Deutsche Bank Technology Supply Chain Stock Picks for the Balance of 2013

Technology stocks continue to severely underperform the overall market this year. Through the end of last week, the sector was down 3.28 year to date, and it was the only S&P 500 sector in the red. Many Wall Street firms are very bullish on prospects for technology stocks for the rest of the year. Should they perk up, technology supply chain stocks will be right behind them.

The Deutsche Bank A.G. (NYSE: DB) technology supply chain analysts see opportunity for investors in their sector, although Gartner recently changed its 2013 global information technology (IT) forecast to up 2% from up 4.1%. Much of that change is being attributed to exchange rate fluctuations, and the firm remains very positive on these select names for the rest of the year.

Amphenol Corp. (NYSE: APH) is one of two top picks at Deutsche Bank. The company’s Fiber Systems International division won a $45 million firm-fixed-price, indefinite-delivery/indefinite-quantity contract for the procurement of a “Mixed Fiber Optic Cable Assembly” to replace the “Light-Emitted Diode based CX-13295 Tactical Fiber Optic Cable Assembly” currently being used by the United States Marine Corps. Deutsche Bank has a $90 target on the stock. The Thomson/First Call estimate is at $80. Investors are paid a small 0.5% dividend.

Western Digital Corp. (NASDAQ: WDC) is the second of the two top stocks to buy. The company authorized a $1.5 billion share repurchase program to return capital to investors and business has remained solid for this top disc drive manufacturer. Deutsche Bank has a $72 price target, and the consensus target is at $65. Investors are paid a 1.6% dividend.

Avnet Inc. (NYSE: AVT) recently purchased MSC Investoren, a European distributor of electronic components to boost its offshore business.  MSC said its revenue exceeded $450 million in 2012. Nearly half of its business came from sales of embedded computer technology, including display solutions. The Deutsche Bank target price for Avnet is $40. The consensus target price is $39.50.

Molex Inc. (NASDAQ: MOLX) raised its dividend 9% last week. The company engages in the design, manufacture and sale of electronic components worldwide. The Deutsche Bank price objective for the stock is $34, while the consensus target is much lower at $28. Shareholders are paid a solid 3.2% dividend.

Arrow Electronics Inc. (NYSE: ARW) officially announced last month the North American launch of the ArrowSphere cloud service brokerage and aggregation platform that was established in 2012 and is currently available in five countries across Europe. In addition, Arrow unveiled a suite of services to assist the service provider community in building and scaling cloud practices. The Deutsche Bank target for the stock is $44 while consensus is right in line at $44 as well.

Seagate Technology PLC (NASDAQ: STX) is another major disk drive stock to make the list of stock to buy. Greenlight Capital Hedge Fund manager David Einhorn cut his stake recently in the stock, but still owns 5.4 million shares. Deutsche Bank has a $46 price target, and the consensus target is lower at $42. Investors are paid a tidy 3.3% dividend.

Technology underperformance has not gone unnoticed by Wall Street. Many of the firms we cover are very positive on the sector for the rest of 2013 and 2014. Investors may be well served to add the dividend-paying stocks to their portfolios, as total return is always the name of the game for investing success.