10 Hot Techs That Aren't Apple or Google

Investors usually blast the shares of acquirers, but this time the Street applauded because the erasure of a major disk-drive maker helped remove the threat of price wars and overcapacity, which have tripped up this industry in the past. Seagate is a terrific innovator, and because of its work in the labs, you'll start to see much bigger disk drives on computers and personal media players later this year. If the Street comes to think, as I do, that Seagate is on track to earn $2.15 a share in 2007 and deserves a price/earnings multiple of 15, then the stock should trade at $32 by the end of this year, which would be a 32% move.

Another group that's ticking up this year: semiconductors. Chips are the intelligent motors that drive the modern world, powering everything from singing greeting cards to the space shuttle. Among the humbler names that look interesting off the bat this year is ON Semiconductor(ONNN Quote), which makes about 25,000 types of integrated circuits for makers of cars, cell phones, gaming consoles and media players. As inventories thin and end markets perk up, ON could earn 65 cents a share in 2007. Put a 20 P/E on that, and you've got the potential for almost a double in the next 12 to 18 months, to $13.50.

A second chipmaker with potential to surprise skeptics is PMC-Sierra(PMCS Quote), which traded around $250 in 2000 and now goes for the low, low price of $9.55.

PMC was always known as a top-tier communications integrated-circuit maker, but after the purchase of a data-storage business from Agilent Technologies(A Quote), PMC now has a double-barreled approach. In addition to improving the storage unit through cutting costs, it will score wins in the global broadband and wireless data construction boom of 2006. If all goes fairly well, PMC Sierra could be pulling down 51 cents a share in 2007. With a conservative 26 price-earnings multiple, that makes for a $13.25 stock around this time next year, a 40%-plus gain.