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High technology is the harbinger of the future - or at least that's what these guys would say. Whether it's cancer research, cloud computing, or the design of energy efficient microprocessors, these firms are proven innovators that are expected to significantly expand earnings throughout the next year. Some pay dividends more than others, but the true strength of industries on the cutting edge of innovation is their ability to expand and create entirely new markets.

  1. Intel (NASDAQ:INTC)

The largest chip maker in the world is a firm with a particularly massive R&D budget (about $5 billion per quarter). Intel is still the king of microprocessors, even if it's had a dry-spell with the excitement over tablets. Intel trades at a forward P/E just under 10, but has been beating analyst estimates on a consistent basis. Intel has been underperforming its cousins in the last month. Advanced Micro Devices (NYSE:AMD) and Texas Instruments (NASDAQ:TXN) are doing better, as well as the NASDAQ. There's nothing wrong with Intel's market share or industry outlook though, Intel is offering a very lucrative play for value investors.

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  1. Merck & Co. (NYSE:MRK)

Although Merck has disappointed with its latest drugs, analysts are anticipating that synergies with acquisition Schering-Plough and upcoming pipeline drugs will improve outlook. Forward P/E is about 9 for the upcoming year. There is also a huge 4.5% dividend that might sway your interest. The firm has been near the bottom of the pack of pharma giants, which may reverse sharply upon successful development of new-generation drugs in the upcoming year. Trade accordingly.

  1. AstraZeneca (NYSE:AZN)

Analysts have wildly different estimates for this company, which is very vulnerable to the patent expirations that are coming in the next few years. Speculation on new drugs remains a complete gamble to most investors. However, based on earnings, AstraZeneca is quite inexpensive since it's been underperforming its peers. Trading at a P/E of 8.8, and a forward P/E of about 8.6, the troubled company's valuations may or may not be justified. Nonetheless, if it can retain its value in the long run investors will still be rewarded with a 6.12% dividend.

  1. Novartis AG (NYSE:NVS)

Novartis is doing particularly well, and has been gaining popularity with big-pharma investors. Just a few days ago the firm was rewarded with drug approval for Afinitor, a joint venture with Pfizer (NYSE:PFE) that serves as an example of Novartis' strong product lineup. It also has a 4.2% dividend to compound gains. On a side note, I believe that Novartis is the best buy out of the four pharma giants in the list based on growth prospects.

  1. Eli Lily (NYSE:LLY)

This well known company is trading at a mere 8.4 forward P/E multiple, which is justified by the threat of generic drugs invading the profit margins of Eli Lilly. Still, Eli Lilly has been in the business for 130 years and the revenue declines are expected to be moderate. Its 5.5% dividend should hold as well, giving you a real chunk of change even if LLY stays flat.

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  1. Xerox (NYSE:XRX)

This well-known firm has not been generating much investor interest in 2011 thus far, but that might change as its new fleet of more streamlined products combined with an anticipated corporate spending spree on office electronics may justify the forward P/E of 9.3. It has also been more popular than both the broad market and its rival Canon (NYSE:CAJ) in the last month, suggesting bullish sentiment.

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  1. International Business Machines (NYSE:IBM)

Big blue is the most expensive on this list, judging by the criteria used. But I feel that a company of this caliber justifies a higher P/E. With immense cash reserves, an impeccable reputation, and no shortage of contracts, IBM's forward P/E of 12.8 doesn't look too expensive given the company's position. A solid slow-moving stock for a value-driven portfolio.

  1. Hewlett-Packard (NYSE:HPQ)

Hewlett-Packard has endured market drama with its CEO leaving last summer and its intense rivalry with prodigy firm Oracle (NYSE:ORCL). While this may sound bad, keep in mind that this ticker trades at a leading P/E of 7.7. That's an incredibly low ratio that should raise eyebrows. If the analysts are right, this stock should be outperforming the market in the coming months.

  1. Dell (NASDAQ:DELL)

This massive computer manufacturer has been hit by smartphone/tablet speculation, and is trading at a forward P/E of 8.3. Simply put, PC sales should be procyclical and Dell should benefit upon additional recovery in consumer spending due to its strong position in market share and quality products.

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  1. General Dynamics (NYSE:GD)

This firm is a big vehicle supplier for militaries around the world, and is responsible for some of the most advanced vehicles in the modern world. U.S. spending on the military will be vital to keep the firm's contracts running, but then again this is one sector of the federal government's spending that has been holding strong. This firm trades at a forward P/E multiple of about 10 and should experience healthy growth.

  1. Alliant Techsystems (NYSE:ATK)

With a bit of irony in its ticker, this firm is the largest supplier of ammunition to the Pentagon and has similar exposure to U.S. military and aerospace budgeting as General Dynamics (GD). It has been underperforming the market by a significant margin despite its consistent earnings. Its forward P/E of 7.7 looks like an eye-popping value, although it does carry some risks considering the budgeting dilemma faced by the United States.

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So I've listed 11 stocks here that are undervalued based on analyst estimates. Whatever you decide to do, remember that while P/E ratios are essential to assess the health of a firm, growth is too. Some firms may trade at lower P/E ratios justly, but innovative firms like those listed above can easily turn things around with the proper management, and the proper science.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in INTC, NVS, XRX over the next 72 hours.

Source: 11 High-Tech Firms With Low Forward P/E Ratios