Traders love Apple (
) and this firm is the big leader in its specific industry,
however, if you move one layer up into the technology
sector things change. Apple (
) actually ranks in the middle of the pack within the
larger technology sector on common fundamental and
valuation metrics. Rather than a point against Apple (
) this is an endorsement of the sector as a whole, which
should perform very well if September's rally continues.
However, we can't say that an investment anywhere in this
group will create profits. A smart investor will index the
group to look for those with strong fundamental
performance. For example, we used a few very basic criteria
to create a short list of the top 33 stocks in the industry
(including AAPL) and the average gain this year was 49%,
much higher than the market at large. If the fundamental
criteria is removed, the entire list of 500 tradable stocks
in the sector moved up an average of 14%. This is an easy
test that you can apply to just about any group to find the
You can see 5 most undervalued stocks that we found in the
sector in the list below. We used the following criteria to
find the list and you can experiment with the search
yourself by following this link to Finviz.com.
Optionable and Shortable:
We use this criteria to filter out stocks that have
liquidity problems and may be expensive to trade
Return on Equity:
Looking for a stock with a return on equity (ROE) metric
above 30% is a strict requirement, it summarizes a lot of
key fundamental data into one easy to use score.
Low PEG Score:
The PEG score includes the traditional P/E score divided by
growth rates. It is a good way to evaluate peers within an
industry or sector for being relatively over or under
valued. You can learn more about the PEG score in this
article and video.
GT Solar International (
GT Solar International (
) has seen growth of over 53% this year. The recent
volatility here could present some opportunities for
With a strong ROE and analysts advising a buy with a target
of up to $60/share, Sina (
) is on a rally. Another bump here could see us
jumping to those target predictions.
Having pushed past the near term resistance, InterDigital (
) is now approaching resistance levels set in May. It
will be interesting to see what develops here.
DST Systems (
Recent news may help DST Systems (
) completely breakthrough near term resistance levels, and
provide us with some interesting opportunities.
Cellcom Israel (
Having recently broken through near term resistance, and an
unbelievable 291% ROE Cellcom Israel (
), is on an amazing rally.
Image Courtesy of
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.