10 Tech Stocks With at Least 50% Upside

BOSTON (TheStreet) -- The benchmark S&P 500 Index has rallied 7.2% so far in September. Individual investors are overinvested in bonds and underexposed to equities.

Technology is one of analysts' favorite sectors. Here are 10 lesser-known tech stocks, which are all predicted to gain at least 50% in the next 12 months, based on median targets. These stocks are risky, but expected to deliver outstanding returns. They are ordered by projected upside, from great to greatest.

10. Smith Micro Software ( SMSI) develops mobile software. Second-quarter net income increased 48% to $1.9 million, or 5 cents a share, as revenue grew 21% to $31 million. The operating margin extended from 10% to 12%. Smith Micro's stock trades at a forward earnings multiple of 9.7 and a book value multiple of 1.5 -- 62% and 71% discounts to software peer averages. Its PEG ratio, a measure of value relative to projected growth, of 0.1 signals a 90% discount to fair value. Of analysts covering the stock, seven, or 88%, rank it "buy" and one ranks it "hold."

9. Standard Microsystems ( SMSC) designs silicon-based analog and mixed-signal integrated circuits. Standard swung to a second-quarter profit of $630,000, or 3 cents a share, from a year-earlier loss of $9.2 million, or 42 cents. Revenue surged 56% to $97 million. The operating margin turned positive. Standard's stock sells for a forward earnings multiple of 10, a book value multiple of 1.2 and a cash flow multiple of 9.2 -- 18%, 78% and 34% discounts to semiconductor industry averages. All eight of the analysts following Standard rate its stock "buy."

8. TNS ( TNS) provides networking and data communications services to retailers, banks and payment processors. Second-quarter profit multiplied to $6.5 million, or 24 cents a share, as revenue increased 7.6% to $131 million. The operating margin remained steady at 12%. TNS shares trade at a forward earnings multiple of 6.1, a book value multiple of 3.5, a sales multiple of 0.8 and a cash flow multiple of 3.4 -- 63%, 52%, 75% and 76% discounts to IT peer averages. Of analysts evaluating the stock, five, or 71%, advise buying and two recommend holding.

7. Volterra Semiconductor ( VLTR) designs chips. Second-quarter profit rose eightfold to $9 million, or 34 cents a share, as revenue soared 77% to $40 million. The operating margin stretched from 11% to 26%. Volterra's stock trades at a book value multiple of 4.5, a 19% discount to the semiconductor industry average. It's expensive based on sales and cash flow per share. Its PEG ratio of 0.1 signals a 90% discount to fair value. Of analysts following Volterra, 13, or 81%, advocate purchasing its shares and three recommend holding them.

6. ShoreTel ( SHOR) sells internet protocol telecom systems. Its fourth-quarter loss widened to $3.7 million, or 8 cents a share, as revenue advanced 30% to $42 million. The operating margin fell further into negative territory. ShoreTel's stock sells for a book value multiple of 2.1 and a sales multiple of 1.6 -- 28% and 50% discounts to communications equipment industry averages. But, the stock is expensive based on forward earnings and cash flow per share. Still, eight, or 80%, of analysts rating the stock recommend a purchase and two suggest holding.

5. MasTec ( MTZ) builds utility and communications infrastructure. Second-quarter profit tumbled 23% to $15 million, or 18 cents a share, as revenue gained 28% to $495 million. The operating margin extended from 6.3% to 6.6%. MasTec's stock sells for a forward earnings multiple of 8.9, a book value multiple of 1.4, a sales multiple of 0.4 and a cash flow multiple of 7.5, 43%, 23%, 21% and 54% discounts to industry averages. Of analysts covering MasTec, 11, or 79%, rate its stock "buy" and three rank it "hold."

4. Entegris ( ENTG) sells integrity-management products to semiconductor, fuel-cell and life-sciences companies. It swung to a second-quarter profit of $18 million, or 14 cents a share, from a year-earlier loss. Revenue more than doubled. The operating margin climbed from the negatives to positive 16%. The stock trades at a forward earnings multiple of 6.1, a book value multiple of 1.6 and a cash flow multiple of 9.1 -- 51%, 71% and 35% discounts to peer averages. Of analysts rating Entegris, seven advise purchasing its shares and one recommends holding them.

3. Diodes ( DIOD) makes signal and switching chips for electronic devices. Diodes swung to a second-quarter profit of $17 million, or 37 cents a share, from a year-earlier loss. Revenue grew 44%. The operating margin rose from 5.4% to 16%. Diodes shares trade at a forward earnings multiple of 9, a book value multiple of 1.6 and a cash flow multiple of 8.2 -- 28%, 72% and 41% discounts to peer averages. Its PEG ratio of 0.1 signals a 90% discount to fair value. Of analysts covering Diodes, 10, or 77%, advise purchasing its shares and three suggest holding them.

2. Premiere Global Services ( PGI) is an outsource provider of communications and business-process services. Second-quarter profit fell 43% to $4.4 million, or 7 cents a share, as revenue declined 6.1% to $145 million. The operating margin narrowed from 13% to 11%. The company's stock sells for a forward earnings multiple of 6.8, a book value multiple of 1.1 and a sales multiple of 0.5 -- 52%, 57% and 58% discounts to peer averages. Its PEG ratio of 0.3 reflects a 70% discount to fair value. Six of the seven analysts following Premiere rate its stock "buy."

1. Mindspeed Technologies ( MSPD) makes chips for enterprise, broadband, metro and wide-area-network communications. Mindspeed swung to a second-quarter profit of $4.9 million, or 15 cents a share, from a loss of $3.2 million, or 14 cents, a year earlier. Revenue grew 33%. The operating margin turned positive. Mindspeed's stock trades at a forward earnings multiple of 8.5, a book value multiple of 4.9 and a sales multiple of 1.5 -- 32%, 11% and 53% discounts to semiconductor peer averages. Five analysts rate the stock "buy" and two rank it "hold."

-- Written by Jake Lynch in Boston.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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