Technology investors have had a banner year, and many on Wall Street think that the sector can not only finish this year strong, but can again be a leader in 2015. The recent sell-off hit tech stocks as hard as or harder than other S&P 500 sector. As a whole though, over the past five days, S&P Technology was down 0.15%, better than the S&P 500’s 0.9% decrease. That didn’t keep some very high-profile stocks from getting absolutely hammered.
A new report from the IT tech analysts at UBS highlights some prominent technology stocks that are very oversold on a 14 day relative strength basis. These are not just big momentum names that got chewed up and spit out in the selling, but they are top technology stocks that aggressive growth portfolio investors can add now for possible big gains.
Corning Inc. (NYSE: GLW) may be poised for a big second half of the year as bandwidth and latency needs in the Internet are pressing the limits of what is currently available. In addition big demand for the company’s Gorilla Glass, which Apple uses, is up as much as 30% year-over year as new smartphones hit the market. While the company is well known for being a leading manufacturer of glass substrates for LCDs in consumer electronics, it generates close to 30% of its revenue from its Optical Communication unit. Last year, that division revenue grew 9.2% to reach $2.3 billion.
The stock is rated Neutral at UBS. Investors are paid a 2.1% dividend. The Thomson/First Call consensus price target is $22.03, and Corning closed Thursday at $18.70 a share.
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Juniper Networks Inc. (NASDAQ: JNPR) may be the ultimate contrarian tech stock pick. The company’s large layoff in the summer dented the balance sheet as it reported second-quarter earnings way below Wall Street estimates. The stock was down more than 10%, and many of the top firms on Wall Street that cover the stock moved their ratings from Buy to Neutral. Positive activist shareholders moves combined with a solid product cycle have made the stock a recent favorite, so its recent trip to the woodshed may be just the ticket for investors looking to buy some. The company has a big presence in network and enterprise security and could possibly be a merger or straight out takeover target.
Investors in Juniper are paid a 1.8% dividend. The consensus price target is $26.78. Shares closed Thursday $21.95.
Oracle Corp. (NYSE: ORCL) has sputtered over the past year, but it has finally started to perk up, despite a recent earnings miss. With founder and long-time CEO Larry Ellison stepping down, a touch of volatility was thrown into the mix. This summer Oracle announced the much-anticipated deal to acquire MICROS Systems, the provider of point-of-sale hardware and related services. Oracle is also making a push into cloud computing, application virtualization and software-defined networking. Application virtualization and software-defined networking should be key areas of revenue growth going forward.
Shareholders are paid a 1.3% dividend. UBS has set a $41 price target on Oracle, which is rated Buy. The consensus price target for the software giant is at $43.85. Shares closed Thursday at $38.27.
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Seagate Technology PLC (NASDAQ: STX) is another top stock hitting the oversold screens at UBS. While the company has a 40% share of the hard disk drive market, it is constantly in a neck-and-neck battle with rival Western Digital that may cost it some margin gains. That aside, the company is a solid stock to buy at this lower entry point with storage demand soaring.
Investors in Seagate are paid a solid 3.0% dividend. The consensus price objective is set at $64.80. Seagate closed on Thursday at $55.42 a share.
Tech Data Corp. (NASDAQ: TECD) wraps up the list of five very oversold quality technology stocks. The company is one of the world’s largest distributors of technology products, services and solutions. Its advanced logistics capabilities and value-added services enable 115,000 resellers to efficiently and cost effectively support the diverse technology needs of end users in more than 100 countries. Tech Data generated $26.8 billion in net sales for the fiscal year ended January 31, 2014. With an improving economy that figure is expected to jump to almost $29 billion for this fiscal year.
The consensus price target for the stock is $68.71. Shares closed trading on Thursday at $56.61.
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The recent sell-off can be described as the pause that refreshes. With the economy improving, technology should be a solid area to invest in going forward. Buying quality large cap companies like these at a discount makes very good sense for long-term investors.
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