Technology was one of the top performing sectors in 2012, with many companies from the group hitting new 52-week highs. Many mega-cap technology companies such as International Business Machines and Oracle Corporation (NYSE:ORCL) reached new all-time highs in 2012 and in turn lifted the Nasdaq 100, an index of major technology companies, to a new all-time high.
So far, 2013 has been a record setting year, but tons of obstacles still exist. Big technology looks well positioned to navigate this volatility, and this trend should set the foundation for another strong performance in the latter half of 2013.
3 Stocks to Consider
Oracle Corporation (NYSE:ORCL) has been down in 2013, and closed last week at a share price of $32.75 – much lower than its 52-week high of $36.43. This downtrend could be a good entry point for investors looking for growth, as fiscal-year 2014 earnings are expected to increase 12% to $2.88 per share. That has shares trading at a discount compared to its peers and the market.
In February, the company bought Acme Packet for $2.1 billion, gaining networking gear that helps corporations securely transmit information over the internet. The effects of the deal are not yet clear, but expanding Oracle Corporation (NYSE:ORCL)’s unified communications portfolio and expanding Oracle Corporation (NYSE:ORCL)’s relationship with large telco service providers will only help the company in the long-term. More recently, Oracle Corporation (NYSE:ORCL) announced in a June press release that Salesforce is going to “standardize” a number of Oracle Corporation (NYSE:ORCL) products — including hardware. This standardization would merge the cloud capabilities of the two companies, which would only increase the cloud competencies of both companies.
Additionally, its stock yields 1.5% and it has announced big stock buybacks.
Cisco Systems, Inc. (NASDAQ:CSCO) was a big-time high flyer in the 1990s. But now, 15 years later, the company looks more like a solid blue chip in technology with a very respectable dividend yield of nearly 2.60%. Hardware has been a tough segment for the past few years, with the desktop space becoming largely commoditized. But Cisco Systems, Inc. (NASDAQ:CSCO)’s position in higher-end networking gear protected it from some of the price erosion in desktop hardware. Cisco Systems, Inc. (NASDAQ:CSCO) is another big technology company that looks undervalued, trading with a forward P/E of 12.51, a nice discount to its peer P/E average of 15.
The company recently released a survey that said executives are increasingly committed to video communications in order to link up professionals in different locations, in hopes of attracting top talent. Cisco Systems, Inc. (NASDAQ:CSCO) has already begun to develop business-quality video collaboration hardware and networking, and will certainly benefit from this demanding trend. The company is also working on putting innovative functions in automobiles to enhance the experience of owning and driving a vehicle. From drivers receiving real time traffic and navigation guidance, to manufacturers keeping vehicle software updated over-the-air, to automated and driver-less automobiles. The future vehicle will need to communicate with the outside world via seamless access to the internet over wireless networks, and Cisco Systems, Inc. (NASDAQ:CSCO) is positioning itself to capitalize on that.
With investors on the hunt for blue-chips with yield, Cisco Systems, Inc. (NASDAQ:CSCO) could become a hot destination soon.
Amazon.com, Inc. (NASDAQ:AMZN) is easily the priciest stock on the list, trading with a forward P/E ratio of 106.7. But that hasn’t slowed shares down one bit this year. Amazon.com, Inc. (NASDAQ:AMZN) is doing a lot of interesting things right now. It’s chipping away at big-box retailers such as Best Buy with its incredible online presence. It’s also attacking Apple with its e-reader, Kindle. In addition, the company is becoming a major player in the cloud space as a provider of web and cloud services.The company’s rising revenue shows that the company is growing its market share throughout the world and is in line with the long-term strategy of selling more digital content via its gadgets.
When you add it all together, Amazon is a top player in a number of major tech segments. Analysts are calling for earnings of $0.86 per share in 2013, which creates a lofty valuation. But if 2013 looks anything like 2012, then this tech mega-cap should be in good shape.
Foolish conclusion
Big technology has never looked stronger. The industry is sitting on record earnings, record margins and record cash. With investors looking for more stability in a market clouded with uncertainty, big technology looks well positioned for more gains for the remainder of 2013. The three companies mentioned herein are particularly set for a strong year ahead and every investor should keep an eye on them.
The article 3 Tech Stocks You Should Consider originally appeared on Fool.com and is written by Chris Johnson.
Chris Johnson has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Cisco Systems (NASDAQ:CSCO). The Motley Fool owns shares of Amazon.com and Oracle. Chris is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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