The sell-off and market volatility have made it difficult for many nervous investors to either stand pat or even to stay interested in the market when they are more interested in vacations, getting ready for back to school, or even looking for career opportunities. Hard times bring great opportunities. It is exactly times like this that new millionaires are made by picking great undervalued investments. The reality is that there are some incredible opportunities for value investors out there waiting for investors right now.

Value for the sake of value may never seem like a true catalyst on the surface. In fact, it usually requires an outside economic event or an internal event that creates that next catalyst. All value investors know two things for long-term picks: first is that the value has to be cheap enough to be worth what may be a very long wait, and second is that when the catalyst arises much of that great opportunity may have already been missed. The town crier may be telling you that many of the great tech stocks are just too cheap today, even if there is a lack of catalysts and even if there is no assurance that the absolute bottom has been seen in the market. One upcoming catalyst could be the calendar: investors have historically preferred to buy technology shares shortly ahead of the fourth quarter.

The old rule of thumb is that stocks should trade at roughly 15-times earnings, with a premium or discount applied to growth and to certain industries. That number may be 12-times or 13-times earnings now. Most value investors also use 3.0-times book value as the basic line for “value.” 24/7 Wall St. has found 12 great technology giants at steep market discounts that are all rather well-known with long histories, they trade at less than 10-times current earnings, they also trade at less than 10-times forward earnings, they have large cash balances, most are at very low multiples of book value, and they are all down considerably from recent highs and highs of the past five years.

The late-summer technology value picks are as follows: Applied Materials Inc. (NASDAQ: AMAT); Computer Sciences Corporation (NYSE: CSC); Corning Inc. (NYSE: GLW); Dell Inc. (NASDAQ: DELL); Hewlett-Packard Co. (NYSE: HPQ); Intel Corporation (NASDAQ: INTC); KLA-Tencor Corporation (NASDAQ: KLAC); Lam Research Corporation (NASDAQ: LRCX); Microsoft Corporation (NASDAQ: MSFT); Micron Technology Inc. (NASDAQ: MU); SanDisk Corporation (NASDAQ: SNDK); and Western Digital Corporation (NYSE: WDC).

Looking for value is usually tricky as there is generally a reason for such a low valuation. Earnings that make up that P/E might not live up to expectations, cash reserves can be chewed up, analysts often change their targets and many fail to trust that the value is reflecting uncertainty in the markets. This will show you the good and the bad in these uncanny technology values.

Applied Materials Inc. (NASDAQ: AMAT) is the king of chip cap-ex and it carries a $15 billion market value. The company usually trades with a lower-than-market earnings multiple, but as the leader this one has always managed to come back. The stock trades at only about 9.6-times current earnings and trades at about 8.7-times forward earnings. It also trades at only about 1.8-times book value, it carries little long-term debt, and its cash and investments are listed as being close to $4.6 billion combined. It also carries a 3% dividend yield. At $11.44, the 52-week trading range is $10.27 to $16.93 and this was above $22 back in 2007 and shares went under $9.00 at the selling zeniths of late-2008 and early-2009.

Computer Sciences Corporation (NYSE: CSC) has been a value stock for years, and that is about the only way the company can sell itself to IT-services investors any longer. It has been a painful tech stock and the market cap is back down to $4.5 billion. Amazingly, its latest earnings warning and the market sell-off has taken it close to 6-times past earnings and just over 6-times forward earnings. The company trades well under a stated book value of more than $7 billion, but it trades at less than 2.0-times the tangible book value. Investors also get a 3.0% dividend yield here simply for waiting. At $29.02, the 52-week range is $26.31 to $56.61. What makes this so unique is that over the past 5-year period it is close to the $26.00 or so lows at the end of 2008 and is down from $60.00 in 2007.

Corning Inc. (NYSE: GLW) is one that many do not know by name, but if you have a flat panel or LCD television or computer screen or a smartphone, then you probably are an indirect client of its high-tech glass for the screens. The company usually trades cheap to the market, but right now the case is that cheap is very cheap even as rising competition fears have been there for years. Corning, or “Glassworks” as traders used to call it, has nearly a $23 billion market value. The recent sell-off has shares valued at less than 7-times trailing earnings and only about 6.7-times forward earnings. The leader in flat glass trades just over 1-times book value and tangible book value. It also carries more than $10 billion in cash and investments. The dividend might not sound great at 1.4%, but Corning can great increase that payout down the road. At $14.59, its 52-week trading range is $13.15 to $23.43, it traded as low as almost $8.00 at the peak selling in late-2008 and it was a $27.00 stock at the peak of 2008.

Dell Inc. (NASDAQ: DELL) is another dirt cheap tech stock, even if we are the first to admit that being in the non-Apple PC business feels a lot like being in the business of manufacturing toasters. The company has a market cap of over $27 billion, it trades at less than 8-times past earnings and forward earnings estimates. Dell is one of our dividend offenders that refuses to pay shareholders for waiting for its great turnaround. It currently trades at close to 3.3-times book value. The company’s most recent quarter generated cash flow from operations of a record $2.4 billion and it ended the quarter with $16.2 billion in cash and investments. Dell recently closed at $14.68 and the 52-week trading range is $11.34 to $17.60; shares were almost at $30.00 back in 2007 and shares went as low as under $8.00 at the peak of selling in early 2009.

Hewlett-Packard Co. (NYSE: HPQ) is one you have definitely heard about being in trouble. The PC-maker and IT-leader is now trying to spin off the PC unit and it is all but killing the great WebOS tablet and smartphone initiatives. Because the company is in such disarray and under an obvious wrong choice of a new CEO, we are going to temper down some of the valuation analysis ahead. The company trades at only 6-times trailing earnings and about 1.2-times earnings. The dividend is “only” about 2.0% now, but the Dow Jones Industrial Average component’s $51 billion market cap is a far cry from what it was last year. Our take is that the Autonomy buyout is too high but there is close to $20 billion in cash and investments. The $24.54 price is down just from $34.00 as recently as last week and the 52-week range is $22.75 to $49.39. It is the sum of the parts that makes the value here, even if the size of each part may be too high in dollars for any buyer to cough up.

Intel Corporation (NASDAQ: INTC) may have lost its processor dominance in a world that has migrated to smartphones and tablets, but it is coming on in that area soon and coming on with more secure hardware in a world where security is scarce. The market value is $103 billion, the second highest of or value picks in technology. The near-monopoly of desktop processors trades at only 9-times trailing earnings and only about 8.1-times forward earnings. The pullback even gives an unusually high dividend yield of 4.4% and it trades at barely 2-times its stated book value and has more than $13 billion in cash and investments. Intel trades at $19.71 and the 52-week trading range is $17.60 to $23.96.  Shares have peaked around $27.00 in late-2008 and the stock traded under $13.00 in late-2008 and early-2009.

KLA-Tencor Corporation (NASDAQ: KLAC) is in chip cap-ex and competes for some of the same dollars spent by chip companies that Applied Materials competes for. The company has a $5.9 billion market value. Due to peak earnings projections, it trades at only 7.6-times trailing earnings and 8.3-times expected earnings. The stock trades at under 2.1-times book value and carries more than $2 billion in cash on the books. This one is also one of the highest technology dividends at a 4.2% yield. At $35.49, the 52-week range is $27.75 to $51.83. The volatility is a scare here, because the stock traded as high as $60.00 in 2007 and it fell to almost $15.00 at the selling crush depths during late-2009.

Lam Research Corporation (NASDAQ: LRCX) is another chip cap-ex player that also trades at a discount to the market and to technology in normal times. The $4.6 billion market cap gives a trailing P/E ratio of 6.5 and it trades at 8.8-times forward earnings. The caution is that earnings have peaked in the cycle in capital spending. Still, Lam Research trades at only 1.9-times book value, only 3-times tangible book value, and it carries more than $800 million in cash. At $37.40, the 52-week range is $35.03 to $59.10. Lam peaked at nearly $60 earlier this year and back in 2007, but shares also fell to nearly $15.00 at the selling trough in late-2008.

Microsoft Corporation (NASDAQ: MSFT) is by far the largest company of the tech-value world with a $207 billion market cap and it hardly needs any introduction. Management is accused of being slow routinely and the focus of the world has moved from Microsoft to Apple. The big fear year after year is that the world is perceived now as a post-PC world. Still, this company almost prints money. Imagine this, the software giant trades at a mere 9.1-times trailing earnings and trades at only about 8-times forward earnings estimates. It also trades at about 3.6-times book value and it carried close to $60 billion in cash and investments before buying Skype. The dividend is often accused of being far too low, but it currently pays 2.7% to investors. At $24.72, the 52-week range is $23.32 to $29.46 and the 5-year high was about $37.00 in 2007 with a low of close to $16.00 in the 2009 selling climax.

Micron Technology Inc. (NASDAQ: MU) is the last large DRAM maker in America and it is trying to turn its ship around in flash, personal memory chips, and enterprise storage solutions. The market value is a mere $5.7 billion. The company trades at less than 9-times current earnings and only about 7-times future earnings. Micron even trades at a mere 0.7-times book value and carries nearly $2.9 billion in cash and investments. What hurts is that no dividend is paid out and we have no real ambition for any great dividends any time soon. At $5.66, the 52-week range is $5.20 to $11.95. This was an $18 stock in late-2006 and it actually fell to a dismal $2.00 at the tech selling peak in late-2008.

SanDisk Corporation (NASDAQ: SNDK) is the undisputed independent king of flash memory. Its $8.2 billion market cap gives a trailing P/E ratio of about 6.5 and the stock trades at only 7.2-times forward earnings estimates. The fear is a peak earnings cycle and a historic boom-to-bust cycle. SanDisk’s big issue now that many consumers are using their smartphones for cameras and Apple is both a competitor and an opportunity. The value is cheap at 1.3-times book value and it lists almost $2.7 billion in cash and liquidity with another $4.6 billion in long-term investments. At $34.35, the 52-week range is $32.24 to $53.61.  It is now down in the red-zone for historic opportunity, but there are some caveats as the real bust has not been seen as you have often seen in cycles past. This fell to under $10.00 in late-2008 and early-2009 and it did thwart a Samsung hostile buyout attempt previously.

Western Digital Corporation (NYSE: WDC) is one we are evaluating on a standalone basis despite the hard drive maker’s attempted acquisition of Hitachi’s disk drive unit. The European Commission has just recently brought up some concerns despite a similar merger happening at rival Seagate (NASDAQ: STX). The company’s stock had been recovering, but the sell-off has taken the drive out of the stock (no pun intended). The biggest ongoing fear is the continually plunging cost of storage as 1 Terabyte can be bought under $100 today. The $6.4 billion market cap compares to a $4.3 billion acquisition of the Hitachi unit. On a standalone basis, this one trades at less than 9-times trailing earnings and only about 6.2-times next year’s earnings estimates. It also trades at less than 1.2-times book value and it already has some $3.5 billion in cash. Unfortunately, it offers no dividend. At $27.57, the 52-week range is $23.06 to $41.87; over the last 5-year period it sold for as little as under $12.00 in the 2008 and 2009 peak selling of tech and it peaked above $45.00 in early 2010.

Warren Buffett said back in the 1990s, “Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily understandable business whose earnings are virtually certain to be materially higher five, ten and twenty years from now.”  Whether you trust Buffett’s key “forever” outlook is something we’ll leave up to you.

Our take at 24/7 Wall St. is that the markets prove over and over (even today) that pricing in all events is not present today and that makes picking only the deepest value stocks worthwhile. George Soros has noted, “Contrary to the tenets of market fundamentalism, financial markets do not tend toward equilibrium; they are crisis prone.” So much for the “efficient market theory.”

Again, having the term “value” does not imply immediate gains and the catalysts are often opaque at best. How many private equity buyers are there for technology companies today? There is a saying that “cheap stocks often get cheaper” if there are no catalysts. Still, when it comes to long-term investing it is the value segment that often outperforms the market during times of uncertainty.

If everything was running perfectly inside these companies then these would not appear as “value stocks” trading at a discount to the market of half to one-third in P/E multiples and in other key metrics. As one investment manager confessed about how she starts her “value screen” process:  “I usually start my screens by seeing which stocks have been hitting 52-week lows for a while.”

We did not include the analyst consensus price targets in the summary above for a specific reason. The price drops of late and the recent market sell-off has skewed the implied upside (perhaps too much) and it is very possible that analysts will continue to temper some robust price targets. Here is what analysts think, per Thomson Reuters consensus price targets.

Stock	Price	Objective	Exp. Gain	Price/Book
AMAT	$11.44	$15.16	32%	1.8
DELL	$14.68	$19.02	29%	3.3
CSC	$29.02	$34.41	18%	0.7
GLW	$14.59	$22.54	54%	1.0
HPQ	$24.54	$43.00	75%	1.2
INTC	$19.71	$25.62	30%	2.0
KLAC	$35.49	$48.30	36%	2.1
LRCX	$37.40	$50.10	33%	1.9
MSFT	$24.72	$32.50	31%	3.6
MU	$5.66	$11.05	95%	0.7
SNDK	$34.35	$57.72	68%	1.3
WDC	$27.57	$45.75	66%	1.2

JON C. OGG

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