We are in the middle of earnings seasons and reports are hitting the wire at a fast and furious pace. As I sift through the reports, three relatively unfollowed tech stocks have come onto my radar. All easily beat estimates, have cash-rich balance sheets, look cheap and seem poised to head higher.
Plantronics (PLT) designs and manufactures communications headsets, telephone headset systems, and accessories for the business and consumer markets.
4 reasons PLT has upside from $39 a share:
- In its earnings report yesterday, the company grew revenues 8% YoY and beat estimates by over $10mm. It also produced earnings of 73 cents a share, five cents a share above consensus estimates.
- The company has a robust balance sheet with over $300mm in net cash on the books (around 20% of current market capitalization). It also pays a dividend of 1%.
- The company has now beat earnings estimates for 12 of the last 13 quarters as analysts underestimate Plantronics's earnings power.
- The stock sells at 13.5x forward earnings, a discount to its five-year average (17.6).
Dolby Laboratories (DLB) provides products, services, and technologies for various stages in the content creation, distribution, and playback process in the entertainment industry worldwide.
4 reasons DLB is undervalued at under $32 a share:
- The company reported GAAP earnings of 50 cents a share yesterday, five cents better than estimates. It also beat on the revenue side by about 7% over consensus.
- Dolby has a robust balance sheet with almost $800mm of net cash on the books (Approximately 25% of market capitalization).
- This is the third straight quarter the company has beaten consensus earnings by around this percentage. The stock trades at approximately 8x operating cash flow.
- DLB trades at 15x forward earnings, a discount to its five-year average (20.4). Subtracting net cash, the stock is trading at less than 12x forward earnings.
Multimedia Games Holding Company (MGAM) designs and manufactures gaming machines, video lottery terminals, and associated systems and equipment.
4 reasons MGAM should go higher from $14 a share:
- The company reported earnings this morning of 24 cents a share, 11 cents better than estimates. Revenue also beat consensus by some 10%. The company raised EPS and revenue guidance for 2013 as well.
- The company has net cash of some $40mm on its books which equates to around 10% of market capitalization.
- The firm has now crushed earnings estimates each of the last 7 quarters. The average beat over consensus over the last five quarters has been just under 50%.
- The stock sports a cheap five-year projected PEG of under 1 (.87) and the median price target by the three analysts that cover the stock is $19 a share. Based on this latest report, I would look for price targets to be revised higher in the coming weeks.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in MGAM over the next 72 hours.