Technology stocks are known to help investors become multi-millionaires; however, there have been times where many investors have lost their shirt because of the lack of information regarding some technology investments. Today, we have done the work for you. Here is an analysis of five technology stocks to buy now. These are stocks with good earnings outlook and a strong potential for stock price appreciation.
International Game Technology (IGT) is not a very volatile stock, as it has traded sideways between $14 and $19 for the last twelve months. It currently distributes an annual dividend of $0.24, has a yield of 1.60% and a payout ratio of 28%.
Sales and income for the last twelve months increased 2.10% and 33.10%, respectively. Moreover, revenue during the last four years has decreased at a compound annual growth rate of 5.93%, while income decreased at a compound annual growth rate of 3.62% during the same time period. The stock reflects this drop in revenue and income as the stock plummeted from $45 to around $15 as of this writing. The economic recession was another catalyst to drive down the stock price during the last four years. Earnings per share (TTM) are $0.86 compared to $1.92 and $0.94 for Bally Technologies, Inc. (BYI) and WMS Industries Inc. (WMS), respectively.
The stock looks cheap with a price to earnings of 17.57, compared to its competitors Bally Technologies (22.88) and WMS Industries (24.15). I rate this stock as a buy. It may take some time for the stock to trade back around the $40 range; however, I believe the stock will begin earning higher revenue with a rebound in the economy, thus the stock price will appreciate in value over time.
Linear Technology Corporation (LLTC) is trading close to its 52-week high of $35.97. It distributes an annual dividend of $1.00, has a yield of 3.00% and a payout ratio of 45%. During the last twelve months the sales and income have increased 26.80% and 60.70%, respectively. Revenue for the last four years has increased at a compound annual growth rate of 6.01% while income has increased at a compound annual growth rate of 12.15% during the same time period. Earnings per share came in at $2.13, compared to earnings per share of $2.81 and $1.88 for competitors Analog Devices Inc. (ADI) and Texas Instruments Inc. (TXN), respectively. More recently, the acquisition of Dust Networks drove the stock price from $30 to around $34. I believe this bullish trend will continue as the company strategically positions itself to increase its market position, acquire more customers, and increase revenue.
Microchip Technology Inc. (MCHP) is currently issuing a dividend of $1.40, has a yield of 3.80% and a payout ratio of 55%. Over the last twelve months sales and income increased 56.90% and 97.80%, respectively. Furthermore, revenue during the last four years has increased at a compound annual growth rate of 9.47% while income has increased at a compound annual growth rate of 9.00% during the same period. Earnings per share of $1.88 are higher than $0.72 for its competitor STMicroelectronics NV (STM) Cash flow has been strengthening during the last three years, growing at a compound annual growth rate of 16.22%. From a technical perspective, the stock is trending up in a channel that will reach the low $40s. I rate this stock as a buy because it's more likely that revenue will continue to increase, earnings per share will be higher, and cash flow will continue to strengthen.
Marvell Technology Group Ltd. (MRVL) has a current market cap of $9.42 billion. Sales and income for the previous twelve months increased 28.60% and 155.80%, respectively. Moreover, revenue during the last four years has increased at a compound annual growth rate of 5.69% while income increased at a compound annual growth rate of over 200% during the same period. Earnings per share came in at $1.18 while the biggest two competitors, STMicroelectronics NV and Texas Instruments Inc., had earnings per share of $0.72 and $1.88, respectively. Cash flow over the last five years has increased at a compound annual growth rate of 27.56%, an indication of a strong financial position. In addition, the current ratio of 5.79 indicates the company's ability to meet short term obligations. Finally, from a technical standpoint, the stock has rebounded after touching a low of $12 and is now on a bullish trend to trade back in the $22 area. I believe that higher revenue and a stronger financial position will continue to drive the stock price higher.
Micron Technology, Inc. (MU) has a market cap of $8.18 billion. On a recent announcement by newly appointed CEO Mark Durcan, in addition to traders' expectations, drove the price from $7.82 to $8.28 as of this writing. Revenue during the last four years has increased at a compound annual growth rate of 10.75%. Earnings per share are reported at a loss of $0.17. Furthermore, the most recent quarter debt to equity ratio stands at 21.83, which implies the company has been very aggressive in using debt to finance operations. Even though this is the case, the stock has been on a bullish trend since October 2011. Management is slowly making a turnaround in managing debt and expenses; thus I believe the stock is gradually on its way back to trading back around $11. To conclude, I think right now is a good time to buy some shares of the company to take advantage of the stock's appreciation as top executives improve the management of the business.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.