Barron's Tech Trader previews investment boutique B. Riley's Cash-Rich Technology Stock [CRTS] index, which seeks out small and mid-size tech companies trading at or near net cash per share. B. Riley doesn't make calls often, but its CRTS has a remarkable, if brief, track record: In 2002, 15 picks gained 326% over 18 months. In 2005, 13 stocks gained 18.6% over 13 months. CRTS III consists of 29 stocks.
"In recent months, the credit crunch, the subprime meltdown and the accompanying uncertain economic environment has resulted in significant losses in U.S. stock indexes," it writes, noting small-caps took the biggest hit. The firm believes now is the time to grab cheap, under-appreciated tech stocks.
- Semis: California Micro Devices (CAMD), Centillium (CTLM), ESS Technology (ESST), Exar (EXAR), GSI Technology (GSIT), Integrated Silicon Solution (ISSI), Silicon Image (SIMG), Silicon Storage Technology (SSTI), Transmeta (TMTA), Trident Microsystems (TRID), FSI International (FSII).
- Communications Equipment/Telecom: Ditech (DITC), Endwave (ENWV), Extreme Networks (EXTR), Sycamore (OTCQB:SCMR), Tollgrade (TLGD), Westell (WSTL), IDT (IDTC).
- Internet: Infospace (INSP), LookSmart (LOOK), RealNetworks (RNWK).
- Software: CallWave (CALL), OpenTV (OPTV) and Pervasive (PVSW).
- Storage: Datalink (DTLK), Dot Hill (HILL).
- Biotech/Healthcare: Maxygen (MAXY), PDI (PDII).
- Digital Signage: Wireless Ronin (RNIN).
Of course there are reasons many of these companies are cheap, such as earnings misses, sector issues and accounting problems. "But Riley analysts think there are bargains, too." Savitz says a cautious approach would be to buy the stocks as a basket.