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If somebody gave you a large sum of cash to invest in the stock market, what would you invest in? With thousands of stocks available to buy and to short these days, which ones will give you the most bang for your buck? That seems like the million-dollar question that investors are constantly asking themselves.

Last April, I started a portfolio consisting of ten technology stocks that I strongly believed would outperform the market over the next year or so. My conviction was right as my portfolio has grown to over 50% in just a four month span.

Whether you have a portfolio already set up or are looking to set one up, these ten technology stocks are definitely worth your time looking over. The chart below shows my portfolio's progress against the S&P 500 as well as the Nasdaq-100.


(Click to enlarge)

As you can see my portfolio has been on a tear lately thanks in large part to the bull market that we have been experiencing over the last couple of months. So what does my portfolio include you might ask? Well without further ado, here it is.

My Performance

Name

Bought

Worth Now

Gain/Loss

My Original Target

My Revised Target

Dangdang (DANG)

$4.14

$9.17

+121.50%

$10.00

$12.00

NQ Mobile (NQ)

$8.65

$18.53

+114.22%

$18.00

$30.00

Baidu (BIDU)

$87.05

$135.01

+55.09%

$125.00

$155.00

Pandora (P)

$13.67

$21.17

+54.86%

$21.00

$24.00

Vipshop (VIPS)

$29.85

$43.21

+44.76%

$40.00

$50.00

Yandex (YNDX)

$22.86

$32.12

+41.64%

$35.00

$38.00

Priceline (PCLN)

$695.76

$933.13

+34.12%

$950.00

$1,050

Youku Tudou(YOKU)

$16.35

$21.40

+30.89%

$28.00

----N/A-----

Apple (AAPL)

$428.91

$507.74

+18.38%

$600.00

$635.00
Vringo (VRNG) $3.15 $3.39 +6.94% $8.00 ----N/A-----
My Portfolio Total: +52.21%

* Prices reflect Monday's closing prices

While I firmly expected these stocks would outperform the market, I honestly didn't expect to see them do it so easily, and so fast. Because of this, I revised and upped some of my price targets on the stocks which makes them even more attractive in my opinion.

As you can see some of these companies are some of the biggest in the world, while others are some of the smallest. Some of them are known throughout the world while others are barely known. So why am I investing in these companies? Here are the reasons why again.

Apple:

When most people think about Apple they usually think about iPhones and iPads. One of the things that often gets overlooked is the amount of cash that Apple has been hoarding over the years. So what is Apple doing with all that cash? Last April, Apple made it public that it will be returning close to $100 billion to shareholders by the end of 2015. Apple said that it will increase its share repurchase program from $10 billion to $60 billion as well as up its dividend 15% to $3.05 per quarter. I like what Apple has done with its stockpile of cash and rewarding its shareholders.

On July 23, 2013, Apple announced earnings that beat Wall Street estimates. One of the most surprising things in the earnings report was that Apple sold 31.2 million iPhones last quarter. This number crushed analyst estimates which helped lift Apple's overall sales and beat expectations.

Another bright note for investors was that Apple's iTunes sales grew close to 30%% last quarter which accounts to nearly 7% of Apple's overall sales.

Cook was pleased by the company's better-than-expected quarter, and continues to be optimistic about the company's future saying; "We are laser-focused and working hard on some amazing new products that we will introduce in the fall and across 2014." Apple's chief financial officer, Peter Oppenheimer confirmed this when he said, "the company will have a very busy fall."

Because of the amount of cash that Apple is giving back to its investors, as well as the new products that will be rolling out soon, I feel confident that Apple will return back levels it was seeing before its fall from grace. Apple currently has a forward P/E ratio of 11 which is significantly lower than the market average. I have revised my price target on Apple from $600 to $635 and recommend that investors go long the stock.

Baidu:

Baidu, often called the Google of China, is one of China's biggest companies. Baidu currently dominates the Chinese search engine field with a market share of close to 70%.

One of the reasons for Baidu's rollercoaster ride over the last year or so has been because of the stiff competition from Qihoo (QIHU) in the search engine business. Qihoo operates mainly as a mobile security provider but has migrated into the search engine business with its massive user base.

Baidu reported earnings a couple of weeks ago and surprised a lot of investors with its results. Baidu posted revenue of $1.23 billion in the second quarter. Analysts on average expected the company to have revenue around $1.2 billion, according to Thomson Reuters. What helped propel the stock to a new 52-week high was because of the guidance that Baidu gave. Baidu said that it foresees revenue of $1.42 billion to $1.46 billion this upcoming quarter, easily surpassing the $1.35 billion expected by Wall Street.

On August 9, 2013, Citigroup analyst Muzhi Li wrote a note to investors saying, "... the increase in Baidu's mobile Internet revenue should raise the valuation of its stock. Baidu should also be boosted by its acquisition of Chinese Internet company 91 Wireless, which has a high growth mobile app and mobile games business." Li upgraded shares of Baidu to Buy from Neutral, and increased the price target to $167 from $113.

Baidu currently has a forward P/E ratio of 21 which is why I feel the company is still undervalued. I feel that Baidu will be able to overcome its recent challenges and with its new products will reward investors who have patience. I have a Buy rating on Baidu with a revised price target of $155.00.

Dangdang:

Dangdang is often times called the Amazon of China because of its marketplace program similar to that of Amazon.com (AMZN). Even though Dangdang has similarities of Amazon, it is not a true representation of it.

Dangdang recently delivered its earnings report where it beat expectations on both the bottom and top lines. Guidance for the upcoming quarter was better than expected as Dangdang expects revenue of around $258 million versus the consensus of $253.3 million.
Dangdang's sales in its marketplace platform nearly tripled to $128 million, equaling out to more than half of its total revenues for the period. The strong growth in the marketplace program boosted the company's overall margins. If Dangdang continues at this pace investors can expect them to return to profitability very shortly.

So why did shares of Dangdang still drop after a solid report? The sell-off was most likely due to the classic case of the "buy on the rumors, sell on the news" event. Shares of Dangdang have almost tripled since the start of the year so a move higher would have been unlikely.

I still find Dangdang to be a very attractive stock. The growth in China, as well as Dangdang's new shopping mall and flash sales, show great promise. I have still have a Buy rating on Dangdang with a revised price target of $12.00.

Pandora:

Pandora has been on a roller coaster ride over the last year or so as its stock price has bounced from the low $7's all the way up into the $20's.

Some of the reasons for such a price increase has been because of Pandora's better-than-expected earnings results over the last couple of quarters as well as many analyst upgrades. On August 6, 2013, Pandora released its audience metrics for the month of July. Pandora reported 1.28 billion listening hours. Those hours were up by 14% from the same month a year ago. Pandora's share of the total U.S. radio-listening market rose almost 1% from July 2012, to 7.08%. The company also said it ended the month with 71.2 million active listeners, a 30% increase from a year ago. Now you can see why analysts have been upgrading the stock.

Not everything is fine and rosy for Pandora though. Two months ago, Apple unveiled iTunes Radio. While nobody knows how powerful iTunes Radio will become, a threat is still a threat. Many analysts and investors still have a wait and see approach with iTunes Radio to see what kind of impact it will have on Pandora. I personally feel that Apple will need some time for customers to jump on board with iTunes Radio.

I feel that Pandora won't feel the heat from Apple until sometime next year. I have a Buy rating on Pandora with a revised price target of $24.00 as Pandora shows greater leverage through stronger control of its content costs.

Priceline:

Priceline has been on a tear over the last couple of years climbing well over 500%. Just when I start to think that Priceline's magnificent run is over, it just keeps climbing higher. Many analysts feel that Priceline will top $1,000 this year. One of the reasons why they feel this way is because of Priceline's impressive earning results.

Two weeks ago, Priceline proved why it's the travel industry top dog went it posted impressive earnings that beat Wall Street's expectations. At least 17 Wall Street analysts came out with glowing reports after the earnings release, raising their targets to above $1,000. The average target price of those analysts is $1,133. Priceline looks to become the S&P 500's first $1,000 stock.

One of the most interesting things is that the stock heads toward this remarkable feat with a reasonable valuation when compared to other high growth companies. With a forward P/E ratio of 19, I feel that Priceline is still undervalued for the type of growth that it has given investors. I still have a Buy rating on Priceline with a revised price target of $1,050.00.

NQ Mobile:

NQ Mobile, has been one of Wall Street's hottest stocks as shares have risen by more than 100% in just two months. Everything that could go right has gone right for NQ Mobile. One of the reasons why I like NQ Mobile is because of the services they provide. Mobile security is growing by leaps and bounds as the world shifts to mobile. NQ Mobile has positioned itself nicely and is not just limited to China, but is worldwide.

Earnings season has come and gone and NQ Mobile took earnings head on. NQ Mobile easily beat Wall Street's expectations as it beat both the top and bottom lines with revenue of 41.4 million and EPS of 26 cents.

The company said it expects third quarter revenue of $50 million to $51 million, and raised its full-year revenue outlook to $185 million to $188 million, up from the $179 million to $184 million it saw previously. Analysts were looking for the company to post third-quarter revenue of $49 million and full-year revenue of $181.4 million.

We all know the world is shifting to mobile and that's where people are going to need security to protect themselves. Don't forget that NQ is growing revenues around 100% year over year. Those are the reasons why I like NQ and have revised my price target to $30.00.

Vipshop:

Vipshop is China's leading online discount retailer. Shares of Vipshop are up over 800% and look to continue flying. Like most companies over the last couple of weeks, Vipshop delivered its earnings report. Like usual, Vipshop beats estimates on both the top and bottom lines as revenue soared 160% to $351 million. For the upcoming quarter, Vipshop expects to see revenues between US$365 million and US$370 million, representing a year-over-year growth rate of approximately 134% to 137%. The only downside is that analysts expected revenue to be around US$376 million.

The recent sell-off after the earning results is a combination of things. Many investors wanted to lock in profits after Vipshops incredible run. Can you blame them with a stock that is up 800% in the last year? Also because of Vipshops huge run, investors were expecting big results to justify the recent share price. This is also a classic example of "buy on the rumors, sell on the news" mentality.

Even though guidance didn't meet Wall Street's expectations, I still believe that Vipshop will continue to grow rapidly and will profit nicely from it. I still love Vipshop with a Buy rating on the company with a revised price target of $50.00. Vipshop history tells us that they will probably beat expectations once again so I wouldn't be nervous over the "weak guidance" that some people made it out to be.

Vringo:

Vringo, together with its subsidiaries, engages in the innovation, development and monetization of its mobile technologies as well as its intellectual property. Most investors know Vringo because of its court case against tech giant Google (GOOG).

On November 6, 2012, a jury unanimously returned a verdict award for Vringo amounting to $30.5 million in respect to past damages by the defendants' infringements commencing from September 15, 2011. It was also confirmed that Vringo would also be compensated by Google, with a running royalty rate of 3.5% through 2016. Estimates have royalties in the range of $635 million that Vringo would be receiving.

Vringo and Google are both awaiting Judge Jackson's post trial ruling as Vringo has asked the judge to award it an enhanced royalty rate between 5-7% because of Google's ongoing infringement. If such an award is indeed granted, Vringo would collect over one billion in royalties. Not bad for a small company that Wall Street currently values at $276 million.

Over the last couple of months, a number of positive developments have taken place for Vringo. First, it was able to come to a licensing and settlement agreement with Microsoft (MSFT), as well as being added to the Russell indexes. It doesn't hurt either that insiders are buying shares, signaling their belief in the company. Remember there is only one reason for insiders to buy shares and that is to make money.

Also in the news last week The District Court ruled on a number of filings. The Court ruled in favor of Vringo as it noted that it will apply the 20.9% royalty base that Vringo argued for to determine the proper ongoing royalty rate. The Court noted as well that Vringo is entitled to supplemental damages and pre-/post-judgment interest related to last Novembers infringement verdict.

I firmly believe that after these court rulings Vringo has a lot less risk now and I like the risk to reward ratio at these undervalued levels. I recommend going long the stock. I have a Buy rating on Vringo with a price target still set at $8.00.

Yandex:

Yandex is commonly known by many as the Baidu and Google of Russia. However, unlike some of its peers, Yandex not only serves the local people of Russia but internationally as well. Yandex has a market share of around 62% in Russia, and continues to fight off Google in the search engine business. Shares of Yandex have been on a roll this year as they are up over 52% year to date.

Yandex delivered quite the earning results as it beat expectations on both the top and bottom lines. Yandex continued to reward shareholders when it announced that it is increasing its full-year forecast after strong second-quarter results. Yandex expects revenue will grow 34%-38% this year up from 30%-35% it previously projected.

I like Yandex and the direction it is heading as I currently have a Buy rating on the stock with a revised price target of $38.00.

Youku Tudou:

Youku Tudou is often known by many as the YouTube of China. Youku is actually China's leading Internet television company with hundreds of millions of users.

Two months ago, Chinese web giants, Youku Tudou and Sina (SINA) teamed up as they agreed on a strategic content-sharing alliance that benefits both parties. In the deal, in exchange for access to Youku Tudou's video library, Sina will leverage its PC and mobile platform to promote Youku Tudou's licensed content to its Weibo users. The alliance between the two will also draw even bigger gains in mobile traffic as both companies have hundreds of millions of users.

Youku like the rest of them delivered its earnings report a couple weeks ago and failed to meet investors expectations as shares fell after the earnings announcement. So should investors be worried? No and analysts explain why.

"Good but not great results," wrote Wedge Partners analyst Juan Lin in a research note.

Nomura's Jin Yoon and Yong Wang felt the report was good saying;

"Youku's 2Q13 consolidated revenue came in at the higher-end of management's guided range. Margins beat our estimates largely due to the benefits from continued bandwidth savings from integration. We believe Youku will continue to execute its balanced content strategy to increasingly focus on in-house production and UGCs, which could benefit margins in the long run. Mobile traffic continued to grow fast in the quarter, and we expect significant revenue contribution in FY14F and believe mobile could be margin-accretive."

Yoon and Wang rate the stock a Buy with a target price of $38.

ABR Investment Strategy's Henry Guo talked about the recent quarter and explains why he is raising his target price from $27 to $30-$32.

"Youku reported solid results with roughly in-line revenue but profitability exceeded expectation on significant margin improvement. The company guided 3Q below street expectations, suggesting increasing gap between mobile traffic and mobile monetization, and management's conservative view on macro environment. We continue to believe multiple medium to longer term drivers, including continued profitability improvement due to scale and cost synergy, improved pricing power with further industry consolidation, and increasing advertisers' adoption of online video advertising."

This month will be the one year anniversary celebrating the merger between Youku and Tudou. The merger has helped Youku generate revenue while decreasing its costs, thus growing its margins. Analysts expect revenue to surge nearly 50% next year. I have a Buy rating on Youku with a price target still at $28.00.

Conclusion

Since starting my portfolio on April 1, 2013, it has grown over 50%. Not bad for a four month span. So what technology stocks do you like for 2013-2014? Do you have a top 10 list? If so, I would love to hear what your technology portfolio would look like over the next year or so.

Disclaimer: I'm currently long Vringo, and look to add more of the companies mentioned in this article. Investors are always reminded that before making any investment, you should do your own proper diligence on any stock mentioned in this article and to make sure you are comfortable with your investment strategy. Have a great day and as always, I look forward to hearing your thoughts or questions that you might have.

Source: I Told You These Stocks Would Outperform The Market: They Are Still Undervalued Too