A Cheap, Cash Rich Tech Stock With Increasing Earnings Estimates Is A Bargain

| About: Teradyne Inc. (TER)
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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. (NYSE: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:

  1. 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.
  2. Teradyne is selling near the bottom of its five-year valuation range based on P/E, P/B, P/S and P/CF.
  3. 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.
  4. 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.
  5. The stock is selling at just over seven times forward earnings, less than half its five-year average (15.8)
  6. 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.