Tech stocks have taken a beating in 2011, but in my opinion the market has it all wrong. The PowerShares Index (QQQ) has been trending sideways all year in the face of increased revenues and profits. Many tech stocks have been beating estimates and projecting growth into 2012. The QQQ has barely returned 1% for 2011, and 2012 isn't looking any better. Using LEAPS, you can beat the market and get returns ranging from 10% to 20%.
Tech analysts are underestimating earnings potentials based on the weak European outlook. This is depressing stock values. Solid stocks with histories of sales and earnings growth will be able to withstand knee-jerk reaction to news from Europe. Although I don't expect to see a 2012 bull market in tech, it will still be possible to profit from the sideways-trending market.
Agilent Technologies (A) is on top on my watch list. Its earnings were ahead of the average estimate last year, and it's expected to grow sales for the next three years. In fact, it has increased earnings over the past three years. Stocks with history like this Agilent should be trading at a much higher multiples. Agilent's current P/E ratio of 11.14 is very attractive, especially with the industry average around 15.
This company is focused on reinvestment in debt reduction and growth of its business. The current debt to equity ratio is low at 45%, placing it in the top 20% for the industry. Revenue in both of its main markets are up for the year, averaging a 10% gain. Expectations for 2012 include a 5% increase in per-share earnings.
Agilent just acquired BioSystem Development, maker of the AssayMap micro chromatography platform. This acquisition will help them automate work flows to meet the needs of the life sciences industry. Agilent is
