From an investment perspective Intel Corporation (NASDAQ:INTC) is hardly an exciting stock, but it certainly has some qualities that make it attractive to value investors. For starters, Intel’s valuation makes it among the cheapest large-cap technology names in the market. Shares are trading at a forward P/E of around 10.4, a forward multiple of just under 11, and a PEG ratio of 0.91. Both its price/sales and price/book ratios are slightly above 2, and the stock’s Enterprise Value/EBITDA multiple is around 4.6.
What makes Intel Corporation (NASDAQ:INTC) even more compelling is its consistent, steady business and its current yield of over 4%. Given that the 10-Year Note was recently yielding 1.70%, the opportunity to own a blue-chip stock like Intel at its current valuation and yield is attractive compared to many alternatives. On the other hand, Intel is only expected to post very modest revenue growth in fiscal 2013 and 2014.
In fiscal 2012 the company reported net sales of $53.341 billion. Analysts anticipate that revenue will grow to $53.68 billion in 2013 and rise to $56.14 billion in 2014. Although Intel has made an aggressive effort to capture market share in the rapidly growing mobile market, the company retains significant exposure to PCs.
A recent report from Gartner showed that PC shipments fell 11.2% in the first-quarter of 2013 to the lowest level since the second-quarter of 2009. One group that has recently profited in the stock is none other than Warren Buffett’s Berkshire Hathaway. The firm’s Geico unit purchased 11.5 million Intel Corporation (NASDAQ:INTC) shares in the second half of 2011, only to unload the investment less than a year later for a profit of roughly $60 million.
Although Corning Incorporated (NYSE:GLW) has been a strong performer over the last decade, the stock has lost almost 50% in the last five years and is down a little less than 4% over the last 52-weeks. At current levels, Corning has a market cap of just over $19 billion. The stock’s valuation is compelling, although net income has been choppy in recent years.
Nevertheless, Corning has managed to post annual sales growth over the last four fiscal years, and analysts are projecting that the company’s top-line sales will post moderate increases in fiscal 2013 and 2014. Corning currently trades at a trailing P/E ratio of 11.4, a forward multiple of just over 10, and a PEG ratio of 0.94.
Even more interesting is the fact that the stock trades at a book value of 0.89, meaning that theoretically the entire company could be bought for less than its liquidation value. Corning Incorporated (NYSE:GLW) also sports a relatively cheap Enterprise Value/EBITDA ratio of below 7. Investors will also find the stock’s current dividend yield above 2.70% attractive in combination with its reasonable valuation.
When executed with skill and patience, value investing has proven to be a very effective method of achieving superior risk-adjusted returns over long periods of time. Although there are other considerations that go into the investment process, identifying cheap stocks that provide a margin of safety is one the of the tenets of the strategy.
The three stocks discussed in this article all possess qualities that adhere to the value investing philosophy. These companies operate proven and successful businesses, the stocks trade at relatively inexpensive valuations using a variety of metrics, and each provides investors with an attractive dividend yield. Apple Inc. (NASDAQ:AAPL), Intel Corporation (NASDAQ:INTC), and Corning are all stocks that deserve a close examination by value-oriented investors looking to allocate capital to the technology sector.
The article 3 of the Cheapest Tech Stocks on Earth (Yes, One of Them is Apple) originally appeared on Fool.com is written by Ryan Glosier.
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