Are Old-School Tech Stocks Bargains?

A year has passed since the market meltdown, when the S&P 500 and many big-name tech stocks hit their lows. Since then, the market has rocketed up 69% and many stocks are up well over 100%.

While I don't want to see 2009's meltdown become an annual event a la NCAA March Madness, there were a lot of high-quality stocks available at bargain basement prices.  Today, bargains are harder to find, especially in technology, but they do exist. Here are four worth a closer look.

Source: Yahoo! Finance, CAPS.

These companies have been around the block more than once, having survived numerous economic cycles, the emergence of new technologies, and of course the great technology bust of 2000. They don't produce the most exciting products -- think disk drives, specialty glass for LCD monitors, printers, PCs, servers, and IT systems integration services -- and they are unlikely to produce the eye-popping growth that up-and-coming tech names sometimes produce. You may be yawning, but at current valuations, you should wake up and take note of these companies.

Only one company in the S&P 500 has a lower forward P/E than Western Digital. Corning and IBM join Western Digital in the bottom quintile of the S&P 500, while Hewlett-Packard just missed membership in the club. Meanwhile the average S&P 500 technology stock trades at a 16.8 times forward P/E, a 6% premium to the overall index.

All four companies have some debt, but with high interest coverage ratios the levels are easily manageable. Corning, IBM, and Hewlett-Packard pay modest dividends and maintained or increased them through the economic downturn. While these names are not specific recommendations, they do show there are still cheap opportunities in the market.

Got any other tech bargains you're interested in? Let us know what cheap tech stocks you're looking at in the comments area below!

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