The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, Abbott Laboratories and AbbVie, La Monica does not own positions in any individual stocks.
Tech stocks have been a bit of a whirling dervish lately. And the Nasdaq was getting taken to the proverbial woodshed again Thursday.
But repeat after me. This is not 2000! Tech stocks, writ large, are not overvalued.
But the biggest difference between now and 14 years ago (other than Lindsay Lohan still having a promising acting career) is that most major technology stocks are trading at very reasonable valuations. The days of Cisco (CSCO) fetching a triple-digit P/E ratio are long gone.
Heck, in 2000 you couldn't even calculate a P/E ratio for a lot of the Internet stocks because many of them didn't have what the E stands for: earnings.
Fortunately, there are plenty of values to be had in tech. I ran a screen (thanks, FactSet!) to find tech stocks at attractive prices that are expected to post healthy gains in sales and profits. To top it off, these stocks also have squeaky clean balance sheets (i.e. little debt) and all but one of the ones I'm about to discuss pay a dividend.
So here are a "Lucky 7" tech stocks that might be able to withstand more volatility in the Nasdaq.
Apple (AAPL) I realize that Apple hasn't released a truly innovative new product in years. And Tim Cook is not Steve Jobs. So?
This stock may have been abandoned by momentum investors. But it trades at just 12 times earnings estimates for this year, below its long-term projected average annual earnings growth rate of 14%. And it has an iNormous amount of cash. Ignore the haters and focus on the still solid fundamentals and thrifty valuation.
Microsoft (MSFT) The maker of Windows is actually the flip side of Apple. Investors are thrilled that new CEO Satya Nadella is not old CEO Steve Ballmer.
Like Apple, Mister Softee is a stock that no longer makes the growth investor crowd that excited. But that could change under Nadella, who is focusing heavily on the company's cloud-based business in a way that Ballmer failed to do. With a P/E of 15 and a long-term growth rate of 11%, it's not as much of a bargain as Apple.
Still, Microsoft may have more potential than Apple thanks to Nadella. And when's the last time you could say that Microsoft is a more dynamic company than Apple? 1990-something?
Qualcomm (QCOM) The beauty of owning this company is that it allows you to make an agnostic bet on the future of wireless.
Qualcomm's wireless chipsets are a mainstay of nearly all mobile devices. So if you are an iPhone/iPad owner or someone that prefers products running on Google's (GOOGL) Android system, Qualcomm doesn't care. The company also has no debt and pays a dividend that yields nearly 2%.
And new CEO Steve Mollenkopf, who actually was rumored to be a candidate for the Microsoft top job before Qualcomm hastily promoted him, is focusing heavily on China as a new area of growth. If he's successful in getting Qualcomm technology in more Chinese phones, this stock could really pop.
Corning (GLW) This company actually lived through the last tech boom and has adapted to take advantage of the latest big trend in tech: mobile. Corning was a star tech stock in the late 1990s because of its fiber-optic cable business. There was huge demand for that when the Internet was in its infant stages.
But that segment collapsed with the rest of tech in 2000. Can you say JDS Uniphase (JDSU)? Fortunately, Corning is hot again due to the more mundane business of glass. Its Gorilla Glass products are a mainstay of smartphones, tablets and laptops.
While Corning's shares are occasionally prone to some swings any time there is a rumor about Apple considering the use of sapphire glass displays from rival GT Advanced Technologies (GTAT), the worries seem to be priced into the stock. Corning trades for just 15 times earnings estimates and profits are expected to grow at a 17% annual clip.
Applied Materials (AMAT) In case you haven't noticed, the chip sector has held up quite nicely during this nasty bout of tech turmoil. The Philadelphia Semiconductor Index (SOX) is up 8% so far in 2014.
One of the best ways to play the rebound in semiconductor stocks like Intel (INTC) and Texas Instruments (TXN) is through the companies that supply equipment to these firms. Applied Materials is the chip equipment leader. And as long as chip companies are ramping up capital spending, that's great news for AMAT.
The stock trades at 18.5 times earnings estimates. So it's not dirt cheap. But earnings are expected to rise by more than 20% a year, on average, for the next few years. The 2% dividend yield does not hurt either.
AOL (AOL) I did a double take when I noticed this stock. But AOL is finally benefiting from stronger online advertising demand and cutting its reliance on its legacy Internet access business. It's telling that AOL is the only online ad company to make it through my screen. No Google, Yahoo (YHOO) or Facebook (FB).
Why? AOL has little debt, trades for less than 20 times earnings estimates and should be able to post annual profit increases in the mid-teens for the next few years. With AOL putting the worst of the Patch hyperlocal debacle behind it, investors can focus on its more lucrative online video and content businesses like Adap.tv and The Huffington Post.
Sure, CEO Tim Armstrong doesn't win points for being a nice guy after his Obamacare snafu earlier this year (who can forget "distressed babies"?). But it's best to ignore emotions when you invest. Look at the numbers.
NetEase (NTES) I was hoping that at least one Chinese tech stock would pop up on my screen. Online gaming company NetEase did. Now don't worry about how NetEase is China's King (KING) or Zynga (ZNGA). This is a very profitable company that even pays a dividend.
NetEase has recently expanded into South Korea and Thailand. And it has plans to launch games in the U.S. as well. That may be a risky move. But NetEase trades for less than 12 times 2014 earnings estimates. It's much cheaper than most other Chinese techs, such as Qihoo 360 (QIHU) and Sina (SINA).
So there you have it. Seven tech stocks that should hopefully let you sleep easily at night -- even on days when the Nasdaq is falling more than 2%.
We'll be talking about all this and more on CNN this Saturday at 2 p.m. ET. I'll be on with Christine Romans on "Your Money." Watch us talk stocks -- it might even help you decide what to do with your tax refund.
Reader Comment of the Week ... and see you on April 24. These are strange times for the markets. Remember the PIIGS? No? That was so 2011. Well, the G member of those once-sad peripheral European nations is back in the fixed-income market. My colleague Mark Thompson wrote about the remarkable demand for a Greek debt offering.
One of my snarkiest readers joked about how these assets may be safer havens than U.S. stocks and bonds.
Opa! Speaking of celebrating, I'm going to be off all next week and the first two days of the following week. Yay me! So Twitter radio silence begins tomorrow after the market close ... and my next Buzz column will be published in two weeks. Enjoy the silence.
It's been a banner year for stocks. The Dow and S&P 500 have been in record territory since March, while the Nasdaq has been trading at its highest levels since 2000.
Though the robust gains have ignited some worries that stocks may be overvalued, most experts believe that a dose of skepticism is actually healthy and predict that stocks will continue to rise next year, albeit at a more MOREHibah Yousuf - Dec 22, 2013 9:00 AM ET
It was a bloody day for technology stocks on Wall Street, as investors punished the entire sector after Google and Microsoft both delivered disappointing earnings results.
Microsoft (MSFT) took the worst beating, plunging more than 11% -- its worst one-day drop since January 2009. The company badly missed Wall Street's profit forecasts after taking a huge write-down on its Surface tablet last quarter.
That bad news as was a hot topic among MOREHibah Yousuf - Jul 19, 2013 4:01 PM ET
The Securities and Exchange Commission approved Nasdaq's plan to pay $62 million to trading firms that incurred losses during Facebook's botched public debut last May.
The four major trading firms -- Knight Capital (KCG), Citadel, Citigroup (C) and UBS (UBS) -- lost a combined $500 million due to technical glitches at the Nasdaq during Facebook's initial public offering.
And while the accommodation plan won't compensate the firms in full, the SEC said it MOREHibah Yousuf - Mar 25, 2013 12:32 PM ET
Norwegian Cruise Line (NCLH) sailed more than 30% above its initial public offering prices when its shares debuted on the Nasdaq (NDAQ) Friday.
The third largest cruise ship operator in North America sold 23.5 million shares for $19 apiece -- slightly better than the estimated range of $16 to $18.
Norwegian Cruise Line plans to use part of the $446 million it raised to pay down some of its $3.1 billion MOREMaureen Farrell - Jan 18, 2013 11:49 AM ET
The battle for the hottest IPOs among stock exchanges is fierce, and it looks like the New York Stock Exchange has won first prize.
Early in the year, it looked like Nasdaq (NDAQ) would be a shoe-in, after it landed the Facebook (FB) listing.
Of course, the Facebook IPO was an epic flop, and the New York Stock Exchange (NYX) ultimately edged ahead of its rival.
The NYSE landed the majority, or MOREMaureen Farrell - Dec 27, 2012 3:19 PM ET
SolarCity (SCTY) is shining on its first day of trading.
In its debut on Nasdaq (NDAQ) Friday, SolarCity closed 47% above its $8-a-share initial public offering price.
To get that pop, SolarCity was forced to scale back its expectations. The company had originally tried to price its offering between $13 and $15, which would have given it a valuation close to $1 billion, and raised $141 million.
Even though the company upped MOREMaureen Farrell - Dec 13, 2012 12:50 PM ET
Facebook will make its way into the Nasdaq-100 (NDX) next week, but the social network could find itself in the even more widely tracked S&P 500 (SPX) soon enough, too.
According to Standard and Poor's methodology, "initial public offerings should be seasoned for 6 to 12 months before being considered for addition to an index." Facebook (FB) just celebrated its six-month birthday as a public company a little over two weeks ago.
While MOREHibah Yousuf - Dec 6, 2012 1:41 PM ET
Facebook is joining a new social network -- the Nasdaq-100 to be precise.
The California-based social media company will join the elite index on Dec. 12, replacing Infosys, an Indian tech company that is moving its U.S. listing to the New York Stock Exchange.
The move is not exactly a surprise. The Nasdaq-100 includes the 100 largest non-financial securities trading in the market. And with a market capitalization of around $60 billion, Facebook MORECharles Riley - Dec 4, 2012 11:41 PM ET
YY, the first Chinese company to brave the U.S. initial public offering market since April, was expected to meet a wary investor base Wednesday. Yet YY's (YY) stock managed to rise 10% in its debut on Nasdaq (NDAQ).
A Chinese Internet social media platform with a focus on gaming and video chats, YY, priced its offering at $10.50, the low end of its expected range. The company raised $82 million for MOREMaureen Farrell - Nov 21, 2012 11:04 AM ET
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