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The Five Best Buys in Consumer Electronics

Stocks in this article: SNE AAPL MSFT

The global recession has hit consumer electronics makers such as Sony (SNE) and Nintendo (NTDOY) hard. Want proof? The S&P 500 Consumer Electronics Index has dropped 77% since the beginning of 2008.

That means laptop computers, cell phones, digital music players and cameras are piling up in warehouses. And retailers are slashing prices to move products off their shelves.

While that's bad news for these companies, it's good for savvy consumers, who can choose from a wide range of high-quality products without breaking the bank. Here are the best buys in key categories:

Laptop computers: Your $1,500 laptop is too bulky to travel with, but the new breed of ultra-small netbooks don't pack enough power. What should you do?

Consider the Pavilion dv2 from Hewlett-Packard (HPQ). The 12.1-inch computer, which starts at $699, blurs the line between netbook and laptop. It's the first computer to use the Athlon Neo processor by Advanced Micro Devices (AMD), which gadget Web site CNET calls "super efficient." It's also powerful enough to run a full version of Microsoft's (MSFT) Windows Vista. Most netbooks run lighter operating systems such as Windows XP or Linux.

And if you like to end your day with a little 3-D gaming, the Pavilion dv2 can easily handle games like "Unreal Tournament" thanks to its high-end graphic components. That's something your average netbook can't do.

Portable music players: Apple's (AAPL) iPod and Microsoft's Zune are packed with features such as video playback, voice recording, customizable playlists and wireless synchronization. However, you can save a bundle of money if you're willing to give up a few of those options.

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