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Fusion-IO, Inc. (FIO), InvenSense Inc (INVN) & Millennial Media, Inc. (MM): Three Tech Stocks to Buy on the Taper Tantrum

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As the Federal Reserve hints at tapering the bond buying program over the next year, cyclical stocks including technology should become interesting buys. Tech stocks have underperformed the market rally over the last year as investors have piled into high yielding stocks as bond yields hit extremely low levels. Now that money should flood out of those stocks and bonds into growth stocks.

Fusion-IO, Inc. (NYSE:FIO)

The main reason the Fed would stop bond buying would be a generally stronger economy, a situation that should benefit growth stocks. The group that should outperform in this rotation of money into growth stocks includes Fusion-IO, Inc. (NYSE:FIO), InvenSense Inc (NYSE:INVN), and Millennial Media, Inc. (NYSE:MM) . These beaten down stocks not only offer the ability to rebound off weak trading, but the businesses could improve as economies around the world rebound.

As the chart below shows, these stocks have dramatically under performed the market since April 1, 2011 when Millennial Media, Inc. (NYSE:MM) came public:

FIO data by YCharts

The group includes a selection of tech stocks from flash storage to motion tracking technology to mobile advertising. The diverse selection should provide an option for any investor.

Flash Storage Leader

While Fusion-IO, Inc. (NYSE:FIO) is seen as a clear technology leader in the sector, the company continues to run into pressures from being focused on two prime customers no longer growing at extreme rates. Both Apple Inc. (NASDAQ:AAPL) and Facebook Inc (NASDAQ:FB) helped build the company up with vast orders of the advanced storage technology, yet now as those companies have matured the orders have stalled.

The company recently lost the CEO and CMO sending the stock to all-time, post-IPO lows. At only $13, the stock is only a shadow of the company when it hit maximum potential with the stock trading over $40 at the end of 2011. At the time, the market cap was soaring towards $4 billion. The biggest issue is that margins and profits have never been maxed out as the company focused on growth. Revenue is expected to surge 30% next year to $570 million making the stock at a market cap of $1.3 billion more appealing. The question is whether the new management team can turn the stock into a major winner by generating profits.

Motion Tracking

InvenSense Inc (NYSE:INVN) has recently seen its fortunes turnaround as several analysts predict that the company has finally landed Apple Inc. (NASDAQ:AAPL) as a customer. The company makes products used primarily in smartphones, tablets, and videogames to sense and track motions.

So while the stock has jumped recently from $9 to over $14, it still offers plenty of value considering the post-IPO surge to over $22 back at the start of 2012. Though InvenSense Inc (NYSE:INVN) has tons of growth potential, the stock only trades at 17 times forward earnings prior to even including Apple Inc. (NASDAQ:AAPL) as a major customer. Noteworthy is that Samsung has been a 30% customer recently providing an example of the potential impact of Apple. Revenue as well is seen growing at a 20% plus pace even before adding Apple Inc. (NASDAQ:AAPL).

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