Technology stocks are among the most interesting stocks in the market. On the one hand, there are high fliers such as Amazon (AMZN), Open Table (OPEN), Salesforce (CRM), Netflix (NFLX) that are trading way above their intrinsic value. Those companies enjoy superb P/E ratios of 81.52, 131.23, 426.44, and 78.65, respectively. On the other hand, there are giants in the industry, paying substantial dividends, yet priced way-below their fair value. Here is an analysis of 5 dirt-cheap technology stocks offering substantial dividends:
Intel Corporation (INTC) is a global technology company and the world’s largest semiconductor chip maker based on revenue. Intel was founded in 1968, and is based in Santa Clara, USA. The market cap of INTC is $115.21 billion. The P/E ratio stands at 10.11, and forward P/E ratio is 9.05 for the next year. The dividend yield of Intel Corporation is 3.87%, and the company will pay $0.21 dividends quarterly. Intel has one of the best profit margins in the industry with a net profit margin of 26.38%. According to a recent announcement, Intel Capital will invest $24.5 million into 4 companies, and with this investment, Intel Capital will cross the $10 billion milestone.
From a technical perspective, the stock is in some sort of correction, but the trend is upward. There is a possibility it can retreat back to $20-$21 range, but I do not see any more downside possibility:
Microsoft Corporation (MSFT) is the world's largest multinational software corporation headquartered in Washington, USA. The company develops, manufactures, licenses and supports a wide range of products and services through its various product divisions. MSFT has a $201.59 billion market cap. The company generated $21.79 billion of profits from a sales revenue of $68.62 billion. The P/E ratio is 9.49, whereas the forward P/E ratio falls to 8.63. Microsoft offers a yield of 2.58%, and the company will pay $0.16 per quarter to each share. Gross profit margin and net profit margin stand at 78.08%, and 31.76% respectively. As of Friday's close, Microsoft is priced at $23.91, however, analysts have a target price of $32.69, implying 32.02% upward potential.
From a technical perspective, Microsoft is in a downward trend for the intermediate term. However, Microsoft stocks tend to stay in a range-bounded price limits. Currently, the stock is near the lower bound, offering a cheap opportunity for those interested:
The first Nokia century began with Fredrik Idestam's paper mill on the banks of the Nokianvirta river. Between 1865 and 1967, the company would become a major industrial force; but it took a merger with a cable company and a rubber firm to set the new Nokia Corporation on the path to electronics.
Nokia's mobile revolution was started by Jorma Ollilla, who transformed Nokia into a technology titan. Nokia now manufactures mobile devices and provides internet and digital mapping navigation services worldwide. The market cap is $25.30 billion. A P/E ratio of 9.51 makes Nokia the cheapest among cell phone makers. A fat dividend of $0.87 per share means a yield of 8.58%. Nokia increased its dividend payments by three-fold in the last ten years. In 2000, the company paid $0.192 dividends, but now it will pay $0.57 dividends to each share. Recently, CNN and Nokia announced a multilevel international collaboration where Nokia becomes a key part of CNN’s roster of mapping providers, delivering its rich mapping services to the international news network.
Currently, there are dark clouds and black swans hovering at Nokia. Shares have lost almost 40% since February. I do not think there is any downside potential left. As a high tech titan, the price/book value ratio of 1.25 is among the lowest in the industry. From a technical perspective, one can easily see large gaps, which will be filled in the upcoming return to fair value. My target price is minimum $10 in intermediate term:
Siemens AG (SI) is an electronics and electrical engineering company operating in the industry, energy and healthcare sectors worldwide. The company was founded in 1847, and is based Munich, Germany. Siemens has a market cap of $121.66 billion. The P/E ratio of SI is 13.89, and the forward P/E ratio is 12.54. The dividend yield of the company is 2.77%, and it will pay a dividend of $3.69 in the next quarter. Over the last 5 years, Siemens increased by two-fold its dividend payments from €1.35, in 2005 to €2.70, in 2010. According to a recent report, Siemens has now achieved a new world record in power plant efficiency with the SGT5-8000H gas tribune having more than 578 MW outputs and 60.75% efficiency. The company aims to commercialize this technology in the near future.
From a technical perspective, although the stock is testing $133 resistance, there is still a high momentum in shares. If the resistance stays strong, it will bounce to higher values in the near-term:
Taiwan Semiconductor (TSM) engages in the computer-aided designing, manufacturing, packaging, testing and selling of integrated circuits and other semiconductor devices and manufacturing masks. It was founded in 1987 and is based in Hsinchu, Taiwan. The company has a $70.68 billion market cap. The P/E ratio and forward P/E ratio of stands at 12.05, and 11.84, respectively. The dividend yield of TSM is 3.51%, and it will pay $0.47 per share in the next quarter. The company has a nifty net profit margin of 38.10%. Net sales increased by 11% to $36.23 billion in April 2011. Revenues for January through April 2011 were $138.78 billion, an increase of 13.9% compared to the same period of 2010.
From a technical perspective, the stock is testing its previous resistance level at $13.7 level. The shares are up by a stunning 40%, since September. Thus, we might observe a healthy pull-back. The multiple top formation confirms the expected pull-back. However the long-term trend is obvious. With an O-Metrix score of 7.5 out of 10, I expect TSM to beat the market with a large margin.
Additional disclosure: I am long Nokia CFDs [Contract for Difference]. I might initiate long/short CFD positions in SI and TSM in 72 hours.