08:17 Barron's highlights cheap tech stocks
Barron's column "Hidden Bargains" highlights cheap European tech stocks, such as Nokia and Infineon. Take Nokia versus Motorola: The Finnish handset maker has a '04 P/E of about 16 times, once you subtract from the market capitalization the hoard of cash it has. Nokia has 20%-plus handset margins and arguably the best third-generation handsets in the business. Yet America's Motorola, with 5% margins, has a P/E around 40 times. People say Nokia's margins are unsustainable. But, Stuart O'Gorman, a Henderson Global Technology Fund manager, wonders, how will a co with 5% margins undermine one with 20%? The comparison between semiconductor makers like Germany's Infineon Technologies and Micron Technology shapes up similarly, he says. The former sports a 2005 P/E of 15x vs the U.S. firm's 25x. On an enterprise value to sales basis, the German firm trades at 1.3 times, versus 2.7 times for Micron. Both produce commodity chips, but Infineon has more exposure to higher-margin telecommunications-chip sales. "Global investors should be in Infineon, not Micron," he says flatly. |
