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5 Tech Sector Bargains to Buy in 2013

Financially, Yahoo! is in stellar shape, with more than $8.4 billion in cash on its balance sheet, and a pretty insignificant $38 million in debt. That huge cash load accounts for around 35% of Yahoo!'s market capitalization right now, providing a material discount to shares. In one of her first acts as CEO, Mayer announced that the firm wouldn't be pursuing a big acquisition strategy, preferring instead to make smaller acquisitions and return cash to shareholders. That's a relief given the horrific track record tech firms have had with acquisitions in the last several years.

Investors may not be excited about Yahoo! right now, but the search firm has some big value at its current share price. That's reason enough to warrant a closer look...

Oracle

Oracle (ORCL) is another name that may seem like a surprising bargain -- the $167 billion enterprise hardware and software firm is one of the biggest names in the business. But as I write, Oracle trades for a 25% price-to-earnings discount to the rest of the tech sector -- and around the same discount on price-to-cash flows. So don't let Oracle's size fool you, this stock looks cheap nevertheless...

Oracle's biggest business is application software -- the firm sells mission-critical software packages to firms that need database tools for everything from customer resource management to supply chain analysis. Because Oracle's big-ticket software is integrated so tightly into firms' operations, customers have extremely high switching costs and competitors have big barriers to entry. That's a very good thing for Oracle's economic moat.

Not surprisingly, ORCL has faultless financials as well. The firm boasts around $14 billion in net cash, a reserve of liquidity that should give Oracle nearly a 10% premium to the rest of the tech sector, not a discount. With a huge share of the coveted enterprise software market and ample cash on hand, this bargain-priced firm is a good option for tech sector exposure in 2013.

Garmin

Investors just don't get Garmin (GRMN). There's no other way to explain the huge 46% discount Garmin's P/E ratio trades at compared to the rest of the tech sector -- or the 30% discount on the firm's cash flows. For the past several years, Garmin has been a perennially-shorted stock. Now, though, as short sellers start to fall off shares of GRMN, the firm could be primed to make higher ground.

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