When the price of a stock takes a dip, one way of analyzing if the drop in price is likely a temporary condition is to look at the capital structure of a company. When a company has not overly leveraged its assets to fund growth or simply keep the doors open, infrastructure remains intact and the company does not have to worry about paying back what it owes to get in the clear. By keeping the debt to a minimum, the focus can remain on growth. With this in mind, we developed a list of tech stocks that appear to be offered at a bargain and that are not saddled with debt. Utilize the graphs and summaries below as a place to start your research.
The Long Term Debt/Equity Ratio is a variation of the traditional debt-to-equity ratio; this value computes the proportion of a company's long-term debt compared to its available capital. By using this ratio, investors can identify the amount of leverage utilized by a specific company and compare it to others to help analyze the company's risk exposure. Generally, companies that finance a greater portion of their capital via debt are considered riskier than those with lower leverage ratios.
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 mis-priced company or indicate that something is fundamentally wrong with it.
The Price/Sales ratio is a price-multiple valuation metric used to help identify if a firm is cheap by its twelve month trailing sales numbers. In the most basic terms, it let's an investor know how much the investment community is willing to pay for every dollar's worth of sales. A firm with a P/S ratio of one or lower would be viewed as cheap because investors are paying $1 or less for every dollars worth of a firm's sales. On the other hand, a firm is generally considered to be expensive when the P/S ratio is above three. To be clear, these are general guidelines used by the investment community not hard rules. Price/Sales Ratio = Current Stock Price/Revenue (sales) per Share
We first looked for technology stocks. We then looked for companies that have maintained a sound long-term capital structure (Long Term D/E Ratio<.1). We then looked for companies that are undervalued from a price-multiple valuation standpoint (P/BV<1)(P/S<1). We did not screen out any market caps.
Do you think these stocks offer both value and growth? Use our list along with your own analysis.
1) NeoPhotonics Corporation (NPTN)
|Industry||Semiconductor - Broad Line|
|Long-Term Debt/Equity Ratio||0.10|
|Price/Book Value Ratio||0.68|
NeoPhotonics Corporation designs and manufactures photonic integrated circuit-based modules and subsystems for bandwidth-intensive and high-speed communications networks. Its portfolio of products include products that enable data transmission at 10 gigabits per second (Gbps), 40Gbps, and 100Gbps; agility products, such as reconfigurable add/drop multiplexers and tunable lasers that are used to allocate bandwidth to adjust for traffic patterns; and access products that provide high-bandwidth connections to devices and people over fixed and wireless networks. The company also offers high speed transceivers, optical add and drop multiplexers, optical line terminals, transceivers, athermal arrayed waveguide gratings (AWGs) and splitters, Sonet/SDH transceivers, thermal AWGs, and variable optical attenuators. NeoPhotonics Corporation sells its products to original equipment manufacturers in the United States and internationally. The company was formerly known as NanoGram Corporation and changed its name to NeoPhotonics Corporation in 2002. NeoPhotonics Corporation was founded in 1996 and is headquartered in San Jose, California.
2) Alpha & Omega Semiconductor, Ltd. (AOSL)
|Industry||Semiconductor - Specialized|
|Long-Term Debt/Equity Ratio||0.06|
|Price/Book Value Ratio||0.84|
Alpha & Omega Semiconductor, Ltd. designs, develops, and supplies a range of power semiconductors worldwide. The company offers power discrete product lines, including industry standard trench MOSFETs, electrostatic discharge, protected MOSFETs, and SRFETs; and power IC products that deliver power, as well as control and regulate the sequence and rate of power management variables, such as the flow of current and level of voltage. Its products are used in notebooks, netbooks, desktop and tablet PC's, servers, flat panel displays, TVs, graphics cards, game boxes, chargers, battery packs, AC adapters, power supplies, e-bikes, motor controls, smart phones, set-top boxes, and other portable devices. The company sells its products primarily through original design manufacturers and distributors. Alpha & Omega Semiconductor, Ltd. was incorporated in 2000 and is headquartered in Sunnyvale, California.
3) CIBER, Inc. (CBR)
|Industry||Information Technology Services|
|Long-Term Debt/Equity Ratio||0.09|
|Price/Book Value Ratio||0.71|
CIBER, Inc., together with its subsidiaries, provides information technology, business consulting, and outsourcing services in North America, Europe, and the Asia/Pacific. It offers a range of IT solutions to commercial enterprises and public sector organizations; enterprise resource planning and customer relationship management services; managed services; and builds custom solutions, which provide application portfolio management support, including analysis, design, development, testing, implementation, outsourcing, and maintenance of business applications.
The company also provides application development and management services, IT strategy and architecture, business intelligence/data warehousing, collaborative solutions, supply chain, portal development, wireless and mobility applications, testing and quality assurance, and digital marketing services. In addition, it offers outsourced enterprise infrastructure management solutions, such as managed hosted infrastructure, end user service desk and desktop services, remote infrastructure management, and application operations support; and technology solutions comprising enterprise servers, storage, middleware, integration services, assessments, and related products required to support critical business applications. Further, the company resells certain IT hardware and software products. CIBER, Inc. offers its solutions to energy and utilities, telecommunications, retail, healthcare, financial services, entertainment, and manufacturing industries. The company was founded in 1974 and is headquartered in Greenwood Village, Colorado.
4) Orbotech Ltd. (ORBK)
|Long-Term Debt/Equity Ratio||0.10|
|Price/Book Value Ratio||0.75|
Orbotech Ltd. engages in designing, developing, manufacturing, marketing, and servicing yield-enhancing and production solutions for specialized applications in the supply chain of the electronics industry. The company's products include automated optical inspection, automated optical repair, laser direct imaging, digital legend printing, laser drilling, laser plotters, computer-aided manufacturing, and engineering solutions for printed circuit boards and other electronics component manufacturing; and AOI, test, repair, and process monitoring systems for flat panel display (FPD) manufacturing.
It also develops and markets character recognition solutions and services primarily to banks, financial institutions, and other payment processing institutions for use in check and healthcare payment processing. In addition, the company is involved in the research and development of products for the deposition of anti-reflective coating on crystalline silicon photovoltaic wafers for solar energy panels. It primarily serves manufacturer of PCB, FPD, liquid crystal displays, and other electronic components worldwide. The company was formerly known as Optrotech Ltd. and changed its name to Orbotech Ltd. as a result of its merger with Orbot Systems Ltd. in October 1992. Orbotech Ltd. was founded in 1981 and is headquartered in Yavne, Israel.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 09/12/2012.