The tech industry managed to produce solid gains in 2011, and many analysts expect more of the same this year. The ever-developing product lines of cellular phones, consumer electronics and more keep the attention of customers, enticing them to buy the newest, best and most expensive models. A number of these stocks are expected to surge in the first half of 2012. Among those companies looking to win big are F5 Networks Inc (FFIV), Microsoft Corporation (MSFT), and Marvell Technology (MRVL), while Concur Technologies Inc (CNQR) and Corning (GLW), which would be very promising at a lower price point.
F5 Networks Inc
A supplier of advanced networking technology for the Internet industry, Washington-based F5 Networks helps companies to make online transmissions faster and safer. Not only is this a solid technical company, it is also an excellent stock to be holding right now. Trading around $120 per share, FFIV has a one-year target estimate of $124.45, an increase of almost 4%. Although this is still well below the top end of the company's 52-week range, ($69.01 - $129.92) it represents a strong gain since October, when the share price fell to $70.
That climb represents a move of about 70%, and it looks as though the run still has legs. F5 has a year-to-year quarterly earnings growth of 40.20%, and it is currently sitting on $335.20 million of levered free cash flow. Looking at a forward P/E 22.78 and a PEG ratio of 1.25, FFIV looks very strong and would merit taking a new position or adding to an existing one.
Ah, Microsoft. Every time an analyst writes this giant of the computer industry comes back strong. Currently sitting around $29 per share, the company appears poised to make a serious jump, with some believing that MSFT has legs to $32 per share. Announcing a record-setting $20.89 billion in quarterly revenue, (5% increase year-to-year) the company was rewarded with a spike in share price as it went up $1.59 on January 20th. It is safe to expect MSFT to seize that momentum and attempt to make a run at that $32 target.
Relying on more than just its Windows software, the company is getting significant boosts from its entertainment division and Windows Phone groups. The Xbox360 is getting renewed interest as the Nintendo Wii loses appeal, and the cellular manufacturers expect big things from the Windows Phone in 2012. With a dividend of $0.80 and a yield of 2.80%, this tech leader appears ready to make another push, especially in the first half of 2012.
Concur Technologies Inc
Concur Technologies has moved strongly into the integrated travel and expense management field to provide software solutions for various businesses throughout the world. The company's has gained a lot of attention with TripIt, software that includes the addition of real-time visibility into travel spending and trends. Innovations like this have pushed the company ahead, as evidenced by its 22.80% year-to-year quarterly revenue growth and forward P/E of 49.02.
In spite of its success, Concur is still fighting to hit its stride. With a current share price of almost $54 per share, expectations include a drop as the one-year target for CNQR is a disappointing $48.68, a price that reflects a decline of approximately 10%. The company's return on equity is also down at -1.62%, suggesting that investors should wait to see some positive indicators before taking a position. I would be a buyer at a 15% discount.
Marvell Technology Group Ltd
Marvell Technology has become a major player in the microprocessor world, first dominating the market for hard disk drive controller chips, but now receiving nearly half of its revenue from other ventures. This Bermuda-based company has a market cap of $9.06 billion, and its share price of $15.50 hovers near the midpoint of its 52-week range of $11.23 to $20.49. It does not pay a dividend, but the company's one-year target estimate of $17.58 represents an increase of over 13%.
Although the company's quarterly earnings were down 23.70% from last year, it has a solid forward P/E of 12.23, a low PEG ratio of 0.76 and $537.54 million in levered free cash flow. Seventy-four percent of the company stock is held by institutional investors, with another 17.65%. With reasonable numbers and a strong market position, now is a good time to take a position before the price increases.
Corning is a well-known name in the kitchen, but the company has grown into other sectors as well. This New York-based manufacturer creates specialty glass and ceramics products for display technologies, telecommunications, environmental uses and specialty materials. Founded in 1851, the company has a market cap of $22.66 billion and pays a dividend of $0.30 (2.10%) against its current share price around $14.
Corning came out of a long slide that lasted most of 2011, dropping from its 52-week high of $23.43 in February until it almost hit its low of $11.51 in October. Since that time, the stock price has been climbing, and it appears to have enough momentum to challenge is 200-day average, which stands at $16.00. The one-year target estimate for GLW is $16.43. Corning products are innovative, and its P/E of 6.81 may not represent the true value that GLW possesses. Investors should continue to monitor the stock price and be ready to take a new position or expand an existing one. For Corning, I'd be a buyer at a $2 discount from the current price.
Going Tech in 2012
Although the economic climate has pushed some investors to look at dividend stocks and other safe haven investments, tech companies still represent solid investments. Based on the first month's action, investors should consider positions in F5 Networks Inc, Microsoft Corporation and Marvell Technology Group Ltd as soon as they are ready to add a holding. Concur Technologies Inc and Corning Incorporated are both solid prospects when they start to gain some momentum.