Given the recent market volatility, and what seems like a downward trading bias, some stocks continue to get bought at a very disproportionate level. The UBS technology analysts keep a close eye on stocks in which too much money is flowing, especially speculative money. In a new research report, they highlight five top technology stocks that, despite their solid credentials, may be ready to roll over.
Corning Inc. (NYSE: GLW) makes the UBS list. The stock has hit 52-week highs while the rest of the technology sector has struggled. Investors looking to own this optical communications leader may want to look for a stock sell-off before buying. Investors receive a 1.9% dividend. The Thomson/First Call price target for the stock is $19.66. Corning closed above that on Friday at $20.61.
Hewlett-Packard Co. (NYSE: HPQ) is another old-school tech name that makes the UBS overbought list. The stock has been on a roll for more than a year as Wall Street has applauded Meg Whitman’s leadership at the company. Like Corning, the stock has good qualities, but it is also pushing up against 52-week trading highs. Investors receive a 1.8% dividend. The consensus price target is $32.90, very close to Friday’s $32.04 close.
Lexmark International Inc. (NYSE: LXK) may have crossed the line into false advertising when it told manufacturers of refurbished ink cartridges that it was illegal for them to use with microchips designed to allow them to operate in Lexmark printers. That ruling, which came out last week from the U.S. Supreme Court, combined with yet another stock trading at highs, could spell trouble. Investors are paid a 2.7% dividend. The consensus price target is $33.14. The stock closed much higher than that Friday at $45.14.
Nuance Communications Inc. (NASDAQ: NUAN) has been one of the targets of activist investor Carl Icahn over the past year. At the end of last year, he held a reported 60.8 million shares of the stock. While the company is perhaps the most advanced speech recognition company, investors may want to wait for a good pullback to buy stock. The consensus price target is $18.20, and the stock closed Friday at $17.17.
Seagate Technology PLC (NASDAQ: STX) is another top name hitting 52-week highs and making its way on to the UBS overbought list. While the company has a 40% share of the hard disk drive market, it is constantly in a neck-and-neck battle with rival Western Digital that may cost its some margin gains. Investors are paid a solid 3.1% dividend. The consensus price objective is $59.85. Shares ended Friday at $54.92.
The key thing for investors to remember is that these stocks are overbought, not over-the-hill. They all have outstanding prospects and could press even higher from these levels should the market take a big leg up. With first-quarter earnings right around the corner, and some end-of-the-quarter selling perhaps still on tap, individuals looking to buy these names may just want to wait for a better entry point.