Is it time to buy tech stocks? You might think so if you just read the headline above this week’s
Bloomberg News article heralding that tech stocks are “the cheapest in seven years” (http://www.bloomberg.com/news/print/2013-04-28/tech-stocks-cheapest-in-seven-years-as-profit-estimates-decline.html).
But tech stocks, which Bloomberg reports make up “the second-best industry of the past decade,” could be headed for more losses since many analysts have reduced profit estimates for the second quarter of 2013. Government spending cuts and reduced spending by consumers have prompted analysts to predict that earnings at computer companies will fall 5.5 percent in the second quarter, according to the Bloomberg story.
If you are a bull, the low cost of technology stocks may just be too hard to pass up. If you’re a bear, the spending cuts plus the weakening economies in Europe and China make it the wrong time to start buying technology stocks.
Two large cap tech stocks–Apple and IBM–are examples of the low prices in the technology sector. Apple closed out the week of April 22-26 at $417.21, “41 percent lower than the peak reached in September,” according to the Bloomberg story. Apple jumped up a bit from there, and at mid-day May 2 was trading at $447.83, up $8.54. IBM shares have been tumbling as well as the company missed forecasts for the first time since 2005, Bloomberg reported.
So “buyer beware” may be the takeaway from this report for tech stocks in May. Here are five small cap tech stocks chosen randomly so do your homework before investing.
Fremont, CA-based Procera Networks (Nasdaq: PKT, http://www.proceranetworks.com/) works with mobile and broadband network operators providing intelligent policy enforcement solutions for managing private networks. PKT’s products are sold under the PacketLogic brand name to more than 600 customers in North America, Europe and Asia. PKT’s 52-week trading range is $10.12-$25.99. At mid-day May 2 it was trading at $11.22, up 77 cents, with a market cap of $229 million.
Petaluma, CA-based Calix Inc (NYSE: CALX, http://www.calix.com/) provides broadband communications access systems and software for fiber- and copper-based network architectures that enable communications service providers to connect to residential and business subscribers. CALX has a Unified Access Infrastructure portfolio made up of carrier-class hardware and software products. In February 2011 Calix acquired Occam Networks and in November 2012 acquired Ericsson’s fiber access assets. CALX’s 52-week trading range is $4.25-$9.48. At mid-day May 2 it was trading at $8.64, up 43 cents with a market cap of $422.5 milllion.
Naperville, IL-based Tellabs Inc. (Nasdaq: TLAB, http://www.tellabs.com/) designs and markets equipment and services to communications services providers worldwide, enabling them to deliver wireless and wireline voice, data and video services to business and residential customers. Its customer base includes distributors, OEMs, system integrators and government agencies. Its 52-week trading range is $1.90-$3.89. at mid-day May 2, TLAB was trading at $2.04, up 3 cents, with a market cap of $746 million.
Oakland, CA-based Zhone Technologies (Nasdaq: ZHNE, http://www.zhone.com/) designs and manufactures communications networks equipment for telecommunications, wireless and cable operators worldwide. Its products enable network service providers to migrate from traditional circuit-based networks to packet-based networks and from copper-based access lines to fiber-based access lines without abandoning their existing infrastructures. Zhone makes the MXK Multi-service Terabit Access Concentrator or MXK. It’s 52-week trading range is $0.40-$1.24. At mid-day May 2, ZHNE was trading at $0.98, up 4 cents, with a market cap of $30.5 million.
San Jose, CA-based NetGear Inc (Nasdaq: NTGR, http://www.netgear.com/) is a global networking company that operates in three business units: retail, commercial and service provider. Products include Ethernet switches, wireless controllers, internet security appliances, unified storage products, routers, IP telephony products and many more. Its 52-week trading range is $26.82-$40.97. At mid-day May 2 NTGR was trading at $29.31, up 42 cents with a market cap of $1.1 billion.