The markets are bumping up along the high-end of the recent trading ranges, however, there are still great opportunities in the tech sector for potentially large gains. Here are a few tech stocks that have declined recently and could now be providing an excellent buying opportunity. A number of top analysts expect these tech stocks to gain around 50%:
Baidu, Inc. (BIDU) shares were trading around $115 at the start of 2012, but have been in a solid uptrend almost all year. This took the shares to about $150, but the stock erased a major portion of this year's gains after the company reported earnings that disappointed some investors. First quarter revenues for 2012 were $677.1 million, which is a 75.0% increase from the same period in 2011. Earnings for the first quarter were $332.1 million, or about 85 cents per share. For the second quarter of 2012, the company offered guidance between $847.2 million to $867 million, which clearly disappointed some investors. However, Baidu remains the most popular search engine company in China, and that country should continue to see substantial growth in the economy and with Internet usage. Baidu is a great way to play this secular growth story, and the stock is worth buying on pullbacks. An analyst at Standard & Poors raised ratings on Baidu from buy to strong buy, and set a $180 price target for the stock. Other analysts even have targets for $200, which would offer gains of about 50%.
Here are some key points for BIDU:
Current share price: $132.60
The 52 week range is $100.95 to $165.96
Earnings estimates for 2012: $4.61 per share
Earnings estimates for 2013: $6.43 per share
Annual dividend: none
ARM Holdings, PLC. (ARMH) shares were trading around $29 per share just a few days ago, but the stock plunged after the company reported earnings that some investors found disappointing. ARM Holdings designs and sells computer chips and it has leading edge designs, which are being used in some of the world's most popular smart phones and tablets. Of course, this puts the company in competition with industry heavyweights like Intel (INTC), which is also rolling out specialized chips for the smartphone and tablet market. That concerns some investors, especially since Intel shares trade for a much lower price to earnings ratio and also offers a higher dividend. ARM Holdings reported a 13% increase in first quarter revenues, which were $209 million, or 16 cents per American Depository Share. This beat estimates for 15 cents per share, but the stock came under pressure as the company guided with $880 million in revenue for 2012, which was slightly below the estimates for $882 million. It also reported a smaller backlog of orders. Nonetheless, this company has strong growth prospects, and some analysts see the decline in the stock price as a major buying opportunity. An analyst at Raymond James recently gave Arm Holdings shares a strong buy rating and set a $35 price target. Based on the current price of just over $25 per share, this would provide investors with exceptional gains of over 50%.
Here are some key points for ARMH:
Current share price: $25.64
The 52 week range is $22.10 to $32.18
Earnings estimates for 2012: 71 cents per share
Earnings estimates for 2013: 87 cents per share
Annual dividend: 17 cents per share which yields .7%
Hewlett Packard (HPQ) shares have held little interest for many investors, but that has led to an extremely attractive buying opportunity. This company has given investors some reasons to lose confidence in management and sell the stock. After all, there has been a lot of turnover in the CEO position, and the company has introduced products like the Touchpad, which did not prove to be an effective competitor in the tablet market. However, Meg Whitman has recently taken the CEO position, and the company remains a highly diversified tech company. The company is expanding into cloud computing, which is a fast-growing segment in tech today. The stock trades for just about 6 times earnings and it offers a dividend yield around 2%. That type of valuation for a tech stock is very hard to find, and chances are strong that the market will eventually re-value Hewlett Packard shares much higher. An analyst at Sterne Agee & Leach recently gave Hewlett Packard shares a buy rating, and set a $34 price target. Based on the current price of about $24 per share, this would provide investors with exceptional gains of nearly 50%.
Here are some key points for HPQ:
Current share price: $24.70
The 52 week range is $21.50 to $41.74
Earnings estimates for 2012: $4.04 per share
Earnings estimates for 2013: $4.42 per share
Annual dividend: 48 cents per share which yields 1.9%
NVIDIA Corporation (NVDA) shares were trading around $15 in April, but the stock has drifted lower in recent days. This company designs and manufactures 3D graphics chips for use in computers and other high-tech devices. NVIDIA has developed some new products which could send growth higher in the coming months. It recently announced the launch of the world's fastest consumer graphics card, which is expected to be popular for use in gaming computers. NVIDIA also has the "Tegra" processor, which some analysts believe will grow in popularity. This company could also see a boost in sales after Microsoft introduces Windows 8, which is expected to occur around June. That could lead to an upgrade cycle for the whole technology sector. An analyst at Cantor Fitgerald recently gave Nvidia shares a buy rating and set a $20 price target. Based on the current price of about $13 per share, this would provide investors with nearly 50 upside.
Here are some key points for NVDA:
Current share price: $13.02
The 52 week range is $11.47 to $20.52
Earnings estimates for 2012: 69 cents per share
Earnings estimates for 2013: 91 cents per share
Annual dividend: none
Data is sourced from Yahoo Finance. No guarantees or representations are made. Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.
Disclosure: I am long (HPQ).