Although I am cautious on the market overall, there are still some sectors that offer good value. The tech sector seems to offer some compelling values right here. One stock I like is Teradyne Inc. (TER). It has improving earnings estimates, low valuations and a cash rich balance sheet.
"Teradyne provides automatic test equipment products and services worldwide. The company operates in three segments: Semiconductor Test, Systems Test Group, and Wireless Test." (Business description from Yahoo Finance)
Six reasons there is value in Teradyne at $14 a share:
- Earnings are expected to ramp up nicely over the next few years. The company made $1.39 a share in FY2011. Analysts expect $1.83 a share in earnings for FY2012 and then $2 in FY2013.
- Teradyne is selling near the bottom of its five-year valuation range based on P/E, P/B, P/S and P/CF.
- The current price of the stock is some 50% below analysts' consensus price targets. The median analysts' price target for Teradyne is $22. Credit Suisse has an "outperform" rating and a $22.50 target price on Teradyne.
- The company beat earnings estimates for an impressive 12 straight quarters and consensus earnings estimates for both FY2012 and FY2013 have moved up sharply over the past three months.
- The stock is selling at just over seven times forward earnings, less than half its five-year average (15.8)
- The stock has a five-year projected PEG of under 1 (.81), and the company adjusted guidance higher at its last earnings conference call.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in TER over the next 72 hours.
