Bargain Buys: 8 Tech Stocks To Consider Right Now

Tech Stocks: Picking Through The Carnage

With Tuesday's rally on Wall Street all but erased by more big losses on the stock market Wednesday, the question arises as to what companies should investors be looking at now. What are the best bargains and why?

In a report titled "Picking Through the Carnage," Raymond James & Associates upgraded seven tech stocks Wednesday morning and maintained its strong-buy status on another company in order to capitalize on what it called very attractive entry points made possible by the recent market woes. Here's a look at the seven companies upgraded from "outperform" to "strong buy" by Brian Alexander, managing director of equity research for technology hardware/distribution and EMS at Raymond James.

Ingram Micro

Aug. 9, 2011: $16.47
52-Week High: $21.63
52-Week Low: $14.72

Ingram Micro is "well-diversified from both a regional and customer point of view, is aggressively repurchasing shares (10 percent of market capitalization) and trades at a 20 percent discount to tangible book value," according to Raymond James. The firm also notes Ingram's cash-rich balance sheet as an attractive positive.


Aug. 9, 2011: $14.42
52-Week High: $17.60
52-Week Low: $11.34

Raymond James also notes Dell's strong balance sheet and added, "We believe Dell is the only company in our coverage universe where we think estimates are overly conservative and are likely to increase, while we believe the current valuation offers a compelling risk/reward tradeoff," wrote Alexander in the report. "We have grown increasingly confident that the company’s recent margin performance is primarily driven by structural and mix-driven margin improvements (as opposed to transient factors) and believe management has shown much more discipline with regard to its capital allocation strategy. In the near term, we expect Dell to report strong gross margin upside in F2Q12 and believe share repurchases are likely to exceed expectations over the coming quarters."

Arrow Electronics

Aug. 9, 2011: $29.97
52-Week High: $47.50
52-Week Low: $22.56

Distributor Arrow has "predictable cash flow" and can deploy capital to cushion earnings through accretive acquisitions and/or share repurchases, wrote Raymond James' Alexander.


Aug. 9, 2011: $25.51
52-Week High: $38.00
52-Week Low: $22.39

Raymond James likes Avnet for much of the same reasons it likes its chief rival Arrow: predictable cash flow and capital that can be used on acquisitions or share repurchases. The firm made its decision on Avnet even before the distributor won reported solid earnings Wednesday morning.


Aug. 9, 2011: $41.72
52-Week High: $61.02
52-Week Low: $37.04

NetApp stands to benefit from secular trends and its recent underperformance has created an attract entry point for investors, Alexander wrote. "We believe NetApp has the strongest mid-range storage portfolio in the industry, which should drive continued market share gains and double-digit organic revenue growth," he wrote in the report. "Moreover, we note that NetApp’s low double-digit free cash flow yield is very attractive for a high growth company."


Aug. 9, 2011: $22.56
52-Week High: $28.73
52-Week Low: $17.90

Raymond James did not upgrade its rating on EMC but the investment firm maintained its strong buy rating for the storage giant and added that EMC is its favorite IT hardware pick given the company’s leading position in storage, which is the strongest secular growth market within IT hardware. "We believe EMC has assembled the most comprehensive portfolio of storage assets specifically targeted at a number of emerging market trends," Alexander wrote.

Jabil Circuit

Aug. 9, 2011: $15.53
52-Week High: $23.09
52-Week Low: $10.17

Jabil Circuit provides electronics design, production and product management services. The company should continue to generate industry-leading growth and returns on capital while delivering operating margin expansion, according to Raymond James. "Furthermore, we believe value investors will find Jabil as an increasingly attractive investment as the company is deploying capital through share repurchases and offers a modest dividend yield of 1.8 percent," Alexander wrote.


Aug. 9, 2011: $26.18
52-Week High: $38.71
52-Week Low: $21.08

Plexus is an electronic manufacturing services company that previously lowered financial expectations "to realistic levels," according to Raymond James. " We believe management’s revised FY12 outlook for high-single to low double-digit revenue growth is conservative and will likely lead to positive estimate revisions going forward barring a double-dip recession," Alexander wrote. "We also expect investors will gravitate towards EMS companies, such as Plexus, that generate industry leading metrics."