After a a steep market decline, the technology sector is a great place to look for value and rebound candidates. Many tech stocks are loaded with cash, have higher than average growth rates, and some could even be takeover targets.
Technology continues to play an increasingly important role in business productivity and in our personal lives. This demand and dependence on technology makes the tech sector a solid investment for long term investors. With many stocks trading near 52 week lows and in some cases at multi-year lows, it won't be surprising to see some stocks double in the next couple of years.
It's important to realize that stock market values have been depressed ever since the financial crisis and that we are still not in a normal environment for stocks. When the markets and the economy are healthier, stock values will be higher.
Here are a few tech stocks with the potential to double:
Oracle Corp. (ORCL) shares are trading at $27.63. Oracle is a leading provider of business software solutions and is based in California. The 50-day moving average is $29.66 and the 200-day moving average is $31.55. Earnings estimates for ORCL are at $2.40 per share in 2011 and $2.66 for 2012. The PE ratio is about 11, which is below many other software companies. The book value is $7.85. Earlier this year, Oracle shares traded around $36, and with earnings growing and more acquisitions possible, it's not hard to see how this stock could be trading around $50 sometime in 2013. Earnings could easily go over $3 per share in 2013, and if the multiple expands to about 15, you have a $50+ stock.
Marvell Technology (MRVL) is trading around $13.50. Marvell is a leading integrated circuit maker. The 50-day moving average is $13.89 and the 200-day moving average is $16.37. Earnings estimates for MRVL are $1.45 per share in 2011 and $1.55 for 2012. These shares have traded in a range between $11.23 to $22.01 in the last 52 weeks. Marvell shares traded over $30 before the financial crisis and the stock only needs to go to $27 to double from current levels. Revenues are expected to grow in 2012.
Adobe Systems, Inc., (ADBE) shares are trading at $25.30. Adobe is a leading provider of publishing, web design and other software solutions and is based in California. The 50-day moving average is $27.17 and the 200-day moving average is $31.29. Earnings estimates for ADBE are at $2.26 per share in 2011 and $2.55 for 2012. The PE ratio is about 10, which is below many other software companies. The book value is $10.92. A fund manager recently said Adobe is a possible takeover target (you can read about that here). Between earnings growth and the potential of a takeover, this stock could double in the next couple of years.
Cisco Systems, Inc. (CSCO) shares are trading at $15.88. Cisco is a premier networking hardware company. The 50-day moving average is $15.52 and the 200-day moving average of $17.53. Cisco pays a 24 cents per share dividend, which is a yield of about 1.6%. The earnings estimates for CSCO are $1.71 for 2011, and $1.89 for 2011. CSCO now trades for about 8.5 times earnings and the company has an extremely strong balance sheet. John Chambers, CEO of Cisco, has been making tough choices to improve profit margins and boost the stock price. If those plans work, this stock could easily double from these low levels.
Hewlett Packard (HPQ) shares are trading at $24.14. HPQ is a leading technology company with products ranging from computers to printers. The 50-day moving average is $32.03 and the 200-day moving average is $39.14. Earnings estimates for HPQ are at $4.84 per share in 2011, and $4.78 for 2012. This gives HPQ a super low PE ratio of only about 5. HPQ pays a dividend of 48 cents per share which is a yield of 2%. With a PE ratio of 5, chances are these shares have hit rock bottom and are a solid long term buy. This seems to be one of the most hated tech stocks out there, and many are disappointed with the new CEO. However, either the new management strategies will work or the CEO will be forced out, and in both cases the stock is likely to move much higher. With earnings of nearly $5 per share, all HPQ needs is a PE ratio of about 10 to double and trade at $50 per share.
Micron Technology (MU) is trading at $6.06. These shares have a 52 week range of $5.18 and $11.95. The 50-day moving average is $6.73 and the 200-day moving average is $9.03. Estimates for MU are about 33 cents per share in 2011 and 60 cents for 2012. Book value is stated at $8.45 per share. With these shares trading below book value, and the PE ratio being about 10 times 2012 earnings, it looks like a solid value. This stock was trading around $12 just earlier this year and if it gets back to those levels in the next couple of years that would be a double from here.
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.