The market has severely punished many tech stocks over the past weeks and months. I have been watching a number of tech stocks for signs of a bottom. When you see stocks either barely go down, hold steady or go up when the market is dropping, this can be a sign that a stock has bottomed. Another sign of a bottom is when there is just way too much pessimism and the stocks are at oversold levels. Finally, another sign is if the stock does not drop even when it is downgraded or if bad news is released. The stocks below appear to be washed out and it looks like the sellers are exhausted, as they have all been showing recent signs of strength. Not only that, but they are also extremely cheap in terms of fundamental metrics such as PE ratio, book value and growth potential. Here are three major tech stocks that probably have nowhere to go but up:
Cisco Systems, Inc. (CSCO) shares are trading at $15.36. Cisco is a premier networking hardware company. The shares currently trade well below the 50 day moving average of $16.51 and the 200 day moving average of $19.34. Cisco pays a 24 cents per share dividend, which is a yield of about 1.6%. The earnings estimates for CSCO are $1.60 for 2011, and $1.72 for 2011. CSCO now trades for about 8.5 times earnings and they have an extremely strong balance sheet.
Why Cisco shares have probably hit rock bottom: Cisco shares hit a 52 week low of $14.78 not too long ago, but have since bounced back over the $15 level, even after one "late to the party" analyst downgraded the shares a few days ago. Cisco shares have also managed to hold strong or even go up recently even when the markets were dropping. Cisco is a leader in their sector and the PE ratio is too low. The rock solid balance sheet and dividend are also supportive of a higher stock price.
Hewlett Packard (HPQ) shares are trading at $35.23. HPQ is a leading technology company with products ranging from computers to printers. The 50 day moving average is $38 and the 200 day moving average is $41.56. Earnings estimates for HPQ are just over $5 per share in 2011 and $5.69 for 2012. This gives HPQ a super low PE ratio of only 7. Famed hedge fund investor John Paulson recently started a new position in HPQ, which you can see here.
Why Hewlett Packard shares have probably hit rock bottom: HPQ shares hit a 52 week low of $33.95, on June 15, but have since bounced back over the $35 level. Just like Cisco, HPQ shares have also managed to hold strong or even go up recently even when the markets were dropping. With a PE ratio of 7, chances are these shares have hit rock bottom and are a solid long term buy.
Akamai Technologies, Inc. (AKAM) shares are trading at $29.84. AKAM is a leading Internet service company that helps accelerate and deliver website content. The 50 day moving average is $33.95 and the 200 day moving average is $43.25. Earnings estimates for AKAM are just over $1.60 per share in 2011 and $1.83 for 2012. Because this is a higher PE ratio stock in comparison to the other tech stocks here, I would not buy a big position in this, but a smaller position held over the next couple years could pay off from these depressed levels.
Why Akamai shares have probably hit rock bottom: Akamai shares hit a 52 week low of $29.25, on June 10, but have since bounced slightly. AKAM has a rapidly growing business and lots of cash on the balance sheet and that should provide support for the stock as well.
The data is sourced from Yahoo Finance and stockcharts.com. The information and data is believed to be accurate, but no guarantees or representations are made. Rougemont is not a registered investment advisor and does not provide specific investment advice. The information contained herein is for informational purposes only.