Investors don't seem to be choosing tech stocks for their dividends. In fact, since the dotcom bust, many investors steer clear of this sector altogether. But that may not be wise. There are a number of beaten-down tech companies that offer investors great value – by any standard. Here are a few names for value hunters to explore. (To learn more, read Market Crashes: The Dotcom Crash.)
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A Global Semiconductor Powerhouse
Advanced Semiconductor Engineering, Inc. (NYSE:ASX) is a Taiwan-based producer, packager and tester of semiconductors. The company recently issued guidance for the second quarter, stating it expected a 40% increase in revenue over Q1. This is despite a global decline in demand for semiconductor products and related equipment. Investors apparently anticipated this shortfall in demand and are now anticipating, along with ASX, the rebound, as the company's stock declined to lows of just $1.36 back in December of 2008, and has since risen smartly to sit at $2.70 currently – a rise of nearly 100%.
In addition to this, all the best measures of investment value are indicating that ASX stock is now "on sale." The shares trade with a one year trailing P/E multiple of 9.25 time and a dividend yield of 9.9%. Price to sales sits at 1.15 and price/book is a respectable 1.4. With a market cap of $3 billion, Advanced Semiconductor is a major player in the global semiconductor business.
Veterans in a New Game
TSR Inc. (Nasdaq:TSRI) is an old-timer, relatively speaking, in the computer technology field. This nano-cap company was incorporated in 1969 and has been providing computer and computer personnel services to clients ever since. Like ASX, TSR's fundamentals are strong. The company's annual dividend yield is a fat 9.5% and the price/earnings ratio is 12. Even more spectacular is the company's price/book ratio: an unbelievably small 0.6; while its price to sales ratio is a nearly invisible 0.15. The stock has climbed 30% in two months.
Lean, Mean Operations
Wayside Technology Group (Nasdaq:WSTG) has been one of the few companies working its way through this recession without cutting personnel from its roster. Yes, the company placed a hiring freeze on a number of divisions, but no staff has yet been turfed. Company president Joseph Chauvin prides himself on running a "lean, mean" operation. Cost cutting, he says, had to be taken from shipping and production costs. The company's stock yields 8.5% annually and trades at 10.1 times trailing earnings. It's priced at an unearthly low of 0.20 times last year's sales. Since bottoming in October, 2008, the shares are up 40%. Interested investors should only beware that there are days when the stock trades thinly.
The Wrap
Tech is no longer synonymous with "lacking value." As the above three issues demonstrate, there are good investing fundamentals to be found among even the tech-iest of names – for those who are willing to lift the hood, and check the hardware. (To learn more, check out Fundamental Analysis For Traders and our Fundamental Analysis Tutorial.)
