Technolgy with Dividends
10/28/2005 12:00 am EST
One rarely considers the technology sector as a place to look for high yields. But John Buckingham, value investor extraordinaire, does just that. Here, he highlights three favorite technology plays offering a combination of value, growth, and yield.
"What happens in the short run is not the reason we invest as we always buy and hold our stocks for their long-term appreciation potential. Therefore, any further weakness would only add more names to our buy list. In fact, we currently find 139 stocks that meet the criteria for our buy list, one of the highest tallies in our 28-year history of publishing The Prudent Speculator. You can make money on technology; you just have to pay attention to valuation. In fact, our funds are now about 30%-40% in technology stocks. We like to focus on balance sheet strength, a company's cash position, and an inexpensive multiple to earnings.
"Dataram (DRAM NASDAQ) is a maker of large capacity memory products, which are used in servers and workstations made by Sun, Hewlett-Packard, Dell, and IBM. The company reported a 19% increase in first quarter (July) pre-tax earnings and margins are improving. The company has $1.25 in cash per share and no long-term debt. The stock has a current ratio or 9.4 and a current p/e of 9. The stock offers a 3.1% dividend yield and the company is buying back its own stock.
"American Software (AMSAE NASDAQ)) offers supply chain management (SCM) and enterprise resource planning (ERP) software. The company owns 89% of Logility, a publicly traded company in the SCM Business. Logility is buying back shares as a means to consolidate. Meanwhile, American Software is expected to grow faster than the overall industry in both of its business areas. Meanwhile, the company has $2.42 in cash per share and no long-term debt. We note that its financial strength helps the company in its sales process. The company has a current p/e, net of cash, of 13 and a 5.1% dividend yield.
"Nam Tai Electronics (NTE NYSE) is involved in electronics manufacturing and is a design services provider. The company is focused on wireless phones. Nam Tai has a cash-rich balance sheet, with $4.14 per share, net of long-term debt. The company reported a monthly sales record of $67 million in August, while gross margins improved in the second quarter. The stock offers a 5.6% dividend yield and trades at a cash-adjusted 15 times 2006 earnings."
Formed in 2013 and based in Greenwood Village, Colorado, National Storage Affiliates (NSA) is a self...