The technology sector has been identified across the firms that we cover as a solid place for investors to deploy capital for 2014. The analysts at Merrill Lynch are in lockstep with the rest of Wall Street with their bullish assessment of the sector. They think that innovation across hardware, software and mobility will drive the technology sector in 2014. They highlight innovative hardware, the social/mobile consumer and cloud collaboration as three outstanding themes.

In a new research report, the Merrill Lynch team points out that the sector is trading at the steepest discount to the market in its history. Technology has lagged returns in the S&P 500 over the past three years. The top companies have among the cleanest and best balance sheets. The top stocks also have among the highest foreign exposure. In addition the sector has the largest stock buyback and fastest dividend growth. When you add all the positives up, it seems that 2014 might be a banner year for technology.

Here are the best technology stock ideas from Merrill Lynch for 2014.

3D Systems Corp. (NYSE: DDD) develops, manufactures and markets 3D printers, print materials, on-demand custom parts services and 3D authoring solutions for professionals and consumers. The company’s primary print engines comprise stereolithography, selective laser sintering, multi-jet modeling, film transfer imaging, selective laser melting and plastic jet printers, as well as ZPrinters. This has been a super-hot momentum stock and may have room to run in 2014. The Merrill Lynch price target is $90. The Thomson/First Call target is $85. Shares closed Thursday at $83.19.

Adobe Systems Inc. (NASDAQ: ADBE) makes the list this year. With the release of fourth-quarter results this week, the company once again reported faster-than-expected adoption of subscription licenses for its Creative Cloud (CC) business, as more of its clients chose enterprise term licensing agreements. Adobe expects to have nearly 3 million paid CC individual and team subscriptions by the end of fiscal 2014. Merrill Lynch has a $67 price target, and the consensus estimate is $63. Adobe closed Thursday at $58.13.

Automatic Data Processing Inc. (NYSE: ADP) makes the Merrill Lynch list. The company provides technology-based outsourcing solutions to employers and vehicle retailers and manufacturers worldwide. The company operates in three segments: Employer Services, Professional Employer Organization (PEO) Services and Dealer Services. The company also provides Wall Street valuable employment data. Investors are paid a 2.4% dividend. The Merrill Lynch price target is $88. The consensus estimate is much lower at $78. ADP closed Thursday at $79.42.

Avago Technologies Ltd. (NASDAQ: AVGO) has entered into a definitive agreement to acquire LSI for $6.6 billion in cash. LSI shareholders will receive a cash payment of $11.15 for each LSI share. The strategic move was aimed to diversify Avago’s existing business line from wired infrastructure, wireless and industrial businesses to the storage chip market to boost revenues in the face of industry consolidation and challenging macroeconomic conditions. Investors are paid a 1.9% dividend. Merrill Lynch has a $60 price target, the same as the consensus target. Avago closed Thursday at $51.44.

Barracuda Networks Inc. (NYSE: CUDA) was a top IPO this year and another tech deal that worked out well. The stock caught an upgrade to Buy two weeks ago from tech boutique shop Pacific Crest Securities. We profiled the stock in early December as a top name to own in 2014. The Merrill Lynch price target for the stock is $26. The consensus price target for the stocks is $26.50. Barracuda closed Thursday at $25.50.

Cisco Systems Inc. (NASDAQ: CSCO) was hammered after a bad earnings report last month and is almost a value trade now. The networking giant still dominates many of the vertical segments it sells into, and it has a strong cash position for acquisitions. Investors are paid a solid 3.25% dividend, which incidentally will go ex-dividend on January 2. The Merrill Lynch price target is $25, and the consensus stands at $24.50. Cisco closed Thursday at $21.07.

Cognizant Technology Solutions Corp. (NASDAQ: CTSH) provides information technology (IT), consulting and business process outsourcing services worldwide. The company operates through four segments: Financial Services; Healthcare; Manufacturing, Retail, and Logistics; and Other. It offers consulting and technology services, such as IT strategy, program management, operations improvement, strategy and business consulting services. Merrill Lynch has a $105 target, and the consensus is at $101. Cognizant closed Thursday at $97.02.

EMC Corp. (NYSE: EMC) is the large-scale storage leader and gives investors a second dose for growth with its majority ownership position in cloud software company VMware. With a growing demand for both companies’ products, earnings in 2014 could be stellar. Investors are paid a 0.7% dividend. Merrill Lynch has a $29 price target, and the consensus figure is slightly higher at $30. EMC closed Thursday at $24.02.

Facebook Inc. (NASDAQ: FB) is about to be added to the S&P 500. The company’s founder, Mark Zuckerberg, will be offering 40 million shares of stock in a secondary offering that is scheduled to price after the close Friday. The reason for the sale of stock was listed as having to pay taxes. Merrill Lynch has a $60 price target, and the consensus is also at $60. Facebook closed Thursday at $55.05.

KLA-Tencor Corp. (NASDAQ: KLAC) indicated last week at a Credit Suisse conference that bookings this quarter may be below the midpoint of what the company had previously forecast, attributing the change to a $100 million order for tools for 10-nanometer chip production being delayed until next quarter. This caused an almost 5% sell-off in the stock and may provide an excellent entry point. Investors receive a 2.8% dividend. The Merrill Lynch target price is $75, and the consensus target is also posted at $70. KLA closed Thursday at $62.70.

Lam Research Corp. (NASDAQ: LRCX) designs, manufactures, markets, refurbishes and services semiconductor processing equipment used in the fabrication of integrated circuits. The company offers plasma etch products that remove materials from the wafer to create the features and patterns of a device. The Piper Jaffray analysts highlight the company and its peers as having a significant equipment opportunity from the NAND evolution. The Merrill Lynch price target for the stock is $67. The consensus target is lower at $62. Lam Research closed Thursday at $53.02.

NXP Semiconductors N.V. (NASDAQ: NXPI) is a tech name expected to get the nod for inclusion in the Nasdaq 100. The company provides mixed signal and standard product solutions for radio frequency, analog, power management, interface, security and digital processing products worldwide. The Merrill Lynch price target for the stock is $47. The consensus price target for the European chip company is $48. The stock closed Thursday at $43.10.

Pandora Media Inc. (NYSE: P) has been on fire this year. The company provides Internet radio services in the United States. The company allows listeners to create up to 100 personalized stations to access unlimited hours of free music and comedy, as well as offers Pandora One, a paid subscription service to listeners. It is also involved in the sale of displays, audio advertising and video advertising products to advertisers for delivery on computer, mobile and other connected device platforms. The Merrill Lynch price target is $30, but the consensus is a touch higher at $32. Pandora closed Thursday at $28.20.

Salesforce.com Inc. (NYSE: CRM) is another top name on the list. The company’s 2013 portfolio expansion included the acquisition of ExactTarget, which rounds out its marketing automation capability, and the introduction of Salesforce1, a leap forward for developing applications that run natively on mobile devices. Merrill Lynch has a $61 price target for the stock, and the consensus is even higher at $65. Salesforce close Thursday at $53.07.

Stratasys Ltd. (NASDAQ: SSYS) is another leader in 3D printing technology. In an effort to build up its Makerbot awareness, the company decided to team up with eBay to utilize e-commerce to sell 3D printing services. The Merrill Lynch price target is $140. The consensus price target for the stock stands at $135. Stratasys closed Thursday at $122.81.

Ubiquiti Networks Inc. (NASDAQ: UBNT) was recently initiated at Wells Fargo with an Outperform rating. Wells Fargo expects Ubiquiti to post top and bottom line growth of more than 20% over the next few years. “Our positive view reflects our belief that Ubiquiti’s disruptively priced fixed mobile broadband solutions are likely to see strong growth as users in underserved and underpenetrated markets increasingly demand Internet access,” noted the analyst. The Merrill Lynch target is $50, and the consensus is at$48. Ubiquiti closed Thursday at $41.52.

VMware Inc. (NYSE: VMW) remains a top stock to buy for 2014. Majority owned by storage giant EMC, VMware alone contributes almost 24% of EMC’s total revenue. In the third quarter, VMware experienced a 17% rise in revenue to $1.28 billion year over year. VMware’s maintenance revenue supported this increase. The Merrill Lynch price target for the stock stands at $106, and the consensus is slightly higher at $102. VMware closed Thursday at $87.35.

When a sector underperforms for three years and it displays all the requisite themes and metrics to outperform, it makes sense for investors to take a close look. Many of the names on the Merrill Lynch list dominate their areas. Going with the leaders is usually a smart idea.

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