3 High Growth Tech Stocks With Very Strong Profits

Includes: BIDU, TZOO, YNDX
by: ZetaKap

Interested in gaining exposure to technology companies? Do you prefer stocks with high projected earnings over the long term? If so, here are some interesting ideas for you.

The Operating Profit Margin is a profitability ratio that measures the effectiveness of the company's operating efficiency. This metric allows investors to see how much profit is left after all variable costs are covered. If the company's margin is increasing over time this means that it's earning more per dollar of sales. Finding trends in the Operating Profit Margin helps investors identify companies that are improving profitability over time and managing the economic landscape better than competitors.

Return on Equity [ROE] is one way to identify great potential names relative to profitability. This ratio illustrates the percentage return on shareholder equity. As well, this metric segments the company into operational efficiency, asset use efficiency, and financial leverage. Why does this matter? Simply put, it allows investors to get a real picture of how the company is generating these returns and helps identify parts of the company that may be underperforming.

EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. The 5-Year Expected EPS Growth Rate is a long term annual growth estimate, where the growth projections are made by analysts, the company or other credible sources.

We first looked for technology stocks. We then looked for companies with strong profit margins (1-year operating margin>15%)(ROE [TTM]>30%). Next, we then screened for businesses that are considered high-growth, with 5-year projected EPS growth above 25%. We did not screen out any market caps.

Do you think these stocks will perform well? Use this list as a starting-off point for your own analysis.

1) Yandex N.V. (NASDAQ:YNDX)

Sector: Technology
Industry: Internet Information Providers
Market Cap: $6.14B
Beta: -

Yandex N.V. has a Operating Profit Margin of 33.26%, a Return on Equity of 31.49%, and a 5-Year Projected Earnings Per Share Growth Rate of 37.43%. The short interest was 1.03% as of 06/08/2012. Yandex N.V., an Internet and technology company, operates an Internet search engine in Russia and internationally. It offers access to a range of information available online; localized homepages for specific geographic markets; and personalized and email services. The company also provides specialized search services comprising news aggregation and information services; and price comparison services, such as product information, price comparisons, and consumer-generated reviews of products and online retailers, as well as other specialized search services, including search services for images, videos, music, theatres, televisions, weather, jobs, transportation, cars, and real estate.

2) Baidu, Inc. (NASDAQ:BIDU)

Sector: Technology
Industry: Internet Information Providers
Market Cap: $42.37B
Beta: 1.86

Baidu, Inc. has a Operating Profit Margin of 51.89%, a Return on Equity of 55.74%, and a 5-Year Projected Earnings Per Share Growth Rate of 43.20%. The short interest was 1.43% as of 06/08/2012. Baidu, Inc. provides Internet search services. The company offers a Chinese language search platform on its Website, Baidu.com.

3) Travelzoo Inc. (NASDAQ:TZOO)

Sector: Technology
Industry: Internet Information Providers
Market Cap: $375.22M
Beta: 1.92

Travelzoo Inc. has a Operating Profit Margin of 20.97%, a Return on Equity of 58.43%, and a 5-Year Projected Earnings Per Share Growth Rate of 35.00%. The short interest was 66.10% as of 06/08/2012. Travelzoo Inc., an Internet media company, together with its subsidiaries, publishes travel and entertainment deals from travel and entertainment companies, and local businesses in North America and Europe. Its publications and products include the Travelzoo Websites, such as travelzoo.com

*Company profiles were sourced from Finviz. Financial data was sourced from Finviz and Google Finance.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.