The recent technology sell-off creates intriguing buying opportunities. The good news is that many tech stocks are still quite inexpensive.
Says market strategist Alan Skrainka of Edward Jones brokerage: "The pendulum of market psychology has swung from extreme greed to fear. No one can pick the exact bottom, but it's certainly a much better time to buy than it was a few months ago."
We asked some savvy money managers to identify beaten-up tech stocks that they consider attractive buys.
Kevin Landis, manager of Firsthand Technology Value fund, likes TriQuint Semiconductor (symbol TQNT, recent price $35), a small maker of gallium-arsenide chips used in communications devices.
TriQuint has been punished because a significant chunk of its chips — perhaps half — are sold to makers of mobile phones, a sector that has seen a slowdown in growth. But TriQuint also sells to the fiber-optic-equipment, satellite and fixed-wireless markets, giving it a fairly diverse customer base.
Chip maker IDT (IDTI, $34) is "truly inexpensive," says Douglas MacKay, manager of Red Oak Technology fund. The stock sells at a modest ten times the consensus earnings estimate of $3.68 per share for calendar 2001, up 40 percent from expected 2000 results, according to First Call/Thomson Financial. IDT, notes MacKay, is shifting into making high-margin chips used in communications gear.
GlobeSpan (GSPN, $30) is the pick of Mark Herskovitz, manager of Dreyfus Premier Technology fund. Cisco is a major customer for GlobeSpan's chips, which are used in digital subscriber line (DSL) technology to boost transmission speeds over copper wires. Analysts see earnings rising 69 percent in 2001, to 86 cents per share.
Bob Turner, co-manager of Turner Technology, favors VeriSign (VRSN, $85) because of its leading position in Internet and business-to-business security.
"As the Internet grows, you've got to have more security," says Turner.
VeriSign acquired the leading Internet domain-registration company, Network Solutions, early in 2000. Analysts see earnings of 32 cents per share in 2000, jumping to 54 cents in 2001.
A genuine dot-com is ValueClick (VCLK, $4). Michael Balkin, who co-manages William Blair Small Cap Growth fund, says ValueClick, an Internet advertising agency, is a value stock.
ValueClick's cash and holdings in DoubleClick and ValueClick Japan are worth about $9 per share, he says, and the company is debt-free. It's expected to earn 9 cents a share in 2000 and 11 cents in 2001.