Cisco, Intel Make Goldman's Top Five Tech Value Stock List

The tech analysts at Goldman Sachs on Tuesday shuffled the names on their lists of favorite and least favorite tech stocks. Actually, the firm has two lists of favorite stocks - value and growth names.

The firm’s tech growth favorites include Amdocs (DOX), Cognizant (CTSH), eBay (EBAY), EMC (EMC) and FormFactor (FORM). Cognizant, EMC and FormFactor are new to the list, replacing Adobe (ADBE), Parametric (PMTC) and Cisco (CSCO).

The value list now consists of Cisco (which apparently switched teams), Intel (INTC), Microsoft (MSFT), National Semiconductor (NSM) and Symantec (SYMC). Cisco and Intel replace Accenture (ACN) and IBM (IBM).

The least favorite list - basically a list of short ideas - includes Advanced Micro Devices (AMD), Applied Materials (AMAT), Convergys (CVG), EDS (EDS) and Nortel (NT). Convergys and EDS are new to the list, replacing RightNow (RNOW) and Unisys (UIS).

Goldman has been running these lists since September 2005. Since then, the value stock picks have been a good bet, returning 46%, versus 26.6% for the S&P 500 and 26.7% for the Nasdaq Composite. The growth stock picks have been less effective, returning only 8.5%.

They’ve been good pickers of bad stocks: the least favorite stock list is down 20.3% since inception.

A quick look at the changes.

• Cognizant: Recently a hot bottom-fishing play after a recent slide on strength in the rupee, Goldman likes its “defensive margin profile and attractive valuation.”
• EMC: Goldman sees a strong quarter; the pending VMWare (VMW) deal should also boost the stock.
• FormFactor: Goldman sees an in-line Q2 with solid Q3 guidance. The firm contends the Street largely expected a Q2 miss.
• Adobe: Removed from the growth list, with most short-term catalysts now passed.
• Parametric: “Visibility has deteriorated,” with a recent June quarter earnings miss.
• Cisco: Ranks in top quartile on both growth and value lists. Sees a multi-year product cycle ahead.
• Intel: Goldman sees Q2 results beating expectations.
• Accenture: Limited near-term catalysts.
• IBM: Still a Buy recommendation, but removed from the list for other ideas.
• Convergys: Risk it will lose some Sprint (S) business.
• EDS: Sees significant 2007 bookings and free cash flow risks.
• RightNow: Risks more balanced. New product gaining some traction.
• Unisys: Shares hit stop-loss. But remains Sell rated.