Inventory Clearance at Tech Five & Dime

I have decided to clear out the inventory at the Tech Stock Five & Dime to make way for a major renovation and expansion, ie., new stocks.

Back in August when I started this series, I intended to provide trading and investment guidelines for technology stocks trading below $10 per share. Here are my new guidelines for this group: Take a cautious view of the market and technology stocks in particular for 2006, book profits and offset some gains with losses.

There are 25 stocks on the shelves, and net performance has been quite good for this group of technology companies. But if I were screening these stocks today with more stringent criteria, none of these names would qualify.

Remember, when I started this concept, the tech sector was consistently undervalued. I decided to screen for low-priced technology stocks that were undervalued by at least 40%.

The criteria I use in 2006 will be different: Stocks will have to have a strong buy or buy rating according to ValuEngine and be at least 50% undervalued. I also will be examining a broader field, not just tech stocks exclusively.

The Winners, the Losers

In November, I reviewed how the stocks were faring so far. The year-end results aren't much of a surprise after that check-in.

Winners: Of the 24 stocks in the Tech Five & Dime, 14 have gains of 5% or more. Of those, five stocks made 20% or more: Actuate(ACTU Quote), Micromuse(MUSE Quote) (bought Wednesday by IBM(IBM Quote)), RealNetworks(RNWK Quote), Ciena(CIEN Quote) and Westell(WSTL Quote).

Losers: Only four of these 24 stocks have lost 5% or more, and only two, SkyWorks(SWKS Quote) and Terayon(TERNE Quote) lost 20% or more.

Draws: Six of these 24 had gains or losses of 5% or less, which isn't meaningful enough to call either way.

Let's take a final inventory of the Tech Stock Five & Dime:

The Tech Five & Dime Many undervalued stocks in this sector had dramatic gains
Company Name	Date Posted	Price at Close	Price on Dec. 21	% Gain/Loss
Computer Hardware
Gateway (GTW:NYSE)	9/21/2005	$2.60	$2.61	0.38%
Immersion (IMMR:Nasdaq)	10/14/2005	7.12	6.79	-4.63
Semiconductors & Electronics
Applied Micro (AMCC:Nasdaq)	11/17/2005	2.73	2.60	-4.76
Asyst Tech (ASYT:Nasdaq)	11/17/2005	5.18	5.91	14.09
Conexant (CNXT:Nasdaq)	11/17/2005	2.24	2.34	4.46
Emcore (EMKR:Nasdaq)	11/17/2005	6.41	7.29	13.73
JDSU (JDSU:Nasdaq)	11/17/2005	2.23	2.51	12.56
Sanmina (SANM:Nasdaq)	11/17/2005	4.32	4.19	-3.01
SkyWorks (SWKS:Nasdaq)	9/21/2005	6.84	5.35	-21.78
Software & Sevices
Actuate (ACTU:Nasdaq)	8/22/2005	2.38	3.19	34.03
BEA Systems (BEAS:Nasdaq)	9/23/2005	8.43	9.46	12.22
Entrust (ENTU:Nasdaq)	9/21/2005	5.51	4.96	-9.98
Extreme Networks (EXTR:Nasdaq)	10/14/2005	4.38	4.88	11.42
Interwoven (IWOV:Nasdaq)	9/6/2005	8.40	9.18	9.29
Micromuse (MUSE:Nasdaq)	9/6/2005	6.96	9.92	42.53
RealNetworks (RNWK:Nasdaq)	9/6/2005	5.41	8.09	49.54
Sapient (SAPE:Nasdaq)	9/23/2005	6.37	5.80	-8.95
Stellent (STEL:Nasdaq)	10/14/2005	8.67	10.09	16.38
WebMethods (WEBM:Nasdaq)	9/23/2005	6.45	7.40	14.73
Telecommunications
Ciena (CIEN:Nasdaq)	8/22/2005	2.11	2.78	31.75
Lucent (LU:NYSE)	8/22/2005	2.87	2.80	-2.44
Terayon Comm (TERNE:Nasdaq)	9/7/2005	3.40	2.29	-32.65
Tellabs (TLAB:Nasdaq)	9/21/2005	9.50	10.64	12.00
Westell Tech (WSTL:Nasdaq)	9/21/2005	3.64	4.43	21.70
Source: Global Market Consultants

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Please note that due to factors including low market capitalization and/or insufficient public float, we consider Immersion, Asyst Technologies, Emcore, Sanmina, Actuate, Entrust, Interwoven, Stellent, WebMethods, Terayon and Westell to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.