Tech Companies on Sale, Acting Well

Sep 9, 2013 | Securities

Tech Companies on Sale, Acting Well

Right now many of the world’s best technology companies are on sale, and that’s even before we adjust their valuations for their huge cash hoards. When adjusting valuations for cash on their balance sheets and looking at just the operating side of their businesses, these technology giants are even cheaper.

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Take Cisco Systems (CSCO) for instance. It is the world’s largest internet plumbing supplier. It makes the routers and switches that connect people and businesses to the internet. Right now it trades for just 11x July 2014’s consensus earnings estimates. That compares to the boarder market which trades for ~15x. It currently has a total market value of US$126 billion, but of that US$50 billion sits in cash on its balance sheet. Stripping out the cash component of its market value, that means you can buy the operating business for just 6.6x next years forecast earnings.

Microsoft Corporation (MSFT) is another technology mega-cap that represents compelling value. It is currently valued by the market at US$260 billion. But of that value, US$78 billion sits in cash on its balance sheet. Right now Microsoft trades for ~11x next years consensus earnings estimates, but stripping out the huge cash balance it has, you can buy the operating business for just 7.9x next years estimated earnings.

Remember, the market trades on average for around ~15x next years earnings estimates so this is extremely compelling value compared to the broader market.

But the value doesn’t just stop there, Apple (AAPL), which has a total market value of US$452 billion, trades at almost 12x next years estimates before stripping out its cash balance of ~US$42 billion.

Information infrastructure and virtual infrastructure technologies, solutions, and services provider EMC Corporation (EMC) trades for ~12.5x 2014’s consensus earnings estimates but has ~20% of its market value sitting in cash.

Oracle Corporation (ORCL) one of the world’s leading enterprise management software companies trades on just 10x next years earnings estimates and has 20% of its market value in cash on its balance sheet.

Intel Corporation (INTC) the world’s largest chip maker trades on just 11x next years earnings estimates and has about 15% of its market value in cash on its balance sheet.

These are the world’s best and safest technology companies and they are on sale and what’s more, they are in an uptrend. Right now you can buy the world’s best and safest technology companies for bargain basement prices and you can buy them with the trend being your friend.

If you would like to know how you can safely make a play to own the world’s best and safest technology companies and use a simple technique to lower the price you pay for these already super cheap global tech giants, contact United Global Capital today and speak with one of our financial strategists for a No Cost, No Obligation consultation on 03 8657 7640 or email info@ugc.net.au.

Here’s to your long term health and wealth.

The information contained in this report is General in nature and has been prepared without taking into account your objectives, financial situation and needs.

 

 

 

 

 

 

<a href="https://ugc.net.au/author/joel/" target="_self">Joel Hewish</a>

Joel Hewish

Joel is the founder and CEO of UGC. He is a licensed financial advisor with 15 years experience assisting clients grow, manage and protect their wealth.

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