Technology

RBC Has 3 Quality Tech Stocks to Buy Following Market Sell-Off

Avago

This company recently made big headlines with a blockbuster buyout of chip giant Broadcom. Avago Technologies Ltd. (NASDAQ: AVGO) was originally a part of Hewlett-Packard and gets a huge chunk of its business from Apple and Samsung. They are big providers in the cloud/hyperscale data center and networking sector. In fact, the company recently announced it will demonstrate its latest optical transceiver technologies for next generation data center and enterprise storage applications. As data center networks transition to 100G speeds to support higher bandwidth demands, technical challenges emerge across various levels of the network from storage endpoints to servers to top-of-rack and core switches.

The RBC team feels flat out that the purchase of Broadcom will add earnings-per-share power to the company. They also think that with the addition of Broadcom the market should reward the company with a higher multiple. Higher multiples would ultimately equal a higher stock price. Many on Wall Street see the stock as a benefactor of what is called “cycle dynamics.”

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RBC has a $150 price target on Avago, though the consensus target is $162.35. Shares closed on Tuesday at $108.51.

CDW

CDW came back from private equity land with a highly anticipated IPO, and it had gone straight up in price for almost two years until a serious dip in July following earnings. CDW Corp. (NASDAQ: CDW) provides IT products and services to business, government, education and health care customers in the United States and Canada. It offers discrete hardware and software products to integrated IT solutions, such as mobility, security, data center optimization, cloud computing, virtualization and collaboration.

This company is one of the stocks that the RBC team highlights as having absolutely no exposure to China. While some of the China concerns may be overblown, the volatility and tumbling stock market there will keep the volatility high. They also think that the company will benefit from the integration of U.K. IT services and solutions provider Kelway.

CDW investors a paid a small 0.7% dividend. The stock is rated Outperform with a $43 target price. The consensus target is $43.33. Shares closed most recently at $37.55.

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These RBC ideas make perfect sense for investors looking for value, but also looking to avoid a meltdown should the market take another leg down. They all make good additions and have weathered macro challenges in the past better than their peers.

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