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Google And Apple Rank Among The Best Value Stocks In The Tech Industry

This article is more than 5 years old.

It is no secret that the information technology sector has been one of the favorites with investors. The sector has been leading the market higher and strong revenue and earnings growth rates from IT continue to draw attention. Investors are still hungry to make a profit in tech, but one could get a nose bleed as many stocks are reaching all time highs. Tech shares have outperformed other sectors by a large margin, adding value to an otherwise unexciting market. Investors put $4.7 billion into ETFs that track technology in May alone, part of a $10.2 billion influx for the year, according to Jeff Cox of CNBC.

According to Stephen Grocer of the New York Times, “the rally [in IT] has come as the global economy shows signs of strain. Fears of a trade war have made investors anxious.” Investors have looked to tech stocks to be consistent money makers.

As of June 8, Dow Jones Indices reports that IT is up 13.56% vs. the S&P 500 up 3.94% year-to-date. Many investors are becoming weary of chasing stocks after such a rally. The goal to earning a profit is to buy low and sell high. Investors often find it difficult to spot the stocks with fair prices that have great value. For investors that want to find fairly priced stocks in tech, we have listed some of the best valued opportunities. In our opinion, these stocks can still produce a notable profit. They have attractive values and should outperform both the market and peer stocks in the IT sector.

CressCap Investment Research

The foundation of our recommendations is to identify companies that perform best and worst on the collective basis of value, growth, EPS revisions, profitability, and LT momentum. The CressCap systematic trading model gathers data daily on 6,500 companies globally and assigns academic grades (A - F) for each financial metric. These grades are scored relative to its region/sector.

Alphabet Inc. (GOOGL-US)

It may be hard to believe, but Alphabet Inc., the parent company of google, has only edged slightly higher than the S&P 500 over the last 52 weeks, outperforming by 16.76% vs. 14.19% respectively. Google is in the business of internet-related products and services which include advertising, managing applications, and sales of digital content and hardware products. We still believe the company is a good buy in the technology sector. CressCap has a value grade on the stock of A-. Specifically, P/CF ratio at .03x compared to the sector at .25x shows the stock is inexpensive. In addition, profitability looks promising with a CressCap ranking of A+ for ROE and A for operating margin. The price action of the stock has not been stellar compared to the sector. The stock’s CressCap momentum grade is C. Largely, this could be a result of the possible 11 billion dollar fine by the EU regarding its Android Operating System. This stock is on our buy list as it possesses strong EPS revisions, holds good value, and is profitable. We view this as an opportunity to investors.

Apple Inc. (AAPL-US)

When an investor thinks of consumer technology, Apple is a company that immediately comes to mind. The company sells and manages a wide range of technology products that include iPhone, apple watch, iPad, iCloud and accessories. They own and operate a range of software applications on their devices such as OS X and iPhone OS (iOS). The overall CressCap rating for the stock is an A+. In our opinion,  the valuation on the stock looks favorable. The P/E FY1 received a CressCap ranking of B+ with the stock multiple at 16.68 compared to the sector at 22.99. On P/E basis, AAPL shows tremendous value relative to the sector. The stock’s growth and momentum grades are inline with the sector as exhibited by the CressCap grade of C. The profitability grade of A+ stands out compared to the sector. ROC, Operating and EBIT Margin possess a CressCap grade of A with rates of 22%, 30%, and 26% respectively. We do see this stock as a value opportunity in the technology sector.

NetApp, Inc. (NTAP-US)

NetApp is a worldwide company that provides a full range of hybrid cloud data services that simplify management of applications and data across cloud and on-premises environments to accelerate digital transformation. The stock is recommended as a buy based on our quant model and is also supported by technical indicators and fundamental analysis. The EPS trend of the stock for the current fiscal year is up 11.50% in the past 90 days. The P/CF ratio shows that the stock has good value at a multiple of 0.08x compared to the sector at a 0.25x. The value is ranked at a B+ and the EPS revisions rounds out the ranks with a B. Overall, the stock is given an A rating. There are no major red flags and under all five CressCap criteria and fundamental metrics the stock is performing well compared to the sector.

Rudolph Technologies, Inc. (RTEC-US)

Rudolph Technologies, Inc. is a leader in the design, development, manufacturing, and support of process control inspection, as well as, metrology equipment, lithography equipment, data analysis systems, and software used by microelectronic device manufacturers worldwide. The CressCap sector ranking given to this company is a 70 out of 404 companies. It has a CressCap sector grade of A-, and is accompanied by a buy recommendation. The EPS revisions for this stock are seen as a strong point. The estimated EPS growth is at 68.10% and it significantly outperforms the sector which sits at 51.94%. Based on a P/B ratio of 3.06x relative to the sector at 4.01x, and P/E FY1 at 17.59x vs. 22.99x, the stock is inexpensive. This is a good buy and could produce the opportunity investors are looking for.

For additional information, feel free to send questions to info@cresscap.com or view our website www.cresscap.com. Please click here to view CressCap Investment Research’s full disclaimer.