If Warren Buffett turns out to be wary of Twitter, what are some undervalued technology stocks he would like?
The other day I heard a string theory professor explain something that reminded me of the Twitter IPO.
He was discussing the applications of his research, and he admitted that at the moment, no, he didn't really know yet exactly how his discoveries would impact the world in terms of genuine, marketable inventions.
But then he pointed out that quantum physicists in the 1920s also wouldn't have known how their research would eventually be applied to everyday life. When you're still working out difficult concepts, it's hard to see things like the semiconductor coming along - an invention which, by some estimates, accounts for over a quarter of our nation's GDP.
A lot of time, effort, and money need to go into understanding something before you can monetize it. But without making those kinds of investments in the first place, we wouldn't have had the radio, the computer, or the internet.
This relates directly to the problems that many Twitter skeptics raise when they look at the company's IPO. Why would you invest in a company with no profits yet? Why would you invest in a company that will trade at over 70 times its valuation?
Most importantly, why would you invest in something when you have no idea where the profits will be coming from next month, much less in two, three years?
But then, when a company has a goal not to make a profit, but to permanently "democratize content" - well, how you cash in is almost an afterthought.
For that reason, Warren Buffett probably wouldn't dig Twitter as an investment. In fact, half of all investors polled don't have an interest in the social media stock. But are there other ways to invest in science and technology, without placing a bet on a single product or goal?
As evidenced by his purchase of IBM (IBM), Buffett likes technology stocks that fit certain parameters: they have relatively low valuations, they pay dividends, and they don't keep all their eggs in one basket, so to speak.
Consider if Microsoft's (MSFT) Bing fails, there's still Office... That final point is more abstract than the rest.
However, the first two are very easy to run in a screen. We found six technology stocks trading with foward price to equity ratios (forward P/E), in this case at or below 14, that also pay high dividends.
Click on the interactive chart below to view dividend yields over time.
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Do you see investing opportunities in these tech stocks? Use the list below as a starting point for your own analysis.
1. Cohu, Inc. (COHU, Earnings, Analysts, Financials): Engages in the development, manufacture, sale, and servicing of test handling and burn-in related equipment, and thermal sub-systems for the semiconductor industry. Market cap at $233.09M, most recent closing price at $9.35.
2. Ebix Inc. (EBIX, Earnings, Analysts, Financials): Provides on-demand software and e-commerce solutions to the insurance industry. Market cap at $458.8M, most recent closing price at $12.33.
3. Electro Scientific Industries Inc. (ESIO, Earnings, Analysts, Financials): Provides high-technology manufacturing equipment to the semiconductor and micro-electronics markets. Market cap at $297.45M, most recent closing price at $10.0.
4. Corning Inc. (GLW, Earnings, Analysts, Financials): Manufactures and processes specialty glass and ceramics products worldwide. Market cap at $25.1B, most recent closing price at $17.26.
5. KLA-Tencor Corp. (KLAC, Earnings, Analysts, Financials): Designs, manufactures, and markets process control and yield management solutions for the semiconductor and related nanoelectronics industries. Market cap at $10.69B, most recent closing price at $64.47.
6. QUALCOMM Incorporated (QCOM, Earnings, Analysts, Financials): Engages in the development, design, manufacture, and marketing of digital wireless telecommunications products and services. Market cap at $120.15B, most recent closing price at $69.57.
(List compiled by James Dennin. Dividend Yields sourced from Zacks Investment Research, all other data sourced from Finviz. Original article published on 11/6/13.)
Analyze These Ideas: Getting StartedRead descriptions for all companies mentioned Access a performance overview for all stocks in the list Compare analyst ratings for the companies mentioned Compare analyst ratings to annual returns for stocks mentioned Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)
Dig Deeper: Access Company Snapshots, Charts, FilingsCohu, Inc. (COHU, Chart, Download SEC Filings) Ebix Inc. (EBIX, Chart, Download SEC Filings) Electro Scientific Industries Inc. (ESIO, Chart, Download SEC Filings) Corning Inc. (GLW, Chart, Download SEC Filings) KLA-Tencor Corp. (KLAC, Chart, Download SEC Filings) QUALCOMM Incorporated (QCOM, Chart, Download SEC Filings)
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