3 Bargain Tech Stocks To Watch In 2014

In an increasingly expensive market, these cheap tech names could prove attractive for investors.

Jan 9, 2014 at 4:15PM

The tech sector typically isn't the best place to go hunting for value investments.

Especially considering the best proxy for the tech sector, the Nasdaq Composite, has surged more than 33% in the past year and trades for an earnings multiple north of 21x, technology stocks as a whole don't appear to offer a ton of value.

However, turning the page to individual stocks, there are actually plenty of attractive names in the technology space that could prove attractive as another new year gets under way.

Here's a list of three technology stocks that could be worth consideration for 2014:

1) Intel (NASDAQ:INTC)

Intel Logo

Source: Intel                                                             

Intel's x86 chip architecture missed the boat on mobile to its more power-efficient competitor, ARM Holdings. Worse yet, the PC market went through one of its worst years in recent memory in 2013. The PC market is expected to contract once again in 2014. These factors have done plenty to justify a bottom-barrel multiple for Intel.

But looking past the current misery, there's reason to be at least cautiously optimistic when looking at Intel. New CEO Brian Kraznich has Intel diving headlong into new growth opportunities. Recently, Kraznich took the stage at this week's Consumer Electronics Show to discuss the opportunity Intel plans to attack with the much-discussed Internet of Things. At the CES keynote, Krzanich said  "We want to make everything smart–that is what Intel does." Making everyday goods smart is touted as possible a multi-trillion dollar  market by as soon as the end of this decade.

And although Intel putting its chips into as many items as possible is only one subplot, it could provide a much-needed growth driver for the struggling semiconductor maker. If so, Intel's current 13x P/E ratio and 3.5%  dividend yield will look like a steal, although it's by no means a sure thing.

2) Hewlett-Packard(NYSE:HPQ)

Hp Logo

Source: Hewlett-Packard

Hewlett-Packard makes the list by virtue of pure cheapness. With a 10x P/E and dividend yield slightly above 2%, Hewlett-Packard is one of the cheapest large cap tech stocks around. However as is so often the case, Hewlett-Packard is cheap for a reason, even after gaining 75% in the last 12 months.

So should investors expect another big year from Hewlett-Packard? Hewlett-Packard is smack dab in the middle of a multi-year turnaround under CEO Meg Whitman that's helped avert the company from what many thought was to be the demise of one of Silicon Valley's most storied companies.

Although it's unquestionably cheap, it's probably more fair to think of Hewlett-Packard's massive rally in 2013 as more of a "relief rally" than anything else. Extending the time horizon just one year, you can see that Hewlett-Packard had a horrendous 2012, falling 47% over the course of the year and culminated in Hewlett-Packard taking a $8.8 billion dollar writedown of its fated Autonomy acquisition from the year before.

Looking to 2014, the seminal question for Hewlett-Packard should be "where will the growth come from?" And unfortunately from where I'm sitting, that's unclear. So given the bleak outlook of its two key industries (personal computers and enterprise), Hewlett-Packard's valuation seems justified today.



Source: Apple

Apologies for the lack of creativity for this pick, but it's simply too hard to ignore Apple's bottom-barrel valuation.

After ditching its shares en masse in the first half of 2013, Apple's stock surged in the second half to end the year slightly above breakeven. And although its days of breakneck growth are probably behind it, Apple's current prices don't reflect its growth opportunities in the year to come.

For starters, China should factor prominently for Apple in a number of ways. Its recent deal with China Mobile should help drive iPhone sales. Additionally, Apple is hard to work expanding its own brick-and-mortar and third party distribution as well. And lastly, Apple also recently opened an online storefront via Alibaba's Tmall online shopping site that should also help users get their hands on Apple's products throughout the entire country. Another key growth driver for Apple could be the introduction of another product line as well, either an iWatch or something else (iTV, perhaps?).

However the critical piece in understand Apple as an investors is that its current valuation hasn't reflected its reasonable, not heady, growth potential going forward. Backing out the roughly $130 billion in net cash on Apple's balance sheet, values Apple's core operations at right around 10x its last 12 months' earnings, what could fairly be argued as a "no growth" valuation. Especially considering the leeway Apple's massive cash stash provides for the possibility of increased capital returns to shareholders, Apple strikes me as simply too cheap today.

Foolish bottom line
Each of these stocks offers investors a bottom-barrel valuation, each for its own unique set of circumstances. However in a sector where cheap stocks are more the exception than the rule, they could certainly be attractive for investors looking to add some value to their portfolios

A better bet for 2014 than Apple, Intel, or HP
There's a huge difference between a good stock, and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report: "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Fool contributor Andrew Tonner owns shares of Apple. The Motley Fool recommends Apple and Intel. The Motley Fool owns shares of Apple, China Mobile, and Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

Something big just happened

I don't know about you, but I always pay attention when one of the best growth investors in the world gives me a stock tip. Motley Fool co-founder David Gardner (whose growth-stock newsletter was rated #1 in the world by The Wall Street Journal)* and his brother, Motley Fool CEO Tom Gardner, just revealed two brand new stock recommendations moments ago. Together, they've tripled the stock market's return over 12+ years. And while timing isn't everything, the history of Tom and David's stock picks shows that it pays to get in early on their ideas.

Click here to be among the first people to hear about David and Tom's newest stock recommendations.

*"Look Who's on Top Now" appeared in The Wall Street Journal which references Hulbert's rankings of the best performing stock picking newsletters over a 5-year period from 2008-2013.

Compare Brokers