Tech Stock Bargains Under $10
forbes.com
We regularly screen for stocks trading under ten bucks. Not a terribly sophisticated parameter, we’ll admit, but we’ve found it useful for bargain hunting.
Here we focus on tech under $10. LSI Logic (nyse: LSI), a semiconductor company headquartered in Milpitas, Calif., that makes circuits and storage systems used in consumer electronic products. Its shares took a hit last month at the announcement of its $4 billion acquisition of Agere Systems (nyse: AGR).
Could the sell-off be a buying opportunity? Shares of LSI Logic carry a modest 2007 price-to-earnings ratio, based on the average among security analyst estimates of 15. As for profit growth, for the last three months of 2006, analysts reporting to Thomson Financial IBES expect LSI to deliver a year-over-year earnings increase of 7 cents, to 17 cents per share. The consensus forecast on annualized profit growth for the next three to five years: 18%.
The table below highlights four technology companies with shares trading below $10. All were profitable in 2005 and are expected to be in the black in 2006 and 2007. None trade for more than 16 times this year’s earnings estimates. PEG ratios (price-to-earnings growth ratio) for all are no higher than 1.0. A PEG of 1.0 or less is often a sign that a stock is cheap relative to its growth prospects.
Company Price Change 2007 Vs. 2007 EPS Growth* Market Value
From 2006 P/E ($Mil)
52-Week Estimated
High, EPS Change,
LSI Logic $9.31 -21% 12% 15 18% $3,724
(LSI)
Mattson 8.99 -33 58 14 34 472
(MTSN)
ON Semi 7.62 -4 10 10 19 2,479
(ONNN)
Stratex 4.88 -26 35 16 18 478
(STXN)
Prices as of Jan. 4.
EPS: Earnings per share.
P/E: Price-to-earnings ratio.
*EPS Growth: Annualized; projected over next three to five years.
Sources: FT Interactive Data, Reuters Fundamentals and Thomson IBES via FactSet Research Systems; Thomson One Analytics |
