its income.

Earnings per share were 6.52 compared with analysts forecasts of 6.18.

Price Bought – 172.33

Current Price – 172.33

Date Bought – 1/7/2024

Percentage Rise / Fall – 0

Now this is just a nominal portfolio, a piece of fun. I am not tipping these shares.

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