These three top-tier technology stocks have corrected substantially in the past several trading sessions. All are at levels which should be good entry points for accumulation. All three companies have a forward price to earnings ratio of less than 12. Hewlett Packard (NYSE:HPQ) and Microsoft (NASDAQ:MSFT) both pay dividends now, and Cisco (NASDAQ:CSCO) has said it will announce a dividend later this year. These stocks have a Relative Strength Index (RSI) of about 30 which is a level which indicates a stock is oversold.
Cisco is a premier networking hardware company that saw its shares fall on earnings results, which some investors found disappointing. The shares currently trade at about $18.64, well below the 50-day moving average of $20.33 and the 200-day moving average of $21.74. The RSI is about 33, which indicates the stock is at/near oversold conditions. You can read more about why I like Cisco shares here.
Hewlett Packard is a leading technology company with products ranging from computers to printers. HPQ reported earnings which apparently disappointed the market, as shares dropped from about $48 before earnings to current levels of around $42. HPQ shares have an RSI of about 30, which indicates the shares are at/near oversold conditions. The 50-day moving average is about $45.34 and the 200-day moving average is about $43.76. Earnings estimates for HPQ are just over $5 per share in 2011, and are even higher for 2012, so the PE ratio is only about 8 on these shares. You can read more about HPQ's earnings estimates and its conference call here.
Microsoft Corporation is a premier software and technology company with products ranging from Microsoft Office to the Xbox and Kinect for gaming. Microsoft reported earnings that the market viewed favorably at first, but the shares have given back those gains and the shares currently trade for about $26. The RSI is about 36, which indicates the share are at/near oversold levels. The 50-day moving average is about $27.76 and the 200-day moving average is about $25.79, so the shares should see solid support at current levels around $26. You can read more about why I like Microsoft shares here.
Another positive point is that all these companies have very strong balance sheets. This allows them to buy back a substantial number of their own shares, which in turn can boost earnings per share in the future. Being that these stocks recently corrected, have low PE ratios, and dividends being paid or coming soon (for CSCO), they are likely to perform better when the markets correct when compared to high flying tech stocks.
Data is sourced from Yahoo Finance and Finviz.com.
Disclosure: I am long CSCO, HPQ.