These seven tech stocks have positive catalysts for future growth, positive Reuters ratings, and PEG ratios of less than 1. The PEG ratio is a broadly-used indicator of a stock's prospective worth. It is preferred by numerous analysts over the price/earnings ratio because it also accounts for growth. Similar to the P/E ratio, a lower PEG means that the stock is more undervalued. Many financiers use 1 as the cut-off point for PEG ratios. A PEG of 1 or less is believed to be favorable. As Warren Buffett would say, "Price is what you pay, value is what you get."
These are bullish indicators regarding a stock's possible future performance. Moreover, these stocks are trading well below consensus analysts’ estimates, have improving financial results, several have recent upgrades and positive analyst comments. Nonetheless, this is only the first step in finding winners for your portfolio. Now that we have cut the wheat from the chaff, let's take a closer look to distinguish the driving factors behind these remarkable statistics and ensure the stories are intact.
Below are four tables with detailed statistics regarding company summaries, price performance, fundamentals and earnings and dividends followed by a brief review of each company, a summary of current analysts' estimates and up/downgrade activity followed by a chart of the company's key statistics. Please use this as a starting point for your own due diligence.
Earnings and Dividends
Click to enlarge
Apple Inc. (AAPL) - Together with subsidiaries, the company designs, manufactures and markets personal computers, mobile communication and media devices, and portable digital music players, as well as sells related software, services, peripherals, networking solutions and third-party digital content and applications worldwide.
CEO Steve Jobs and a team of Apple executives will kick off the company’s annual Worldwide Developers Conference with a keynote address on Monday, June 6, at 10:00 a.m. At the keynote, Apple will unveil its next generation software - Lion, the eighth major release of Mac OSX, iOS 5, the next version of Apple’s advanced mobile operating system which powers the iPad, iPhone and iPod touch, and iCloud, Apple’s upcoming cloud services offering. You can read more about it here.
Apple recently announced financial results for its fiscal 2011 second quarter ended March 26, 2011. The company posted record second quarter revenue of $24.67 billion and record second quarter net profit of $5.99 billion, or $6.40 per diluted share. These results compare to revenue of $13.50 billion and net quarterly profit of $3.07 billion, or $3.33 per diluted share, in the year-ago quarter. Gross margin was 41.4% compared to 41.7% in the year-ago quarter. International sales accounted for 59% of the quarter’s revenue.
Steve Jobs, Apple’s CEO said:
“With quarterly revenue growth of 83% and profit growth of 95%, we’re firing on all cylinders. We will continue to innovate on all fronts throughout the remainder of the year.”
The company is trading significantly below analysts' estimates. AAPL has a median price target of $450 by 45 brokers and a high target of $612. The last up/downgrade activity was on March 16, 2011, when JMP Securities downgraded the company from Market Outperform to Market Perform. Please review the illustration for AAPL's summary and key statistics.
Arrow Electronics, Inc. (ARW) - Arrow distributes products, services and solutions to industrial and commercial users of electronic components and enterprise computing solutions worldwide.
Arrow Enterprise Computing Solutions, a business segment of ARW, recently announced a distribution agreement with Riverbed Technology (RVBD) in the Nordics. The agreement enables Arrow ECS to distribute Riverbed solutions in Sweden, Norway, Denmark, Finland, Estonia, Latvia and Lithuania. It represents an expansion of the already established global relationship between Arrow ECS and Riverbed. You can read more about it here.
Arrow recently reported first quarter 2011 net income of $136.3 million ($1.18 and $1.16 per share on a basic and diluted basis, respectively) on sales of $5.22 billion, compared with net income of $87.0 million ($.72 and $.71 per share on a basic and diluted basis, respectively) on sales of $4.24 billion in the first quarter of 2010.
Michael J. Long, chairman, president and chief executive officer, stated:
"Our growth strategy and the related momentum we built throughout the second half of 2009 and 2010 have carried over into the first quarter of 2011, with the Arrow team generating the strongest first-quarter results in our history. Revenue and earnings per share came in well ahead of our expectations, driven by strength in both of our business segments."
The company is trading significantly below analysts' estimates. ARW has a median price target of $53 by 11 brokers and a high target of $59. The last up/downgrade activity was on Mar 8, 2011, when Stifel Nicolaus upgraded the company from Hold to Buy. Please review the illustration for ARW's summary and key statistics.
Avnet, Inc. (AVT) - Together with its subsidiaries, distributes electronic components, enterprise computer and storage products, and embedded subsystems worldwide.
Avnet Express, part of the Avnet Electronics Marketing operating group of AVT, recently announced the immediate availability of standard antennas from TE Connectivity, along with a quick reference selector guide. The recently released family of TE antennas includes surface mount, tab mount, surface mount over ground and chassis mount cabled antennas. You can read more about it here.
Roy Vallee, Chairman and Chief Executive Officer, commented on the recent quarterly results:
"Our revenue in the March quarter was much stronger than expected at both operating groups, driving operating income margin higher sequentially and year over year. This solid performance drove a fourth consecutive quarter of record adjusted EPS with return on capital employed (ROCE) within our target range of 14% - 16%, even as we are integrating our most recent significant investments in value creating M&A. Electronics Marketing delivered another very strong quarter as double-digit organic growth drove both margins and returns above our long-term targets. As the technology markets continue to lead the economic recovery, we remain focused on driving performance across our portfolio of businesses and leveraging revenue growth into increased shareholder value and higher EPS."
The company is trading significantly below analysts' estimates. AVT has a median price target of $44 by 11 brokers and a high target of $47. The last up/downgrade activity was on March 8, 2011, when Stifel Nicolaus upgraded the company from Hold to Buy. Please review the illustration for AVT's summary and key statistics.
Intel Corporation (INTC) - Engages in the design, manufacture and sale of integrated circuits for computing and communications industries worldwide.
Intel recently announced that its board of directors has approved a 16% increase in the quarterly cash dividend to 21 cents per share (84 cents per share on an annual basis), beginning with the dividend that will be declared in the third quarter of 2011.
Paul Otellini, Intel president and CEO, stated:
"Worldwide demand for computing continues to increase at a very rapid rate, putting Intel on track for revenue growth of over 20% this year, delivering another record year for the company. Intel's current and projected growth is generating strong cash flow, allowing us to further increase our dividend. We are delivering on our commitment to return cash to shareholders with annual dividend growth that's already more than five times the S&P 500."
The company is trading significantly below analysts' estimates. INTC has a median price target of $27 by 37 brokers and a high target of $31.50. The last up/downgrade activity was on April 20, 2011, when FBR Capital upgraded the company from Market Perform to Outperform. Please review the illustration for INTC's summary and key statistics.
KLA-Tencor Corporation (KLAC) - Engages in the design, manufacture and marketing of process control and yield management solutions for the semiconductor and related nanoelectronics industries.
KLAC recently announced operating results for its third quarter of fiscal year 2011, which ended on March 31, 2011, and reported GAAP net income of $210 million and GAAP earnings per diluted share of $1.22 on revenues of $834 million.
Rick Wallace, KLA-Tencor's president and CEO, commented:
"KLA-Tencor's solid third quarter financial results reflect the strong demand environment and our ability to deliver innovative solutions that enable our customers to meet their critical yield challenges. We're continuing our focus on delivering strong financial performance by leveraging our market and technology leadership."
The company is trading significantly below analysts' estimates. KLAC has a median price target of $52 by 15 brokers and a high target of $59. The last up/downgrade activity was on Jan 13, 2011, when Oppenheimer upgraded the company from Underperform to Perform. Please review the illustration for KLAC's summary and key statistics.
Marvell Technology Group Ltd. (MRVL) - Designs, develops and markets analog, mixed-signal, digital signal processing and embedded and standalone ARM-based microprocessor integrated circuits.
MRVL recently reported financial results for the first quarter of fiscal 2012, ended April 30, 2011. Revenue for the first quarter of fiscal 2012 was $802 million, a 6% decrease from $856 million in the first quarter of fiscal 2011, ended May 1, 2010, and a 11% sequential decrease from $901 million in the fourth quarter of fiscal 2011, ended January 29, 2011.
Dr. Sehat Sutardja, Marvell's Chairman and Chief Executive Officer, stated:
"The results for our first quarter reflected the typical seasonality of our consumer centric end markets. Even at this low point in the revenue cycle, we were an industry leader in profitability for both operating and cash flow margins, demonstrating the strength of our long-term business model. We remain confident that the investments we are making such as in TD-SCDMA and SSD will result in improved results throughout the year."
The company is trading significantly below analysts' estimates. MRVL has a median price target of $21 by 29 brokers and a high target of $26. The last up/downgrade activity was on Oct 8, 2010, when The Benchmark Company initiated coverage on the company with a Buy rating. Please review the illustration for MRVL's summary and key statistics.
Tech Data Corporation (TECD) - Distributes information technology products as well as offering logistics management and other value-added services in North America, South America and Europe.
Tech Data recently announced results for the first quarter ended April 30, 2011. Net sales for the first quarter ended April 30, 2011, were $6.3 billion, an increase of 13% from $5.6 billion in the prior-year first quarter. The strengthening of certain foreign currencies against the U.S. dollar positively impacted the year-over-year net sales comparison by approximately 3 percentage points. Operating income for the first quarter was $75.7 million or 1.20% of net sales. This compared to operating income of $69.5 million or 1.24% of net sales in the prior year first quarter. First-quarter net income attributable to shareholders of Tech Data Corporation was $48.7 million or $1.03 per diluted share compared to $45.6 million or $0.88 per diluted share in the prior-year period.
Robert M. Dutkowsky, chief executive officer, stated:
"We are pleased to report another solid performance with record first quarter sales, net income and earnings per share. Our first quarter results reflect a Tech Data that is fit, focused and flexible - able to execute well for our vendor partners, customers and investors in a variety of market environments. Our worldwide team's focus on responsible growth and gross margin management, combined with stronger foreign currencies, resulted in sales and earnings growth that was in line with our expectations. Additionally, we achieved a 14% return on invested capital, and in the quarter purchased $51 million of our stock, underscoring our commitment to creating shareholder value."
The company is trading significantly below analysts' estimates. TECD has a median price target of $55 by seven brokers and a high target of $63. The last up/downgrade activity was on Mar 2, 2010, when Needham upgraded the company from Buy to Strong Buy. Please review the illustration for TECD's summary and key statistics.
Information was gathered from CNBC, Yahoo Finance and respective company websites. Based on the current market conditions I would suggest scaling in to any position to reduce risk. I believe all these stocks are currently undervalued and provide significant opportunities for long term investors. Please use this information as a starting point for your own due diligence.