Tech Traders Hit Refresh as Cheap Stocks Replace High Fliers

  • Best performers in first half of year trade lower since June 9
  • Data processors and video-game stocks climb to front of pack

Take a look at the U.S. tech sector today and the trauma of this month’s selloff is still visible. Peer in closer and you can detect a more subtle consequence.

It’s a shift in investor preferences within the group away from the best-known megacaps. While the year’s first-half winners continue to nurse their wounds, out of the rubble of the June 9-12 rout has risen a new vanguard of leaders.

Of the top 20 performers since June 12, just six are holdovers from the first half of the year. In fact, only eight of the 20 biggest first-half winners have clawed back any of the losses they suffered in the downdraft.

So why have investors turned their backs to the companies that filled their coffers in the first six months? Pricey valuations may be one reason. The best performers since the selloff have a median price to earnings ratio of 28, compared with 41 for the first-half leaders.

Apart from video-game stocks Activision Blizzard, Nvidia Corp. and Electronic Arts, Facebook Inc. and Western Digital and Adobe Systems Inc. are the only shares that both led the market higher in the first six months and remain in the top 20 since June 9.

In the place of the others are companies including Automatic Data Processing Inc., most famous for its payroll solutions, as well as Paychex Inc. and Alliance Data Systems Corp., both up at least 2.3 percent as the S&P 500 moves sideways.

And some stocks are extending rallies that have been underway throughout the year. Gartner Inc., up 3.6 percent since the selloff, added to a 19 percent rally in the first six months, and Advanced Micro Devices just capped three days of gains that brought its year-to-date advance to 23 percent.

The Nasdaq 100 was up 0.1 percent at 5,787.71 as of 10:51 a.m. in New York.

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