The technology industry largely incorporates massive businesses with global investments, diverse operations and expanding international markets. With a constantly evolving innovative product portfolio and a range of diverse production processes, tech stocks have been able to adapt well to the overwhelming challenges that have adversely affected other businesses.
In this article, I will discuss five such stocks that recorded impressive growth in the last five quarters and showed great resilience against predominantly negative market conditions. I have chosen these stocks because, even in the current fiscal quarter, these stocks have continued to perform well, exceeding projected revenue growth, announcing new product launches, and hiking dividends.
Analog Devices Inc. (ADI)
Analog Devices designs, manufactures and markets analog-signal, mixed-signal and digital signal processing integrated circuits for industrial, automotive, consumer, and communication applications. The company has fared well amidst tough economic conditions partly because it develops products for a wide range of electronic equipment such as industrial process control, instrumentation and measurement, factory automation and energy management systems. The company's financial performance in 2011 was impressive partly due to increased demand in emerging Asian markets. Analog Devices has taken a head start this year with an impressive performance in January. The technology stock currently has a market capitalization of nearly $12 billion with an average trading volume a little shy of $3 million.
Last year, a sharp decline in trading price largely due to slow market activity saw the stock plummet to as low as $29. However, the stock is currently trading well at around $40. Analog Devices has a price to earnings ratio of nearly 14 and the company pays its investors nearly 30c in dividends on earnings per share of around $3. These promising financial indicators have helped the company earn a high rating from leading financial analysts and an impressive yield of nearly 3% has earned it favorable investor sentiment in recent fiscal quarters. Very recently, Analog Devices has introduced the revolutionary MEMS Microphone, which is expected to increase market share across the globe and widen the company's competitive moat.
Teradyne Inc. (TER)
Teradyne Inc. manufactures and sells automatic semiconductor testing equipment for a wide range of industries spread across local and international markets. After a slow start in the year 2011 amidst increasing market instability and declining market shares, the business recovered well in the second half of the year with an impressive overall performance. The fourth quarter was particularly profitable for the business with sizable revenues of nearly $300 million. This pushed the company's overall revenues in 2011 to more nearly $1.4 billion with an overwhelming 57% increase in global orders. Teradyne Inc., amidst favorable investor sentiment, has started the current year with an upbeat attitude. It currently has a market capitalization of nearly $3.1 billion and average trading volume exceeds $4.5 million.
Current trading price of stock is poised at around $17 after a short stint where it slumped down to almost $10. With a price to earnings ratio of more than 11, Teradyne offers investors nearly 20c on earnings per share of $1.5. Seeing how well the stock has performed in the last two quarters, and looking at prevailing market conditions and current financial indicators, I believe the stock is headed up. Therefore, I rate Teradyne as a buy in 2012.
KLA-Tencor Corp. (KLAC)
KLA-Tencor Corporation develops inspection and yield management solutions for the global semiconductor industries. The company performed reasonably well in the first three quarters of 2011. The fourth quarter was very impressive with record revenue earnings of more than $850 million amidst aggressive trading, favorable investor sentiment and successful execution of long-term strategies. Exceptional performance in the fourth quarter pushed total revenues earned in 2011 to more than $3.2 billion suggesting almost 14% growth (compared to previous year's numbers) as a result of increasing demand in international markets. Currently, the business has a massive market capitalization exceeding $8.25 billion with an average trading volume of nearly $3 million.
Trading price of shares is around $50 although the stock slumped to as low as $33 recently due to sluggish market activity. With a price to earnings ratio of more than 11, KLA-Tencor pays its investors nearly 35c in dividends on earnings per share of around $4.5. A good dividend history and a decent yield of almost 3% have allowed the business favorable investor sentiment and high ratings by analysts. Analysis of current financial indicators, prevailing market conditions and favorable investor sentiment all highlight strong growth in the current fiscal quarter. The company has recently made two announcements; regular cash dividends for third fiscal quarter of 2012 and launching of a revolutionary Flagship wafer inspection Solution. I believe this news will have a positive impact on the business and will help it widen its competitive moat considerably. I strongly rate KLA-Tencor as a buy in the current year.
Electronics Art Inc. (EA)
Electronic Arts is among America's leading developers, publishers, marketers and distributor of video games. After getting off to a sluggish start in 2011, the company reported impressive financial gains in the third quarter with net revenue of nearly $1.5 million and earnings per share of almost 60c. Electronics Art fared equally well in the fourth quarter amidst positive investor sentiment and more favorable market conditions. Net revenues earned during the last quarter were $995 million with nearly 25c in earnings per share. The company exceeded projected targets by leading financial analysts amidst increasing demand for video games during holidays near the end of the year. Electronic Arts has started 2012 slow with sluggish market activity and decent trading.
The stock currently has a market capitalization of nearly $6 billion and an average trading volume of more than $8.25 million. Although trading price of stock is currently poised at a little over $17, a range of new video games like Star Wars (The Old republic) is expected to increase favorable investor sentiment for the business leading to more aggressive market activity. I believe the stock will perform well in the current fiscal quarter in the wake of favorable market conditions and positive investor sentiment leading up to the launch of a range of new video games.
Baidu Inc. (BIDU)
Baidu Inc. is a Chinese company that offers an array of web services. Baidu overwhelmed investors in the fourth quarter of 2010 with a 57% market share out of a total of $4 billion search queries in China. By the second quarter of 2011, Baidu's total market share had increased to a staggering 77%. Fourth-quarter earnings of the company exceeded $326 million suggesting earnings per share of 93c. With a massive market capitalization of nearly $50 billion, Baidu has an average trading volume of more than $6 million.
Trading price of shares is currently poised at around $136 although the stock plummeted to $100 due to restricted market activity. Baidu has a price to earnings ratio of more nearly 54 with earnings per share of more than $2.5. Judging from most recent financial indicators, steady performance in recent fiscal quarters and favorable market conditions, I believe that Baidu will continue its recent trend of positive upward movement and will most likely exceed projected growth targets for 2012.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.