Tuesday, March 29, 2011

Are Techs (IBM) (ONNN) (LAVA) (GLW) Undervalued?

Shares of ON Technologies (Nasdaq:ONNN), IBM (NYSE:IBM), Magma Design Automation (Nasdaq:LAVA) and Corning Inc. (NYSE:GLW) appear to be undervalued, as the tech sector continues to roll, even in the midst of concerns it could be approaching bubble proportions again.

Technology is well beyond peak earnings from late 2007 - proof that these companies are getting the job done despite doubts.

IBM (IBM) is an example of that assertion. 2010's EPS of $11.58 beat 2009's $10.01, both of which were better than 2007's $7.13. In fact, IBM is working on its seventh year in a row of bottom line growth.

Semiconductor maker ON Technologies (ONNN) is just coming off its best year in its history. Without using any accounting tricks, it has a trailing P/E of 15.5 and forward-looking (12-month) one of 7.71, making it desirable for investors.

Strongest Earnings Growth

If Magma Design Automation (LAVA) hadn't already posted a significant improvement in earnings on a rolling year-over-year basis, it might be hard to believe it could grow income by 59 percent in fiscal 2012, which it probably will.

Corning Inc. (GLW) with its PEG ratio of 0.96 appears to have found the best balance profit growth and current valuation. GLW is priced under 10 times its past and future earnings. It grew earnings by 41 percent, and is on pace for modest growth this and next year. With more beats than misses over the last couple of years though, the G in the PEG ratio may end up being bigger than expected.

IBM was trading at $162.81, up $1.44, or 0.89 percent, as of 1:14 PM EDT. ON Semiconductor was at $9.99, up $0.01, or 0.10 percent. Magna was trading at $6.585, down $0.055, or 0.83 percent. Corning was at $21.19, down $0.26, or 1.19 percent.


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