Interested in technology stocks? Looking for undervalued stocks? Looking for ways to dip deeper into a company's profitability? For ideas on how to go about your analysis, here is a list you might be interested in.
The Price/Book Value Ratio is a great price-multiple valuation metric to find companies that could be potentially undervalued or overvalued. If a firm has a Price/Book Value Ratio of less than 1 it is stated to be trading below "break up" value. A lower P/BV Ratio can indicate a potentially mispriced company or indicate that something is fundamentally wrong with it.
Return on Assets [ROA] illustrates how much a company is generating in earnings from its assets alone. This metric gives investors a picture of how profitable the company is relative to the assets in current possession. As well, it lets investors see how efficient and effective management is at generating earnings from the company's assets. While most management teams can probably make money by throwing money at an issue very few can make very large profits with little investment.
We first looked for Technology stocks that are undervalued from a price-multiple valuation standpoint (P/BV<1) and with strong profitability (ROA > 10%). We did not screen out any market caps.
Do you think these technology stocks are worth more than their current valuations? Use this list as a starting-off point for your own analysis.
1) Amphenol Corporation (APH)
Amphenol Corporation has a Price/Book Value Ratio of 4.33 and Return on Assets of 12.50%. The short interest was 1.75% as of 04/19/2012. Amphenol Corporation designs, manufactures and markets electrical, electronic and fiber optic connectors; interconnect systems; and coaxial and specialty cables worldwide. Its Interconnect Products and Assemblies segment produces interconnect products and assemblies for voice, video and data communication systems; information technology; commercial aerospace and military systems; automotive and mass transportation applications; and industrial and factory automation equipment. This segment also offers connector and cable assembly products for communication applications; smart card acceptor and other interconnect devices for mobile telephones; set top boxes to read data from smart cards; fiber optic connectors for fiber optic signal transmission; backplane and input/output connectors and assemblies used for servers and data storage devices and linking personal computers and peripheral equipment; sculptured flexible circuits to integrate printed circuit boards; and hinge products for mobile phone and other mobile communication devices.
2) Cognizant Technology Solutions Corporation (CTSH)
|Industry:||Business Software & Services|
Cognizant Technology Solutions Corporation has a Price/Book Value Ratio of 5.51 and Return on Assets of 17.51%. The short interest was 1.06% as of 04/19/2012. Cognizant Technology Solutions Corporation provides information technology (IT), consulting, and business process outsourcing services in North America, Europe and internationally. Its IT consulting and technology services include business and knowledge process consulting; IT strategy consulting; program management consulting; technology consulting; application design, development, integration, and re-engineering, such as complex custom systems development, data warehousing/business intelligence, customer relationship management (CRM) system implementation, and enterprise resource planning (ERP) system implementation; and software testing services. The company's outsourcing services comprise application maintenance, including custom application, CRM, and ERP maintenance; IT infrastructure outsourcing; and business and knowledge process outsourcing.
3) Analog Devices Inc. (ADI)
|Industry:||Semiconductor - Integrated Circuits|
Analog Devices Inc. has a Price/Book Value Ratio of 2.97 and Return on Assets of 15.89%. The short interest was 1.62% as of 04/19/2012. Analog Devices, Inc. engages in the design, manufacture, and marketing of analog, mixed-signal, and digital signal processing integrated circuits (ICS) used in industrial, automotive, consumer, and communication applications. The company's signal processing products involve converting, conditioning, and processing real-world phenomena, such as temperature, pressure, sound, light, speed, and motion into electrical signals. Its product range includes data converters, amplifiers and linear products, radio frequency ICs, power management products, sensors based on micro-electro mechanical systems technology and other sensors, and processing products.
4) Agilent Technologies Inc. (A)
|Industry:||Scientific & Technical Instruments|
Agilent Technologies Inc. has a Price/Book Value Ratio of 3.24 and Return on Assets of 12.24%. The short interest was 1.37% as of 04/19/2012. Agilent Technologies, Inc. provides bio-analytical and electronic measurement solutions to the communications, electronics, life sciences, and chemical analysis industries worldwide. Its Electronic Measurement segment offers electronic measurement instruments and systems, and software design tools that are used in the design, development, manufacture, installation, deployment, and operation of electronics equipment and microscopy products. Its products consist of communications and general purpose test products.
5) Cerner Corporation (CERN)
|Industry:||Healthcare Information Services|
Cerner Corporation has a Price/Book Value Ratio of 5.44 and Return on Assets of 11.31%. The short interest was 7.83% as of 04/19/2012. Cerner Corporation designs, develops, markets, installs, hosts, and supports healthcare information technology, healthcare devices, and content solutions for healthcare organizations and consumers worldwide. It offers the Cerner Millennium architecture, which combines clinical, financial, and management information systems that provides access to an individual's electronic health record (EHR) at the point of care, and organizes and delivers information for physicians, nurses, laboratory technicians, pharmacists, front- and back-office professionals, and consumers. The company also provides the Healthe Intent platform, a cloud-based platform that sits above existing EHR systems and is designed to contain data from any EHR along with claims data, medical evidence, and research to facilitate proactive care.
6) Applied Materials Inc. (AMAT)
|Industry:||Semiconductor Equipment & Materials|
Applied Materials Inc. has a Price/Book Value Ratio of 1.77 and Return on Assets of 12.37%. The short interest was 1.10% as of 04/19/2012. Applied Materials, Inc. provides manufacturing equipment, services, and software to the semiconductor, flat panel display, solar photovoltaic (PV), and related industries worldwide. The company's Silicon Systems Group segment offers a range of manufacturing equipment used to fabricate semiconductor chips or integrated circuits. This segment provides systems that perform primary processes used in chip fabrication, including atomic layer deposition, chemical vapor deposition, physical vapor deposition, electrochemical deposition, rapid thermal processing, chemical mechanical planarization, wet cleaning, and wafer metrology and inspection, as well as systems that etch or inspect circuit patterns on masks used in the photolithography process.
*Company profiles were sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.