When you see the kind of gains that have been printed for people long Amazon or Google, it makes you incredibly mad you didn’t jump in sooner. The bottom line is that, although they are great companies, and will continue to be significant in the technology-driven economy and world we live in, it’s a good bet that the big money has long since been made. For those looking for some solid tech gains, it may make sense to look at sector laggards now.
We screened the Merrill Lynch technology research universe looking for big-time companies that are either just plain out of favor or perhaps facing a cyclical backlash as their business rotates through the cycle. The following five companies are all rated Buy, well established and offer patient investors some serious upside potential, with probably limited downside.
This stock was truly on fire a couple of years ago but was absolutely eviscerated after numerous earnings misses. FireEye Inc. (NASDAQ: FEYE) has been mentioned over the years as a takeover target, and trading 85% below highs that were printed this time three years ago, it may indeed be on the radar.
The company provides network security solutions addressing advanced persistent threats, which traditional IT security tools like anti-virus, intrusion prevention systems, email/web gateways and firewalls, have largely failed to protect from. These solutions typically compare incoming traffic to a list of known threat signatures, failing to identify and protect against unknown targeted attacks, versus FireEye’s solution that focuses on the behavior of traffic rather than a signature.
The Merrill Lynch price target for the shares is $20, and the Wall Street consensus target is $19.05. The stock closed Friday at $16.82 a share.
This blue chip leader may still be offering investors the best entry point in years, as it is down almost 4% in 2018. International Business Machines Corp. (NYSE: IBM) is a leading provider of enterprise solutions, offering a broad portfolio of information technology (IT) hardware, business and IT services, and a full suite of software solutions. The company integrates its hardware products with its software and services offerings in order to provide high-value solutions.
IBM’s five major segments are: 1) Cognitive Solutions, 2) Global Business Services, 3) Technology Services & Cloud Platforms, 4) Systems and 5) Global Financing. Analysts cite the company’s potential in the public cloud as a reason for their positive outlook going forward.
For the second quarter, IBM beat analyst expectations on both revenue and earnings per share, despite some currency headwinds. At current trading levels the stock is a bargain, especially if the company can continue to grow its cloud business.
IBM shareholders receive a 4.15% dividend. Merrill Lynch has a $200 price target, while the consensus target is $164.50. Shares closed Friday at $151.35.