Forget Apple: Five Tech Stocks Analysts Favor - TheStreet

Forget Apple: Five Tech Stocks Analysts Favor

Diodes, Art Technology, TriQuint Semiconductor, Cognizant Technology Solutions and Rackspace get top ratings.
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BOSTON (TheStreet) -- Who doesn't own shares in Apple (AAPL) - Get Report?

Investors should consider the following technology stocks, which receive a disproportionate number of "buy" ratings from sell-side researchers, who expect a surge in the months ahead.

5.

Rackspace Hosting

(RAX)

is a cloud-computing specialist, providing Web-based IT systems to businesses.

Quarter

: First-quarter profit increased 49% to $9.8 million, or 7 cents a share, as revenue grew 23%. The operating margin rose from 9% to 9.4%. Rackspace has $131 million of cash and $170 million of debt, converting to a debt-to-equity ratio of 0.5.

Stock

: Rackspace has advanced 56% during the past year, outperforming U.S. stock indices. It trades at a price-to-sales ratio of 3.2 and a price-to-cash-flow ratio of 9.9, 73% and 38% discounts to peer averages. It's also cheap based on book value.

Consensus

: Of analysts covering Rackspace, 21, or 84%, advise purchasing its shares and four recommend holding them.

Morgan Stanley

(MS) - Get Report

expects the stock to advance 48% to $26.

Goldman Sachs

(GS) - Get Report

predicts that it will gain 43% to $25.

4.

Cognizant Technology Solutions

(CTSH) - Get Report

sells IT consulting and outsourcing services.

Quarter

: First-quarter profit increased 34% to $152 million, or 49 cents, as revenue expanded 29%. The operating margin remained steady at 19%. Cognizant has $1.4 billion of cash, translating to a quick ratio of 3.9, and no debt or interest expenses.

Stock

: Cognizant has doubled during the past 12 months, beating U.S. benchmarks. It sells for a price-to-projected-earnings ratio of 21 and a price-to-cash-flow ratio of 25, 36% and 49% premiums to peer averages. It's cheap based on book value.

Consensus

: Of researchers following Cognizant, 22, or 88%, rate its stock "buy" and three rate it "hold."

Citigroup

(C) - Get Report

offers a price target of $62, leaving a potential return of 19%.

Piper Jaffray

(PJC) - Get Report

forecasts that the stock will rise 17% to $61.

3.

TriQuint Semiconductor

(TQNT)

designs semiconductors for communications devices.

Quarter

: TriQuint swung to a first-quarter profit of $14 million, or 9 cents, as revenue increased 52%. The operating margin rose from the negatives to 7.3%. TriQuint holds $158 million of cash, converting to a quick ratio of 2.9, and no debt.

Stock

: TriQuint has risen 43% during the past year, outpacing indices. It trades at a price-to-book ratio of 1.8, a 41% discount to its peer average. Its PEG ratio, a measure of value relative to growth, of 0.1 reflects a 90% discount to estimated fair value.

Consensus

: Of firms rating TriQuint, 10, or 91%, advocate purchasing its shares and one recommends holding them.

Stifel Financial

(SF) - Get Report

expects the stock to appreciate 51% to $10.50.

Barclays Capital

(BCS) - Get Report

values each share at $10.

2.

Art Technology Group

(ARTG)

develops applications for e-commerce sites.

Quarter

: First-quarter profit decreased 31% to $2.1 million, or 1 cent, as revenue grew 6.7%. The operating margin narrowed from 7.3% to 3.2%. The balance sheet stores $139 million of cash, translating to a quick ratio of 2.8, and no debt.

Stock

: Art Technology has risen 4% during the past 12 months, lagging behind benchmarks. It sells for a price-to-projected-earnings ratio of 15, a 44% discount to its peer average. Its PEG ratio of 0.5 reflects a 50% discount to estimated fair value.

Consensus

: Of analysts covering Art Technology, 11, or 92%, advise purchasing its shares and one recommends holding them.

Deutsche Bank

(DB) - Get Report

believes the stock will climb 61% to $6.

Raymond James

(RJF) - Get Report

offers a price target of $5.50.

1.

Diodes

(DIOD) - Get Report

makes semiconductors for communications and computing markets.

Quarter

: Diodes swung to a first-quarter profit of $15 million, or 33 cents, from a loss of $11 million, or 26 cents, a year earlier. Revenue soared 75%. The operating margin turned positive. Diodes has $486 million of cash and $369 million of debt.

Stock

: Diodes has returned 26% during the past year, beating U.S. indices. It trades at a price-to-projected-earnings ratio of 12, a 12% discount to its peer average. Its PEG ratio of 0.1 indicates a 90% discount relative to expected long-run growth.

Consensus

: All 12 firms that rate Diodes give it a "buy."

Sidoti & Co.

forecasts that the stock will rise 69% to $33.

BMO

(BMO) - Get Report

offers a price target of $30 and

UBS

(UBS) - Get Report

projects a target of $28.

-- Reported by Jake Lynch in Boston.

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