The stock market produced a very mixed bag of earnings results for the first reporting season of 2015, and investors have been whipsawed on some top companies. While the majority of the companies in the S&P 500 reported earnings in line with or better than estimates, some very high-profile members fell short, causing the market to bounce wildly all through the first two months of the year.
A new research report from the Information Technology and Hardware analysts at UBS tracks the stocks that are the most overbought and oversold on a relative strength basis. Needless to say, volatility has skewed numbers for the stocks that were oversold even more. One caveat from the report, and one for investors to be mindful of, is that the UBS team has said on occasion that many of the stocks in their coverage universe are fairly valued at this time.
Ingram Micro Inc. (NYSE: IM) is the world’s largest wholesale technology distributor and a global leader in IT supply-chain, mobile device lifecycle services and logistics solutions. Ingram announced last fall a multiyear agreement with SquareTrade, the number-one-rated mobile device protection plan, trusted by millions of customers. Ingram Micro Mobility will provide all mobile device lifecycle services and back-end supply chain operations for SquareTrade, creating unrivaled reliability and consistency across its operations. Investors can look forward to solid margin expansion driven by cost cutting and a shift to higher-margin businesses like cloud, logistics and data-center-related opportunities.
The Thomson/First Call consensus price target for the stock is $32.40. Shares closed trading on Monday at $24.29.
Hewlett-Packard Co. (NYSE: HPQ) is trading at a very low 9.3 times 2015 estimated earnings. HP has had a remarkable comeback under the leadership of Silicon Valley veteran Meg Whitman, but some doubt has started to creep in again on Wall Street. The stock has been hit and is down sharply from the highs printed in early January, despite many seeing absolutely no change to the long-term outlook for the Silicon Valley giant. Some analysts think the company can continue to outgrow a solid PC market and predict that PC sales can account for more than half of HP’s free cash flow moving forward.
HP investors are paid a 1.95% dividend. The consensus price target is $40.65. Shares closed Monday at $32.95 apiece.
Lexmark International Inc. (NYSE: LXK) has been a frustrating stock for investors over the past few years. As the printing market has diversified and smaller, more nimble competitors have jumped into the market, Lexmark has struggled to retain its core business customer. In an attempt to jump-start its global business, the company acquired Swedish tech firm ReadSoft last year. ReadSoft is expected to be integrated into Lexmark’s Perceptive Software segment, which has been strengthened with several acquisitions such as PACSGEAR, Saperion and Brainware.
The stock pays shareholders a tidy 3.6% dividend. The consensus price target is a very unenthusiastic $36.79. Lexmark closed above that level Monday at $39.94.
Seagate Technology PLC (NASDAQ: STX) is still down sharply from the highs posted late last year, and some insiders have been selling stock recently. The company and other hard disk drive stocks took a hit during earnings season and are just now starting to bounce back. Seagate’s sizable stock repurchase program may put some support under the company.
Seagate investors are paid a very solid 3.8% dividend. The consensus price target is $65.40. Shares closed the trading day on Monday at $56.98.
Workday Inc. (NYSE: WDAY) is another hot momentum stock that posted tremendous earnings and billings growth, and it got absolutely hammered. In addition, the company guided billings growth for the first quarter and the entire year to the high end, and some on Wall Street think the guidance is conservative. The company is a leading provider of enterprise cloud applications for finance and human resources. Workday delivers financial management, human capital management and analytics applications designed for the world’s largest companies, educational institutions and government agencies.
The consensus target is set at $103.21. The stock closed Monday at $83.03 a share.
These oversold stocks provide investors with high-profile tech names to buy at reduced prices. With the market very toppy, investors may want to put on partial positions now and wait and see if a sell-off doesn’t offer an even better entry point.