The other day, PC components maker Corsair (CRSR) was once again victimized by the global supply chain crunch.
And then Saturday morning, I received an email from major online photo retailer Adorama.com:
“As you may have heard, the world is gearing up for a holiday season unlike any other. While we look forward to providing you with the service and cheer that you expect from Adorama, we also want to give you advance notice that we may face inventory challenges this year that are out of our control.”
What does this mean for tech stock investors?
Well, we already know that semiconductors are in short supply. Nvidia (NVDA) and AMD (AMD) GPUs are in incredibly short supply, and even industries like automotive are cutting production because they’re short on chips.
Look at what’s happening on Amazon when we search graphics cards:
*Amazon links are affiliate links
So what’s the story this holiday season?
Here are 3 things to watch:
1) Retail stocks
There’s a good chance retailers get annihilated over the next couple of months.
Retail stocks (represented by the XRT ETF here) are up huge off the pandemic lows:
If these stocks get hurt badly, it will likely be time to buy.
Why? Because we’ll be getting in BEFORE supply chain issues get sorted out.
Watch for magazine and newspaper headlines declaring the supply chain is permanently broken - that will almost certainly be a bottoming signal.
2) Software Stocks
Software stocks could outperform into year-end simply because they are much less exposed to supply chain problems. I’m talking names like Salesforce.com (CRM) and Microsoft (MSFT).
SAP (SAP) just had a monster earnings report.
So investors will be looking towards these names because there’s a reduced chance of earnings misses.
3) Hardware Stocks
I’ll be closely watching to see if stocks like HP (HPQ), Western Digital (WDC), Logitech (LOGI), Turtle Beach (HEAR), and the aforementioned Corsair get spanked on earnings.
Again, because I want to get in when things look the worst.
Think about the pandemic lows.
You could have bought pretty much ANYTHING and made money.
So it will suck to have all of our favorites out of stock at stores… but we’ll have opportunities to buy stocks on sale.