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The market has seen a strong rally in the past several weeks and the average stock in the S&P 500 Index (SPY) now trades for about 16 times earnings. In this type of environment, it's becoming tougher for "value" investors to find stocks that fit their criteria. Value investors often focus on undervalued stocks in companies that have solid balance sheets and sometimes even a solid dividend. Over time, value investors have historically done very well and Warren Buffett might be one of the best examples of the extraordinary long-term performance that is possible with "value" investing.

Even though the market has rallied, there are still a number of very high quality stocks that appear cheap. Below, you can find a couple of undervalued picks, which give investors a chance to own one of the most enduring and successful "old tech" stocks and there is even one way to invest in some of the fastest-growing and hottest "new tech" stocks, (even in Pre-IPO Twitter shares) at a significant discount. Here are two stocks for value investors to consider buying now:

Corning, Inc. (GLW) might be best known for designing and manufacturing specialty products like "Gorilla Glass," which is a strong and scratch-resistant glass that is used in many of the world's most popular tablets and smartphones. However, there is more to this company, as it derives revenues from several lines of business, which include:

  1. Display Technologies: This division produces thin-film transistor liquid crystal display or "TFT-LCD" glass, which is used for television and other display products.
  2. Environmental Technologies: Corning manufactures ceramic substrates and diesel particulate filters, which are used for pollution control systems in cars and trucks.
  3. Telecommunications: Corning offers a variety of fiber optic and copper products for telecommunications networks. This business division provides cables, connectors and related hardware, and network services.
  4. Life Sciences: This division produces a wide-range of products including cell culture, liquid handling and equipment, molecular biology, bioprocess, automation, lab glass and more.
  5. Specialty Materials: This division produces glass for consumer electronics like tablets, smartphones and other mobile devices. It makes the "Gorilla Glass," which is used in many popular tech products including Samsung's (SSNLF.PK) latest GALAXY Tab 10.1, the GALAXY S II smartphone, and Acer's dual-screen ICONIA tablet, just to name a few.

While the company has many products that are well-established and provide significant revenues, Corning also continues to innovate and this could lead to growth in the future and possibly entirely new products and markets. One of the most exciting new products was announced last year. Corning said it has developed ultra-slim flexible glass, which is called "Willow Glass." It is so thin and light that it could be used in many products that require display or touch features. It can also be used on curved surfaces and the company is considering it for use in lighting and flexible solar cells.

Corning has been reporting solid financial results and for the first quarter of 2013, it achieved sales of $1.8 billion and earnings came in at 30 cents per share, which was a 15% increase when compared with the same quarter last year. The company said it anticipates that second-quarter price declines will be smaller than those reported in the first quarter and that means profit margins could improve. Another real positive is the financial strength of this company. It has about $5.8 billion in cash and just around $2.93 billion in debt. This solid balance sheet reduces risks for shareholders and it allows the company to continue spending on research and development.

One significant downside risk to consider is foreign currency exchange. Corning has a significant amount of business in Asia, since that is where many televisions and other tech products are made. A good deal of business is transacted in Japanese yen and that currency has been rapidly depreciating due to new fiscal and monetary policies introduced by the Japanese Government. However, Corning is minimizing this risk as it introduced a currency hedging program in the first quarter that is designed to protect the company from further yen weakening through 2014. Of course, another major risk is that companies in this sector can be at risk of technological obsolescence. However, Corning has been successfully fending off these challenges and it continues to innovate with new products like "Willow Glass."

Aside from the very valuable technology and patents that this company owns, and the strong balance sheet, there are other reasons why this stock appears undervalued. For example, it is trading for close to book value, which is $14.49 per share. The average stock in the S&P 500 Index trades for about two times book, so Corning looks like a real value based on that metric. It also looks cheap based on the price-to-earnings multiple since the average stock now trades for about 16 times earnings. Corning shares trade for just about 12 times earnings estimates, which are $1.28 in 2013, and $1.40 for 2014. Plus, it pays a solid dividend that yields 2.5%, and in the past couple of years the dividend has been rising. For all these reasons, plus industry-leading technology, Corning appears to be a "must-buy" tech stock for value investors.

Firsthand Technology Value Fund (SVVC) is not known by many investors and that is one reason why a major buying opportunity currently exists for this stock. This fund invests in a wide variety of tech companies and it often buys into high-potential stocks before the IPO. For example, this fund owned Facebook (FB) shares before that company went public and this stock soared to about $46 before the Facebook IPO last year. However, the stock is now a real buying opportunity because it is trading well below net asset value. It is also an opportunity because it has the potential to soar once again since the value of its portfolio seems to be rising sharply, and also because another very high profile IPO could take these shares up soon. Let's take a closer look at the opportunity and the multiple catalysts here:

Kevin Landis is the chief investment officer of Firsthand Capital Management and the portfolio manager. He has experience in making venture capital investments in the technology and cleantech sectors. A seasoned portfolio manager like Mr. Landis reduces risks for investors and it also increases opportunities for additional high-potential investments since a manager with decades of experience is more likely to have contacts in the industry. However, portfolio managers do make mistakes and this is a potential downside risk to consider. Another risk is not that a manager will make bad investments but that he or she will make investments that lag the market and that can create an "opportunity cost" for shareholders.

The portfolio of this fund (as of 3/31/2031) has a number of stocks that have been performing extremely well and one that is not even public yet, "Twitter," and that could become another big reason to own this stock. Twitter is likely to be a very high-profile IPO and there is growing belief amongst industry watchers that it could be poised to go public relatively soon. A recent report states that Twitter could now be worth about $10 billion and that the company is ripe for an IPO in the not-too-distant future. I expect that the news media will go on a blitz when the IPO nears and many investors will want to find ways to buy Twitter before the IPO. That could be a significant upside catalyst for this stock, especially since Twitter represents 9.3% of the fund's net assets. That is a large enough stake to move the net asset value higher if the Twitter IPO is popular. Here is a closer look at some of the top holdings:

  1. Twitter, Inc. is an online social networking service that lets users send and receive 140-character messages ("tweets"). The service has more than 140 million active users and more than 340 million daily tweets. Twitter represents 9.3% of the fund's net assets.
  2. Facebook, Inc. is an online social networking service with more than 1 billion active users worldwide. Facebook represents 7.7% of the fund's net assets.
  3. SolarCity Corp. (SCTY) is a leading installer of commercial and residential solar photovoltaic systems. SolarCity represents 3.6% of the fund's net assets.
  4. Silicon Genesis Corp. is a developer of layer transfer technology for the semiconductor and solar industries. Silicon Genesis represents 3.1% of the fund's net assets.
  5. QMAT, Inc. is developing advanced materials technologies for applications in the electronics industry. QMAT represents 3.0% of the fund's net assets.

It's worth noting that as of the end of March, this fund had a net asset value of $23.26. However, the shares currently only trade for about $19.60, which means there is a significant discount. That discount appears to be even bigger now since the stock market and many of the portfolio holdings have surged in value since March. For example, SolarCity has soared in recent weeks rising from about $18.88 on March 28, (which is around the last time net asset value of $23.26 was calculated) to $48 per share, recently. That is nearly a tripling of the value, which means many millions of dollars in added value for the portfolio. Based on this and other gains, the net asset value of this fund now appears to be significantly higher than the $23.26 value that was reported in March (based on the stake it holds in Solar City and the number of shares outstanding for the fund, I calculate that the net asset value could now be around $25). Plus, it could continue to rise much higher as Twitter heads toward a potential IPO.

Another potential upside catalyst is the fact that an activist investor is involved and seeking a higher value for this stock. A hedge fund called "Bulldog Investors" now has about a 9.67% stake in this fund and started a campaign to oust the fund manager. Bulldog focuses on closed-end funds like this one and it is pushing the board to get out or do buybacks or create a "liquidity event" (that could push the stock price back to net asset value). Who knows how this will settle out, but it would seem to put serious pressure on the fund to create more shareholder value.

It's rare to be able to buy quality at a significant discount, and especially in pre-IPO stocks like Twitter. With an activist investor involved, a share price that is way below net asset value and with possibly more upside when Twitter has a potential IPO, there are many reasons to be buying this stock. Remember that this stock surged to about $46.50 per share in April 2012, as talk about the Facebook IPO became frenzied. It doesn't have to go that high to still provide investors with major gains. The key is to buy this before the potential Twitter IPO run, and the net asset value update, which is likely to show a significant gain. Also, the involvement of the activist investor is another reason to be buying now. This stock has a 52-week high of about $20 per share and it is within striking distance of that now. As it is very undervalued (trading well below net asset value) and with the portfolio holdings rising significantly in recent weeks, I believe it is poised to hit the 52-week high soon, and then breakout to new highs shortly thereafter.

Data sourced from Yahoo Finance. No guarantees or representations are made.

Disclaimer: Please consult a financial advisor before making investments.

Source: These 2 Tech Stocks Are 'Must-Buy' Bargains For Value Investors