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Are you a value investor? Do you also consider sales trends when evaluating a company's stock? One idea is to compare trends in revenue to trends in accounts receivable.

We began by screening for technology stocks that appear to be undervalued relative to earnings growth, with PEG below 1, and relative to free cash flow, with P/FCF below 15.

It wasn't sufficient to just find stocks that were undervalued. We wanted to look at the financials to determine if the valuation was an attractive investment idea or a signal to avoid risk.

After we found 12 stocks that looked undervalued, we did a deeper analysis on the financials. We found 5 stocks that had declining top-line growth. These were companies with negative trends in revenue relative to accounts receivable, with slower growth in revenue year-over-year than growth in accounts receivable, as well as receivables comprising a larger portion of current assets.

Receivables represent the portion of revenue not yet collected, so the smaller the portion of revenue and current assets, the better.

A Closer Look

We've provided you with a list of the 5 stocks below, but here we will dig deeper into MagnaChip Semiconductor (NYSE:MX). The stock is trading around $15.64 versus its 52-week range of $15.61-$16.08, up 55% in the past 1 year. The stock trades with a forward P/E multiple of 6.25 times, and a relative P/E multiple versus the S&P 500 (SPX) of 0.21.

As off December 30th, 2012, the company has $182 million in cash on its balance sheet, and long-term borrowings of $202 million. The company does not have any public debt outstanding. Also, MagnaChip has maintained free cash flow above $50 million since 2010 while capital expenditures have remained under $63 million annually.

Here is a company with a strong credit profile, and troubling sales trends. Do you think the this is just a small bump in the road?

The List

Interactive Chart: Press Play to compare changes in market cap over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

Do you think it's time to stay cautious of these stocks? Use the list below as a starting point for your analysis.

1. China Unicom (Hong Kong) Limited (NYSE:CHU): Engages in the provision of GSM and WCDMA cellular, and related telecommunications services in the People's Republic of China.

-Market cap at $37.68B, most recent closing price at $15.99.

-Revenue grew by 16.44% during the most recent quarter ($63,502M vs. $54,538M y/y). Accounts receivable grew by 33.88% during the same time period ($16,706M vs. $12,478M y/y).

-Receivables, as a percentage of current assets, increased from 32.85% to 42.03% during the most recent quarter (comparing 3 months ending 2012-09-30 to 3 months ending 2011-09-30).

-PEG at 0.88, and Price/Free Cash flow at 3.37.

2. MagnaChip Semiconductor Corporation : Designs and manufactures analog and mixed-signal semiconductor products for high-volume consumer applications.

-Market cap at $576.08M, most recent closing price at $16.02.

-Revenue grew by 10.71% during the most recent quarter ($221.87M vs. $200.41M y/y). Accounts receivable grew by 19.45% during the same time period ($150.63M vs. $126.1M y/y).

-Receivables, as a percentage of current assets, increased from 33.05% to 35.88% during the most recent quarter (comparing 3 months ending 2012-09-30 to 3 months ending 2011-09-30).

-PEG at 0.66, and Price/Free Cash flow at 12.79.

3. Sanmina-SCI Corp. (NASDAQ:SANM): Provides integrated electronics manufacturing services worldwide.

-Market cap at $778.45M, most recent closing price at $9.52.

-Revenue grew by -6.96% during the most recent quarter ($1,578.58M vs. $1,696.7M y/y). Accounts receivable grew by -1.24% during the same time period ($1,001.54M vs. $1,014.12M y/y).

-Receivables, as a percentage of current assets, increased from 38.57% to 43.05% during the most recent quarter (comparing 13 weeks ending 2012-09-29 to 13 weeks ending 2011-10-01).

-PEG at 0.33, and Price/Free Cash flow at 5.69.

4. Vonage Holdings Corporation (NYSE:VG): Provides voice and messaging services over broadband networks to residential, small office, and home office customers primarily in the United States, Canada, and the United Kingdom.

-Market cap at $576.42M, most recent closing price at $2.61.

-Revenue grew by -4.12% during the most recent quarter ($207.58M vs. $216.51M y/y). Accounts receivable grew by 65.69% during the same time period ($29.41M vs. $17.75M y/y).

-Receivables, as a percentage of current assets, increased from 17.11% to 19.93% during the most recent quarter (comparing 3 months ending 2012-09-30 to 3 months ending 2011-09-30).

-PEG at 0.33, and Price/Free Cash flow at 8.30.

5. Western Digital Corp. (NASDAQ:WDC): Engages in the design, development, manufacture, and sale of hard drives worldwide.

-Market cap at $11.45B, most recent closing price at $47.0.

-Revenue grew by 91.68% during the most recent quarter ($3,824M vs. $1,995M y/y). Accounts receivable grew by 131.86% during the same time period ($1,732M vs. $747M y/y).

-Receivables, as a percentage of current assets, increased from 13.84% to 24.14% during the most recent quarter (comparing 13 weeks ending 2012-12-28 to 13 weeks ending 2011-12-30).

-PEG at 0.81, and Price/Free Cash flow at 3.88.

*Accounting data sourced from Google Finance, all other data sourced from Finviz.

Source: 5 Undervalued Technology Stocks With Troubling Sales Trends