There are a large number of analysts who believe technology stocks are undervalued -- if you associate with that belief you may be interested in JPMorgan's top tech stock picks for 2012.
J.P Morgan's Noelle V. Grainger published a report on December 9th that took a look at top stocks in several technology sectors, such as software, computer services & IT consulting, semiconductor capital equipment, and alternative energy.
Each sector faces its own set of challenges in today's market.
An example of the sectors JP Morgan thinks are on the fence is software technology. The sector did very well in 2010 but was relatively flat in 2011. Performance in 2012 will depend largely upon investor confidence in earnings growth estimates and macroeconomic uncertainties, according to Insider Monkey.
Some of the sectors expected to excel are Communications Equipment & Data Networking and SMid Semiconductors, which are linked to high growth in communication infrastructure.
One sector JP Morgan feels has more downside than upside is solar. Subsidies for solar energy are expected to be reduced in 2012, and most companies are already struggling to keep their prices affordable.
J.P. Morgan has buy recommendations for the following -- do you agree that these names have the potential to grow in 2012?
List sorted by market cap. (Click here to access free, interactive tools to analyze these ideas.)
1. Oracle Corp. (NAS: ORCL) : Develops, manufactures, markets, distributes, and services database and middleware software, applications software, and hardware systems worldwide. Market cap of $129.60B. The stock is currently stuck in a downtrend, trading -13.09% below its SMA20, -16.36% below its SMA50, and -16.5% below its SMA200. It's been a rough couple of days for the stock, losing 11.51% over the last week.
2. MasterCard Inc. (NYS: MA) : Provides transaction processing and related services to customers principally in support of their credit, deposit access, electronic cash and automated teller machine payment card programs, and travelers' cheque programs. Market cap of $47.12B. The stock has gained 70.44% over the last year.
3. Texas Instruments Inc. (NYS: TXN) : Engages in the design and sale of semiconductors to electronics designers and manufacturers worldwide. Market cap of $33.71B. The stock has lost 7.26% over the last year.
4. Broadcom Corp. (NAS: BRCM) : Designs and develops semiconductors for wired and wireless communications. Market cap of $16.05B. The stock has had a couple of great days, gaining 5.72% over the last week.
5. Equinix Inc. (NAS: EQIX) : Provides data center services for the protection and connection of information assets to enterprises, content providers, financial companies, network service providers, and cloud and IT services companies. Market cap of $4.83B. The stock is a short squeeze candidate, with a short float at 10.08% (equivalent to 6.75 days of average volume). The stock has gained 25.85% over the last year.
6. Lam Research Corp. (NAS: LRCX) : Engages in designing, manufacturing, marketing, and servicing semiconductor processing equipment used in the fabrication of integrated circuits. Market cap of $4.39B. Might be undervalued at current levels, with a PEG ratio at 0.76, and P/FCF ratio at 7.47. The stock is currently stuck in a downtrend, trading -6.29% below its SMA20, -10.42% below its SMA50, and -15.16% below its SMA200. The stock has lost 29.48% over the last year.
7. Jabil Circuit Inc. (NYS: JBL) : Provides electronic manufacturing services and solutions in the Americas, Europe, and Asia. Market cap of $4.14B. This is a risky stock that is significantly more volatile than the overall market (beta = 2.01). Might be undervalued at current levels, with a PEG ratio at 0.91, and P/FCF ratio at 13.42. The stock has gained 0.71% over the last year.
8. Robert Half International Inc. (NYS: RHI) : Provides staffing and risk consulting services in North America, South America, Europe, Asia, and Australia. Market cap of $4.05B. The stock has had a couple of great days, gaining 6.1% over the last week.
9. Riverbed Technology, Inc. (NAS: RVBD) : Provides solutions to the fundamental problems associated with information technology (IT) performance across wide area networks (WANs) in the United States and internationally. Market cap of $3.71B. The stock has lost 31.23% over the last year.
10. Cree, Inc. (NAS: CREE) : Develops and manufactures light emitting diode (LED) products, silicon carbide (SiC) and gallium nitride (GaN) material products, and power and radio frequency (RF) products. Market cap of $2.54B. The stock is a short squeeze candidate, with a short float at 15.51% (equivalent to 5.12 days of average volume). The stock is currently stuck in a downtrend, trading -6.86% below its SMA20, -15.72% below its SMA50, and -16.08% below its SMA200. The stock has performed poorly over the last month, losing 13.11%.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
List compiled by Eben Esterhuizen, CFA. Kapitall's Rebecca Lipman does not own any of the shares mentioned above. Data sourced from Finviz.
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