Are you interested in finding tech companies that you can get for a discount, before they grow to be the next Google or Amazon? Today we focused on companies that have positive ratings from tech analysts, but whose fundamentals suggest that they should be trading for higher. We came up with a short, but interesting list of companies that merit more research and analysis.
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.
The Price/Earnings ratio is one of the most commonly used price-multiple metrics. Often, EPS from the last four quarters is used to derive this number. A firm that has a high P/E ratio generally indicates that investors have high expectations of the firm relative to future earnings growth. By the opposite token, investors generally have lower expectations of a firm with a low P/E ratio. A firm that holds a P/E below 10 could be viewed as having "value investment" potential. One thing to remember is that EPS is an accounting measure that could be potentially manipulated. Thus the P/E is only as good as the quality of the earnings.
We first looked for technology stocks. Next, we then screened for businesses that analysts rate as "Buy" (2 < mean recommendation < 3). We then looked for companies that are undervalued from a price-multiple valuation standpoint (P/BV<1)(P/E<10). We did not screen out any market caps.
Do you think these stocks will go up in valuation? Please use our list to assist with your own analysis.
1) Jinpan International Ltd. (NASDAQ:JST)
Jinpan International Ltd. has a Analysts' Rating of 2.00, a Price/Book Value Ratio of 0.71, and a Price/Earnings Ratio of 5.26. The short interest was 0.57% as of 06/27/2012. Jinpan International Limited engages in designing, manufacturing, and marketing cast resin transformers and other power control and distribution products in the People's Republic of China, the United States, and Europe. Its cast resin transformers allow high voltage transmissions of electricity to be distributed to various locations in lower and more usable voltages. The company offers medium voltage cast resin transformers for various end uses and applications comprising industrial, infrastructure, and municipal projects, such as factories, real estate developments, airports, and subway systems. It also provides conventional and high end gas insulated switchgears that control the flow of electricity to and from electrical equipment; vacuum pressure impregnated (VPI) reactors for wind energy applications; VPI transformers, which serve as stand-alone units for power distribution and as components for inverters and converters; variable wattage VPI transformers customized for industrial applications; and unit substations that transform high voltage electricity to lower voltages that feed into distribution transformers, which then lowers the electric voltage to levels suitable for consumer applications.
2) GeoEye, Inc. (NASDAQ:GEOY)
|Industry:||Information & Delivery Services|
GeoEye, Inc. has a Analysts' Rating of 2.10, a Price/Book Value Ratio of 0.62, and a Price/Earnings Ratio of 6.60. The short interest was 4.52% as of 06/27/2012. GeoEye, Inc. provides geospatial information and insight for decision makers and analysts worldwide. It owns and operates two earth-imaging satellites, which include GeoEye-1 and IKONOS; and three airplanes with high-resolution imagery collection capabilities, as well as a library of commercial panchromatic and color digital satellite imagery. The company's satellite imagery products include Geo, GeoProfessional, and GeoStereo that provide the customers archive data and new collection services.
3) Nippon Telegraph & Telephone Corp. (NYSE:NTT)
|Industry:||Telecom Services - Foreign|
Nippon Telegraph & Telephone Corp. has a Analysts' Rating of 2.00, a Price/Book Value Ratio of 0.55, and a Price/Earnings Ratio of 9.74. The short interest was 0.02% as of 06/27/2012. Nippon Telegraph and Telephone Corporation, together with its subsidiaries, provides telecommunications services to residential and corporate customers in Japan. It offers fixed and mobile voice related services, IP/packet communications services, system integration and network system services, and other telecommunications related services; sells telecommunications equipment; and operates telephone networks. The company provides intra-prefectural and inter-prefectural communications, international communications, mobile telephone services, and related ancillary services; and data communications services, such as strategic planning, systems planning and systems design, and information communications systems and computer networks installation. It also engages in building maintenance, real estate property rental, systems development, leasing, and research and development activities.
*Company profiles were sourced from Finviz. Financial data was sourced from Yahoo Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.