Citrix, IBM and Rackspace Are Undervalued, Google, Microsoft and Yahoo! Are Overvalued

(Corrects article from 6 a.m. EST to say the Citrix Systems weekly chart is negative.)

NEW YORK (TheStreet) -- Most traders and investors consider stocks trading higher as the best stocks to buy while stocks trading lower are considered the worst stocks to buy. I screened data using www.ValuEngine.com to find three tech stocks that have buy ratings and are undervalued on share price weakness, and to find three stocks that have hold or sell ratings that are overvalued on share price strength.

There were several additional candidates on both sides of this pendulum but over time all six of the stocks I selected have had their ups and downs based upon investor emotion and technical momentum.

Here are my three buy-rated undervalued tech stocks that have already slumped in price.

Citrix Systems (CTXS) ($58.73 on Jan. 28) has a buy rating and is 17.6% undervalued with a loss of 17.8% over the last 12 months. This profile was prepared pre-earnings and is posted after the application software company reported quarterly results afterhours on Wednesday.

This tech stock set an all-time intraday high at $77.16 on Sept. 20 and has been below its 200-day SMA since Oct. 8 trading as low as $54.52. Today the 200-day SMA is the reversion to the mean at $64.32. The weekly chart is negative with the stock below its five-week modified moving average at $59.93. The upside for the stock is to my annual risky levels at $68.20 and $71.60.

International Business Machines (IBM) ($176.85 on Jan. 28) has a buy rating is 13.2% undervalued with a loss of 13.7% over the last 12 months. The IT tech giant beat earnings estimates by 12 cents earning $6.13 a share on Jan. 21. The stock was testing its 200-day SMA pre-earnings that day then declined from its 2014 high at $190.81 to as low as $176.16 on Tuesday.

Today the 200-day SMA is the reversion to the mean at $189.84. IBM has a negative weekly chart with its five-week MMA at $182.05 with its 200-week SMA at $176.68 tested at Tuesday's low. My monthly and annual value levels are $174.27 and $170.81 with quarterly and annual risky levels at $209.00 and $210.61.

Rackspace Hosting (RAX) ($37.32 on Jan. 28) has a buy rating is 13.9% undervalued with a loss of 52.4% over the last 12 months. The cloud IT services company has been below its 200-day SMA since Nov. 12 trading as low as $32.62 on Dec. 9 with the 200-day as the reversion to the mean at $43.09.



Rackspace has a neutral weekly chart with its five-week MMA at $38.16 and the 200-week SMA at $42 74. My weekly value level is $35.24 with a monthly pivot at $37.58 and quarterly and annual risky levels at $59.54, $61.34 and $64.26.

Here are three hold-rated overvalued tech stocks that have had significant upside in price.

Google (GOOG) ($1123.01 on Jan. 28) has a hold rating is 41.5% overvalued with a gain of 49.6% over the last 12 months. The innovative tech giant will have reacted to the company's quarterly results released afterhours today. Analysts expected the company to earn $10.34 per share, which is 5 cents lower than on Tuesday.

The stock set an all-time intraday high at $1,167.89 on Jan. 22 then traded as low as $1,082.27 on Jan. 27. The low is its 50-day SMA at $1,093.06 with the 200-day SMA at $943.19. The weekly chart shifts to negative on a close this week below the five-week MMA at $1,103.71 with the 200-week SMA at $676.08. My annual and quarterly value levels are $1,043.30, $978.09 and $1,015.23 with a monthly pivot at $1,107.37 and this week's risky level at $1,158.87. Below are my semiannual value levels at $993.90 and $846.79.

Microsoft (MSFT) ($36.27 on Jan. 28) has a hold rating is 25.4% overvalued with a gain of 30% over the last 12 months. The software giant and maker of the Xbox 360 set a multiyear intraday high at $38.98 on Dec. 4 and traded to a 2014 low at $34.63 on Jan. 14 with its 200-day SMA at $34.45.

Microsoft reported an earnings per share beat of 11 cents on Jan. 23 then traded as high as $37.55 on Jan. 24 before moving back below its 50-day SMA at $37.02. The weekly chart remains negative on a close this week below its five-week MMA at $36.60 with its 200-week SMA at $29.01.

Yahoo! (YHOO) ($38.22 on Jan. 28) has a hold rating is 49.6% overvalued with a gain of 88.2% over the last 12 months. The Internet communications and media company reported quarterly results afterhours on Tuesday with an EPS beat of 9 cents a share. Yahoo! traded down to $36.44 premarket on Wednesday. Yahoo! set its 2014 high at $41.72 the traded as low as $36.52 pre-earnings on Tuesday with the 200-day SMA at $31.04.

The weekly chart shifts to negative with a close this week below the five-week MMA at $38.67 with the 200-week SMA at $19.46. My quarterly value level is $34.90 with a monthly risky level at $39.85. Below are semiannual value levels at $28.42 and $24.28.

At the time of publication the author held no positions in any of the stocks mentioned.

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This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Richard Suttmeier is the chief market strategist at ValuEngine.com. He has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.

Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.

Suttmeier's industry licenses include, Series 7 and Registered Principal (Series 24). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.

Click here for details on Suttmeier's "Buy and Trade" investment strategy.

Richard Suttmeier can be reached at RSuttmeier@Gmail.com

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