The tech-heavy Nasdaq exchange has managed to pretty much break even over the past three months. Buoyed by resilient bellwethers like Intel (NASDAQ:INTC), Amazon.com (NASDAQ:AMZN), and Cisco Systems (NASDAQ:CSCO), the Nasdaq has outperformed the Dow Jones Industrial and S&P 500 by several percentage points. Some pundits like to stick a "most likely to recover soon" tag next to the tech sector's yearbook picture.
But plenty of perfectly respectable high-tech stocks have been pounded even further into the ground, despite these optimistic trends. I say it's time to look into these depressed stocks and see which ones look most likely to rebound.
It's easy to create a screen for this situation in Motley Fool CAPS, our investor-intelligence database. Here's the criteria to use:
- Limit your search to the "Technology" sector.
- Look for at least four CAPS stars (five's the max). That should weed out most of the also-rans.
- Focus on shares with falling prices in recent months. I'm going with drops of 10% or more in the past 13 weeks. These are the compressed springs that might be poised for a serious rebound.
Try this screen out for yourself, and feel free to fine-tune the settings to your own tastes. I found 107 stocks meeting these criteria on March 27 (your results may vary as market conditions change). Here's a handful of the most promising results:
| Company |
3-Month Return |
Trailing P/E |
CAPS Rating |
|---|---|---|---|
|
VASCO Data Security Intl. (NASDAQ:VDSI) |
(37%) |
9.4 |
***** |
|
Silicon Image (NASDAQ:SIMG) |
(32%) |
19.2 |
**** |
|
Universal Display (NASDAQ:PANL) |
(16%) |
N/A |
**** |
|
Autodesk (NASDAQ:ADSK) |
(12%) |
20.1 |
**** |
I believe that these stocks are bound to rebound with a vengeance. Universal Display's innovative OLED displays are starting to hit retail store shelves and turn the company profitable. The only way to keep Silicon Image down is to make high-definition TV signals permanently unfashionable, which isn't likely to happen. Autodesk and VASCO both sell software and services that keep other companies running and healthy. It's crazy to believe that information security would ever go out of style. Many a manufacturer and media creator simply can't work without Autodesk's 3-D design software.
There may be other companies from the larger list that jump out at you as even bigger recovery candidates than my chosen ones. Skip over to the 130,000-member Motley Fool CAPS to run your own screen and check out the information and opinions that make the site so useful.
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