Technology

6 UBS Favorite Tech Stocks to Buy Now

The technology train keeps rolling, and despite the fact that the overall market is trading at a stiff 18 times trailing earnings, many of the top technology stocks to buy are at much more tolerable multiples. A new report from Steve Milunovich and his outstanding technology team at UBS points out that while currency headwinds did have an effect on some top tech companies’ first-quarter earnings and multiples have expanded, the sector still looks fairly reasonable, especially compared to utilities and consumer staples.

The UBS favorite tech stocks to buy share a common link as they are all among the leaders in their specific technology silos. Again, with a pricey market, these top stocks to buy make good sense in an aggressive growth portfolio.

Cisco Systems

This stock trades at a very low 13.4 times estimated 2015 earnings. Cisco Systems Inc. (NASDAQ: CSCO) boasts an outstanding 7.44% free cash flow yield. The networking giant also seems to have fought through numerous headwinds, including up and down demand from telecom carriers, weakness in emerging markets and threats to its very lucrative switching business, and it recently delivered another solid quarter of earnings. The company also stands to benefit from a better corporate spending environment in Europe, as well as continued growth here at home.

Cisco recently won an important contract for the Verizon build out of the company’s next-generation 100G metro network. While Cisco’s optical business is small as a part of total revenue, this win is seen by Wall Street as a significant endorsement of the investments Cisco has made into its optics business.

After 20 years of leading the Silicon Valley giant, John Chambers recently announced that Chuck Robbins will become the next chief executive of the world’s biggest networking equipment company when he steps down as CEO. That should keep things going smoothly. Two other senior management employees will be leaving in late July. Many believe this could pave the way for new blood and a fresh direction at Cisco, which was also one of our top stocks to own for the next decade.

Cisco shareholders are paid a 2.88% dividend. The UBS price target for the stock is $33, and the Thomson/First Call consensus target is $31.03. Shares closed Thursday at $28.61.

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