Conventional wisdom says that technology stocks are underperforming this year because of weak performance from large caps like Apple (NasdaqGS:AAPL) and Hewlett-Packard (HP). But that's only part of the story.
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Thus far, 22 of the 40 worst performing stocks on earnings report days are technology stocks, according to Bespoke Investment Group.
Among the worst drops, are Brightcove (NasdaqGS:BCOV) and DragonWave (NasdaqGS:DRWI) which each fell more than 27% on the day they reported earnings. Earnings guidance for the technology sector has been lower too. Even with decelerating earnings, there are bright spots.
Small cap technology stocks inside the PowerShares S&P SmallCap Information Technology Portfolio (NasdaqGM:PSCT) have handedly beaten S&P 500 technology stocks (XLK) by a wide margin. Over the past six months, PSCT (small cap tech) has gained almost 11% while XLK (large cap tech) has lost 0.97%.
Small cap stocks are generally categorized as companies with a market size between $250 million up to $5 billion. The average market size for stocks within PSCT is $1.1 billion. Around 25% of the stocks inside PSCT are in the semiconductor sector, 23.5% electronic components, and 20.7% software.
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