Hedge Fund Manager Charles Paquelet’s Top Tech Stock Picks

#3 Hewlett-Packard Company (NYSE:HPQ)

Shares held (as of September 30): 229,850
Total Value (as of September 30): $5.89 million
Percent of Portfolio (as of September 30): 0.79%

It seems Hewlett-Packard Company (NYSE:HPQ)’s turnaround plan is never ending. The PC is in secular decline and printers are no longer the growth market they were before. Hewlett-Packard Company (NYSE:HPQ) has laid off tens of thousands in recent years, and could lay off tens of thousands more. Management hopes the company’s impending split of its PC and printer business from its software and enterprise division will sharpen focus and unlock growth opportunities. At a forward PE of 7.45, Skylands and other funds feel Hewlett-Packard Company (NYSE:HPQ) is worth the risk. Other funds long the technology giant include Richard S. Pzena‘s Pzena Investment Management and Cliff Asness’ AQR Capital Management at the end of June.

#2 Sensata Technologies Holding N.V. (NYSE:ST)

Shares held (as of September 30): 152,850
Total Value (as of September 30): $6.78 million
Percent of Portfolio (as of September 30): 0.91%

Sensata Technologies Holding N.V. (NYSE:ST), a maker of sensors and controls, earned $0.72 per share on revenues of $727.36 million (up 26% year-over-year) for its third quarter, beating profit estimates by $0.01 per share but missing revenue expectations by $7.39 million. Fourth quarter guidance is for $700-740 million in revenues, $176-$188 million in adjusted EBITDA, and $0.62-$0.69 in adjusted net income per share. Given the solid earnings, and the forward PE of 14.7, shares look reasonable, although investors will need the global economy to improve for earnings to really grow. Increasing vehicle utilization rates, automated cars, and other technologies will change demand substantially in the future.

#1 Apple Inc. (NASDAQ:AAPL)

Shares held (as of September 30): 329,765
Total Value (as of September 30): $36.37 million
Percent of Portfolio (as of September 30): 4.89%

Apple Inc. (NASDAQ:AAPL) continues to hit earnings out of the park. For its fourth quarter, the technology giant earned $1.96 per share on revenues of $51.5 billion (up 22.3% year-over-year), beating estimates by $0.08 per share and $380 million, respectively. iPhone revenue increased 36% year-over-year to $32.3 billion, iPad revenues declined 20% to $4.3 billion, Services revenue rose 10% to $5.1 billion, and gross margin inched up 1.9% to 39.9%. Guidance is pretty much in-line, with management expecting gross margin of 39-40% for the first quarter.

The slowdown in China is apparently not having much of an effect on demand, as Apple iPhone revenues increased 120% year-over-year in the country. The China strength is good news for Apple shareholders, as it means demand for Apple’s premium products can hold up even if the global economy slows down. The data could go a long way in changing the market’s view that Apple is basically a one product company with unsustainable profits. Carl Icahn’s Icahn Capital Lp owned 52.76 million at the end of June.

Disclosure:none