3 tech stocks: GLW, NTGR, HLIT

Discussion in 'Stocks' started by Jahajee, Oct 11, 2008.

  1. I like GLW best of the three

    Recommended by Forbes magazine

    High Tech, Big Value
    Taesik Yoon, Forbes Growth Investor 10.09.08, 6:35 PM ET


    Presented below are three technology stocks that you may use in your home computing and entertainment systems on a daily basis. They have seen huge declines in share value, especially recently.

    What makes them attractive is that they provide products and services that I believe have strong long-term market fundamentals. They also have very healthy balance sheets with enviable net cash positions (more cash on hand than total debt). This not only allows them to weather difficult market conditions better than most companies, it affords them the flexibility of making acquisitions at attractive prices. As such, these companies could very well lead the way once the eventual recovery in equities begins.

    Corning (nyse: GLW - news - people )

    Percent Decline From 52-Week High: 55%

    Forward Price-to-Earnings Ratio: 7.0

    Total Debt-to-Total Capital: 10.2%
    Why It Could Lead When Markets Recover: Inventory corrections and declining utilization rates are not unusual during economic downturns. Corning has already noted that inventory levels have improved and that pricing remained within expected ranges in Q3.

    Furthermore, current market conditions belie the longer term LCD demand trend, which I view as positive. In particular, the transition from tube televisions to LCD TVs is far from finished. It could also receive a boost from the switch to digital broadcasting expected next February in the U.S. This could result in increased purchases of LCD TVs and help quicken the inventory correction characterizing the market.

    Also, Corning's fiber optics business should see greater demand over the next several years as communications service providers such as Verizon (nyse: VZ - news - people ) expand their fiber optics-based cable, Internet and phone services to more regions.

    Harmonic Inc. (nasdaq: HLIT - news - people )

    Percent Decline From 52-Week High: 39%

    Forward Price-to-Earnings Ratio: 11.6

    Total Debt-to-Total Capital: No debt
    Why It Could Lead When Markets Recover: While the pace could slow, the transition from standard-definition television to HDTV should continue for several reasons.

    First, the aforementioned nationwide switch from analog to digital broadcasting could induce additional purchases of HDTVs and digital-ready sets. Second, as also noted above, service providers have been aggressively expanding their broadband networks.

    As such, Harmonic could benefit from both greater household penetration of digital TVs and the greater availability of HDTV and on-demand services across the nation. The fact that these services also offer end-users a relatively cost-effective alternative to other forms of entertainment, such as going to the movies, suggests they may hold up better in the currently challenging economic environment. Over the longer-term, these next-generation broadcast services should continue to grow, supported by additional infrastructure rollout and the convenience and value electronic content delivery offers.

    Netgear (nasdaq: NTGR - news - people )

    Percent Decline From 52-Week High: 66%

    Forward Price-to-Earnings Ratio: 7.8

    Total Debt-to-Total Capital: No debt
    Why It Could Lead When Markets Recover: Two key trends give hope that Netgear's long-term prospects remain bright.

    First is the ongoing transition from wired to wireless networks, especially in the home market, where there has been increasing penetration of notebook computers and other portable computing devices. Better wireless standards--such as the new IEEE 802.11n standard, which offers superior range and faster transfer speeds vs. the current 802.11b/g standards--could hasten this adoption.

    Second, the expansion of networking applications into non-traditional markets should continue to drive demand for routers and other electronic sharing solutions. For example, most current-generation video game consoles allow for access to the Internet or online game play. Similarly, certain set-top boxes allow for the streaming of video directly from your PC or the Internet. The proliferation of these and other non-traditional network devices will likely boost demand for Netgear's products
  2. hughb


    Well shit, I thought I had a nice little secret all to myself when I was looking at tech stocks to be the leader out of this selloff. But this makes about the tenth time in the last couple of days I've heard someone else hyping on tech.