When you look at stocks trading at a P/E ratio of 15, you will think of stodgy food companies or steel companies at its peak, not the technology sector. The technology sector, used to be stocks with the highest valuation and growth rate. These days, you can find ample companies in the techland that fits the criteria of value play. This is defined as companies with slower growth and thus lower P/E ratio. Furthermore, they are solid companies with long history of profitability, not some funky google-style outfit. Prepare your notepad and take note. This won't take long. Microsoft Corp. (MSFT). Microsoft is the stock investors love to own during the 1990s. Two Harvard school drop-out has built Microsoft into the world largest software company. In recent years, stock has languished between $ 24 - $ 30 range. Lately, it has done worse. Stocks fell sharply after Microsoft reports its third quarter earning on April 27th 2006. It reported so so earnings and plans to spend $ 2 Billion into its research and development to wage war against search engine giant, Google Inc. Subtracting its $ 4.29 of positive net cash, at recent price of $ 23.77, Microsoft is trading at 13.9 times fiscal 2007 earning estimate. ($ 1.40 earning per share estimate). Heck, that is considered cheap for any kind of companies. It is extremely cheap for companies having excellent balance sheet like Microsoft. This is definitely one stock that is worth researching for. Long history of profitability? Yes, of course. Microsoft has poured in billions of dollars into its coffers as it has successfully sold PC with windows software as a 'necessity'. Intel Corporation. (INTC). Intel was synanomous with its pentium chips. It is installed in more than 80% of personal computers around the world. That doesn't make it immune to setbacks. In the latest announcement, the company has decided to engage in belt tightening for the first time in Intel's history. Intel is expected to eliminate 2 to 3 % of its workforce, mainly through attrition. Balance sheet is solid at Intel as well. In the latest quarter, it shows a $ 2.61 positive net cash while earning for the year is expected to top $ 1.00. At recent price of $ 19, Intel is trading at 16.39 times future earnings. It is not exactly cheap but history shows that it can bounce back from short-term setbacks. Furthermore, it has long history of profitability, apparent from the $ 29.9 Billion of its retained earning on its balance sheet. This is not earned within one year, but rather through years of consistent profitability. Dell Inc. (DELL). This is one more fallen angels that has traded cheapest in recent years. For starter, it spot a clean balance sheet with $ 4.58 of positive net cash. With expected earning estimate of $ 1.61 and recent share price of $ 24.89, Dell is trading at 12.6 times future earnings. While Dell may look cheap and you can start researching this company, it has been known to provide low cost reliable PC. Competition from other low cost providers seemed to have eaten into Dell's growth and it may lose its edge as the provider of low cost PC. Symantec Corp. (SYMC). The provider of security and anti virus software has fallen dramatically in recent months. Defections of key personnel and has brought its shares to the $ 17 level. Furthermore, Veritas acquisition is slower than expected and has yet to bear any fruit. However, with $ 2.68 of positive net cash and $ 0.99 of this year's earning estimate, Symantec is only trading at 14.5 times EPS. This share is worth looking at despite its short-term setback. |
