Big cap tech may be pricier than the broader market, but analysts say investors can still find hidden value in the sector.
The S&P Technology sector is up nearly 12 percent this year, placing it near the top of all major industry sectors.
The sector currently trades at 18 times trailing earnings, slightly higher than the 17.5 multiple of the overall . Some investors say this makes tech an especially attractive investment right now.
"If you look at the tech industry as a whole an as investment area, it's a pretty attractive prize," Wells Capital Management's Jim Paulsen said.
Ticker | Company | Trailing P/E |
---|---|---|
MU | Micron Technology, Inc. | 10.7 |
IBM | International Business Machines Corporation | 12.1 |
HPQ | Hewlett-Packard Company | 12.2 |
WU | Western Union Company | 12.3 |
STX | Seagate Technology PLC | 13 |
VRSN | VeriSign, Inc. | 13.4 |
CA | CA, Inc. | 14.2 |
XRX | Xerox Corporation | 14.4 |
FSLR | First Solar, Inc. | 15.5 |
AAPL | Apple Inc. | 15.7 |
CSC | Computer Sciences Corporation | 16 |
ORCL | Oracle Corporation | 16.8 |
MSFT | Microsoft Corporation | 16.8 |
INTC | Intel Corporation | 16.9 |
MSI | Motorola Solutions, Inc. | 16.9 |
HRS | Harris Corporation | 17.1 |
CSCO | Cisco Systems, Inc. | 17.5 |
ACN | Accenture Plc | 17.9 |
Source: Source: CNBC Analytics
Ticker | Company | Forward P/E |
---|---|---|
HPQ | Hewlett-Packard Company | 9.1 |
MU | Micron Technology, Inc. | 9.7 |
IBM | International Business Machines Corporation | 10.2 |
STX | Seagate Technology PLC | 11 |
CA | CA, Inc. | 11.3 |
XRX | Xerox Corporation | 11.3 |
WU | Western Union Company | 11.6 |
CSCO | Cisco Systems, Inc. | 12 |
WDC | Western Digital Corporation | 12 |
SYMC | Symantec Corporation | 12.2 |
NTAP | NetApp, Inc. | 12.5 |
ORCL | Oracle Corporation | 12.6 |
JBL | Jabil Circuit, Inc. | 13.1 |
JNPR | Juniper Networks, Inc. | 13.6 |
CSC | Computer Sciences Corporation | 13.8 |
GLW | Corning Incorporated | 13.8 |
AAPL | Apple Inc. | 13.9 |
BRCM | Broadcom Corporation Class A | 13.9 |
EMC | EMC Corporation | 14 |
TDC | Teradata Corporation | 14.3 |
QCOM | QUALCOMM Incorporated | 14.5 |
HRS | Harris Corporation | 14.7 |
SNDK | SanDisk Corporation | 14.9 |
LRCX | Lam Research Corporation | 14.9 |
TSS | Total System Services, Inc. | 15.4 |
AVGO | Avago Technologies Limited | 15.4 |
MSFT | Microsoft Corporation | 15.6 |
INTC | Intel Corporation | 15.6 |
TEL | TE Connectivity Ltd. | 15.7 |
Source: Source: CNBC Analytics
Paulsen said he sees growth opportunities in the tech sector because there is evidence of a pickup in capital spending.
"I think you can buy this stuff at the market price with already above-average sustained growth that's probably understated if everyone comes to agreement that cap spending has started again," he said.
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So where can investors find value in the tech sector? There are 18 stocks in the S&P 500 Information Technology sector that trade at a price-to-earnings ratio below 18. Among those stocks are a few standouts with positive price performance.
Micron Technology trades at only 11 times earnings but its price has increased more than 57 percent year to date. The semiconductor company has consistently reported revenue growth that exceeds the industry's average, and maintains a majority "buy" rating by analysts on FactSet. The average price target for Micron is $38.65, a 13 percent increase from its current value.
First Solar is also viewed as another possible value play. The solar company trades at a little over 15 times trailing earnings and 16 times forward earnings. The stock has remained a standout in the crowded solar space, up 15 percent this year. Analysts remain mostly bullish on First Solar, projecting a 5 percent increase in the stock price according to FactSet.
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Another tech winner has been Cisco Systems, up 15 percent. The networking equipment maker has a steady valuation of 17 times trailing earnings and 12 times forward earnings. CEO John Chambers has expanded the company's presence into cybersecurity and cloud computing over the past decade. Still, analysts remain uncertain whether the growth will continue with average price targets on par with Cisco's trading price right now.
Hewlett Packard rounds out the list of possible value plays in tech. HP trades at around 12 times earnings, one of the lowest ratios in the tech sector overall. The stock has been an investor favorite after bottoming out last year, up nearly 25 percent year to date. Some investors say the turnaround is underway with Meg Whitman at the helm, who is now chairwoman as well as CEO.
—By CNBC's Elizabeth Schulze and Dominic Chu. Giovanny Moreano contributed to this report.