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By Larry Geller

(NASDAQ:CSCO): Although Cisco Systems, Inc. has been on a downward trend for the past year, the company is now trading at a low enough P/E ratio (12.15) to merit purchase. In fact, many tech stocks are currently trading at low P/E ratios, but the key to Cisco’s future success is that the company has so much business in the networking industry. In an increasingly interconnected world, demand for Cisco’s networking devices can only go up. Cisco’s other fundamentals are also very attractive. Operating margin is 20.74%, which should allow Cisco to expand as the economy continues to recover. Additionally, price-to-book ratio is quite solid, currently 1.83. Overall, Cisco’s balance sheet is pretty strong, which lends one to believe that Cisco has simply been the victim of downward momentum. One key factor in analyzing Cisco’s balance sheet is that it has a significant amount of cash overseas, but there is a good chance that a tax holiday will be implemented that would allow Cisco to bring its cash back to the U.S. with little penalty. If and when this tax holiday is instituted, Cisco’s shares will benefit greatly. A rebound in stock price is also expected as Cisco clears up its recent controversy regarding the sale of surveillance devices to China. Although this may have hurt shares a bit in the past few days, it is quite clear that the issue is being overblown. Cisco’s dividend structure is also favorable; dividend yield is currently 1.50%. This is especially desirable considering that many of Cisco’s competitors do not offer dividends at all.

(NASDAQ:INTC): Like Cisco, Intel Corporation is a company that stands to benefit greatly from the pending economic recovery. Intel is currently cash-heavy, which means it will be able to finance upcoming operations without taking on burdensome levels of debt. Additionally, the future of business will rely on Intel’s diverse hardware offerings. Fundamentally, the company is in great shape. Its pperating margin is 35.30% and P/E ratio is 10.64. Quarterly revenue growth is 24.70%, which is another statistic in its favor. In many ways, Intel is simply a safe bet – great dividend yield (3.20%) and a business model that doesn’t lend itself to volatility. One of Intel’s main competitors, Advanced Micro Devices, on the other hand has suffered a few setbacks that are negatively impacting its market share. Look for the price of Intel’s stock to move up as this news circulates. Regardless, the semiconductor industry overall should be a solid place for investment as it looks to continue gains made earlier in the year. Strong cash flow in particular portends future success. The balance sheet and income statement are also favorable for future gains in share price. Intel’s upcoming Trigate technology is another factor that figures to increase the company’s value.

(NASDAQ:AAPL): The stock of Apple, Inc. has climbed in the past couple of weeks and with good reason – products like the iPhone and iPad continue to dominate their respective markets. Apple just announced that over 15 billion apps have been downloaded from its app store, and the company’s technology remains as consumer-friendly as ever. Furthermore, Apple’s stock is currently trading at a low PEG ratio of 0.66. The balance sheet looks solid, as cash holdings are plentiful. Cash flow is also very strong. Operating margin is 29.02% and quarterly revenue growth is 82.70%. When taking into account both of these statistics, it is not hard to see why Apple’s future looks so bright. With Apple’s next earnings announcement coming on July 19th, the time to buy is now in order to maximize upcoming gains. One factor that could negatively affect Apple’s future is the health of CEO Steve Jobs, but it is hard to imagine that any event could derail this company. Once the market realizes this, the stock price will improve accordingly. Apple also stands to benefit from its ongoing legal battles with other smartphone makers. Corresponding share price increases will require that some of these verdicts go in Apple’s favor, but that does not seem unlikely. Aside from the legal battles, Apple is also dominating its competitors in the battle for consumer mindshare.

(NYSE:F): At this point in time, it is quite clear that Ford Motor Co. is the American automobile company to buy. The other main option – General Motors – simply does not have much upside as it continues to recover from its 2009 reorganization. From a fundamental perspective, Ford is undervalued. P/E ratio is currently 7.47, but more importantly Ford does not have any pending issues. For a company like Ford, no news is good news – and there’s even some good news to be found as auto sales are expected to climb in coming months. June auto sales were also quite good. While companies like Toyota and Honda may also benefit from this news, they are simply overvalued at the moment. Ford’s share price will also increase once the company can offer dividends again. The key here is that Ford’s loan agreements prevent it from offering dividends until it is back to investment grade status – an event that should happen in the not-too-distant future. The best play is to buy Ford now while it is cheap and watch the stock soar once dividends are reintroduced. Earnings for Ford should increase in the future as the economic recovery moves forward. Furthermore, confidence in the company’s management is exceptionally high. Specifically, the company’s ability to avoid government bailout has aroused the interest of many investors.

(NASDAQ:SIRI): If you’re looking for a company to invest in that is both unique and brand name, Sirius XM Radio Inc. should be that company. When this company formed via merger between Sirius and XM, it made itself into the only company currently providing satellite radio. The idea behind allowing this merger was that Sirius XM would still have to compete with other forms of radio entertainment such as traditional AM/FM and Internet radio. However, it is now quite clear that satellite radio will come to dominate both of these alternatives. The company does not have great fundamental value at the moment, which may explain why it is trading at around 2.25. The one relatively bright spot may be its operating margin of 19.75%, but this is not crucial to Sirius XM’s forthcoming success. The key to seeing Sirius XM as an undervalued stock lies in understanding the future of the market that it plays in. There is simply too much upside to ignore. Like Ford (discussed above), Sirius XM is benefiting from improved auto sales both now and in the future because so much of its entertainment is used in cars. Sirius XM also has smartphone content and smartphone sales are also on the rise. This improvement in auto sales and smartphone sales will increase both Sirius XM’s profitability and ability to obtain credit. One other advantage that Sirius XM possesses is that it controls its own content. Sirius XM’s share price has increased in past months and look for the stock to climb more as investors realize the ingenuity of its business model.

Source: 5 Cheap Stocks in a Very Expensive Market