5 Tech Stocks to Buy for 2013: SAP AG

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet Ratings) -- TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates.

TheStreet Ratings model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e. how much one is willing to risk in order to earn profits?; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to its stock's performance.

These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. As always, stock ratings should not be treated as gospel -- rather, use them as a starting point for your own research.

The following pages contain our analysis of 5 out of 50 stocks TheStreet Ratings has identified as being rated a "Buy" heading into the New Year. To view a list of all 50 stocks simply download our FREE report by clicking: HERE

j2 Global (NASDAQ: JCOM) is rated at BUY with a grade of A. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, revenue growth and notable return on equity. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

To view a list of all 50 stocks simply download our FREE report by clicking: HERE

Highlights from the ratings report include:
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, J2 GLOBAL INC's return on equity exceeds that of both the industry average and the S&P 500.
  • The revenue growth significantly trails the industry average of 44.3%. Since the same quarter one year prior, revenues slightly increased by 8.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 24.1% when compared to the same quarter one year prior, going from $25.50 million to $31.65 million.
  • J2 GLOBAL INC has improved earnings per share by 27.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, J2 GLOBAL INC increased its bottom line by earning $2.43 versus $1.81 in the prior year. This year, the market expects an improvement in earnings ($2.62 versus $2.43).

j2 Global, Inc. provides cloud services to businesses of various sizes through the Internet worldwide. It offers online fax, virtual phone systems, hosted email, email marketing, online backup, customer relationship management, and bundled suites of these services.

You can view the full j2 Global Ratings Report or get investment ideas from our investment research center.

Rogers Corporation (NYSE: ROG) is rated at BUY with a grade of A-. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures, notable return on equity and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

To view a list of all 50 stocks simply download our FREE report by clicking: HERE

Highlights from the ratings report include:
  • Net operating cash flow has significantly increased by 210.22% to $11.22 million when compared to the same quarter last year. In addition, ROGERS CORP has also vastly surpassed the industry average cash flow growth rate of 1.82%.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, ROGERS CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • Although ROG's debt-to-equity ratio of 0.27 is very low, it is currently higher than that of the industry average. To add to this, ROG has a quick ratio of 2.27, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electronic Equipment, Instruments & Components industry. The net income increased by 310.8% when compared to the same quarter one year prior, rising from $14.36 million to $58.98 million.

Rogers Corporation, together with its subsidiaries, engages in the development, manufacture, and distribution of specialty materials and components worldwide.

You can view the full Rogers Corporation Ratings Report or get investment ideas from our investment research center.

PDF Solutions (NASDAQ: PDFS) is rated at BUY with a grade of A-. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity and growth in earnings per share. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

To view a list of all 50 stocks simply download our FREE report by clicking: HERE

Highlights from the ratings report include:
  • PDF SOLUTIONS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PDF SOLUTIONS INC increased its bottom line by earning $0.06 versus $0.00 in the prior year. This year, the market expects an improvement in earnings ($0.66 versus $0.06).
  • 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 Semiconductors & Semiconductor Equipment industry and the overall market, PDF SOLUTIONS INC's return on equity exceeds that of both the industry average and the S&P 500.
  • PDFS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 5.71, which clearly demonstrates the ability to cover short-term cash needs.
  • The revenue growth greatly exceeded the industry average of 3.1%. Since the same quarter one year prior, revenues rose by 33.1%. Growth in the company's revenue appears to have helped boost the earnings per share.

PDF Solutions, Inc. provides infrastructure technologies and services for the design and manufacture of integrated circuits (IC) in Asia, the United States, and Europe.

You can view the full PDF Solutions Ratings Report or get investment ideas from our investment research center.

SAP AG (NYSE: SAP) is rated at BUY with a grade of A-. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

To view a list of all 50 stocks simply download our FREE report by clicking: HERE

Highlights from the ratings report include:
  • The gross profit margin for SAP AG is currently very high, coming in at 73.70%. Regardless of SAP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 15.65% trails the industry average.
  • Although SAP's debt-to-equity ratio of 0.27 is very low, it is currently higher than that of the industry average. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.94 is somewhat weak and could be cause for future problems.
  • Net operating cash flow has increased to $889.76 million or 28.53% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -2.31%.
  • Compared to its closing price of one year ago, SAP's share price has jumped by 34.14%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SAP should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.

SAP AG provides enterprise application software and software-related services worldwide.

You can view the full SAP AG Ratings Report or get investment ideas from our investment research center.

JDA Software Group (NASDAQ: JDAS) is rated at BUY with a grade of A-. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, solid stock price performance, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

To view a list of all 50 stocks simply download our FREE report by clicking: HERE

Highlights from the ratings report include:
  • JDAS, with its decline in revenue, slightly underperformed the industry average of 3.0%. Since the same quarter one year prior, revenues slightly dropped by 5.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Despite currently having a low debt-to-equity ratio of 0.37, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that JDAS's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.47 is high and demonstrates strong liquidity.
  • JDA SOFTWARE GROUP INC's earnings per share declined by 39.5% 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, JDA SOFTWARE GROUP INC increased its bottom line by earning $1.94 versus $0.42 in the prior year. This year, the market expects an improvement in earnings ($2.11 versus $1.94).
  • Compared to its closing price of one year ago, JDAS's share price has jumped by 35.04%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

JDA Software Group, Inc., together with its subsidiaries, provides enterprise software solutions worldwide.

You can view the full JDA Software Group Ratings Report or get investment ideas from our investment research center.

This is just a list of 5 of 50 stocks! Download a list of all 50 of TheStreet Ratings Tech Picks for 2013 NOW!

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

Kevin Baker became the senior financial analyst for TheStreet Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering equity and mutual fund ratings. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.

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