2 Tech Stocks that Look Good Here

06/28/2012 11:15 am EST


Rob DeFrancesco

Founder, Tech-Stock Prospector

It's tough to find tech stocks that have solid footing in this market with so much sand unde foot, but this duo certainly exemplify the fact that there are good companies in uncertain sectors, notes Rob DeFrancesco of Tech Stock Prospector.

Zillow (Z), a specialist in real estate and mortgage information, recently closed an interesting deal, paying $40 million in cash for RentJuice, which provides rental relationship management software aimed at landlords, property managers, and rental brokers.

Zillow knows the demand for rental properties is high, as more than 5 million users visit its mobile or Web properties each month to search its rental listings. With RentJuice, Zillow adds a broad suite of tools and services to help rental professionals market their inventory to renters and manage client relationships.

Launched in 2009, RentJuice offers a subscription-based suite of marketing and productivity tools for rental professionals, including a customer relationship management platform for managing leads and relationships; rental listings management software and syndication across the Web; consumer credit screening; and an online- and mobile-based secure way for consumers to submit rental applications.

RentJuice’s mobile app for iOS allows rental professionals to access their databases on the go, instantly update property photos and connect with prospective tenants in a timely manner.

Zillow is expected to grow its top line this year by 69%. With that type of momentum, it’s no surprise that the market cap of $928 million is 8.3 times the 2012 consensus revenue estimate of $111.5 million. On the 2013 consensus of $159.5 million, the price-to-sales ratio is 5.8.

Zillow went public last July at $20 a share, and finished its first trading day with a gain of 79%.

Meanwhile, I have written in the past about Qualcomm (QCOM) being a key beneficiary of the Mobile Megatrend. But shares of the chipmaker have come down from the April high of $68.87 because a shortage of 28nm wafers will cause some revenue disruption over the next two quarters.

Luckily, the competition is not positioned to capitalize, so this is just a matter of pushing demand forward. At the JP Morgan tech conference in May, Qualcomm management said the supply-demand balance should start to really improve in the December quarter.

Canaccord Genuity recently reiterated its positive view on Qualcomm (and $80 price target) because the research firm thinks the company is positioned for strong fiscal 2013 (September) growth based on increased market share for integrated chipsets, stable royalty rates, and overall solid worldwide demand for tablets and smartphones. JPMorgan agrees, calling the recent pullback in the stock a buying opportunity.

Qualcomm shares trade at 14 times the 2013 consensus EPS estimate of $4.16.

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