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Portfolio Staples: 3 Buy-Rated Tech Stocks

Stocks in this article: AAPL IBM INTC GOOG MU

NEW YORK (TheStreet) -- Apple  (AAPL), a buy-rated company, has reportedly purchased personal assistant app Cue for $50 million to $60 million, according to TechCrunch. The app combed a user's emails and social networks to generate time and location-based push notifications. Google's (GOOG) app Google Now already has similar functionality.

At the time of publishing, an Apple representative was not available for comment.

Shares of APPLE INC (AAPL) stock are down today by $2.95 (0.61%) as of 12:43 p.m. ET. Thus far, 5.02 million shares of APPLE INC exchanged hands as compared to its average daily volume of 12.96 million shares. The stock has ranged in price between $478.60 to $484.60 after opening the day at $483.86 as compared to the previous trading day's close of $483.41. Overall, APPLE INC is lagging the S&P 500 which is up 0.56%. 

TheStreet Ratings team rates APPLE INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate APPLE INC (AAPL) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • AAPL's revenue growth has slightly outpaced the industry average of 0.7%. Since the same quarter one year prior, revenues slightly increased by 0.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • AAPL's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, AAPL has a quick ratio of 1.54, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 41.67% is the gross profit margin for APPLE INC which we consider to be strong. Regardless of AAPL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AAPL's net profit margin of 19.53% compares favorably to the industry average.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Computers & Peripherals industry and the overall market, APPLE INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • APPLE INC's earnings per share declined by 19.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, APPLE INC increased its bottom line by earning $44.16 versus $27.67 in the prior year. For the next year, the market is expecting a contraction of 10.9% in earnings ($39.33 versus $44.16).


In a similar strategic move, IBM  (IBM) has acquired Xtify, a mobile messaging platform specializing in rich-content texts and push notifications. Xtify software has the ability to trigger messages depending on time or geographic location, as well as demographic data. The company was purchased for an undisclosed amount.

Shares of INTL BUSINESS MACHINES CORP (IBM) stock are up today by $1.16 (0.63%) as of 12:43 p.m. ET. Thus far, 1.08 million shares of INTL BUSINESS MACHINES CORP exchanged hands as compared to its average daily volume of 3.65 million shares. The stock has ranged in price between $183.58 to $185.09 after opening the day at $184.17 as compared to the previous trading day's close of $183.86. Overall, INTL BUSINESS MACHINES CORP is leading the S&P 500 which is up 0.56%. 

TheStreet Ratings team rates INTL BUSINESS MACHINES CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate INTL BUSINESS MACHINES CORP (IBM) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the IT Services industry and the overall market, INTL BUSINESS MACHINES CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for INTL BUSINESS MACHINES CORP is rather high; currently it is at 53.83%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 12.94% trails the industry average.
  • INTL BUSINESS MACHINES CORP's earnings per share declined by 12.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, INTL BUSINESS MACHINES CORP increased its bottom line by earning $14.41 versus $13.12 in the prior year. This year, the market expects an improvement in earnings ($16.90 versus $14.41).
  • Despite the weak revenue results, IBM has outperformed against the industry average of 15.3%. Since the same quarter one year prior, revenues slightly dropped by 3.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, IBM has underperformed the S&P 500 Index, declining 6.76% from its price level of one year ago. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

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