NEW YORK (TheStreet) -- As the Dow and S&P 500 continue to make new highs, Wall Street appears even more on edge. Recently joining the list of pessimists is hedge-fund superstar David Einhorn, who insists "we are witnessing our second tech bubble in 15 years."
Einhorn's chief concern is on stock prices, believing investors have rejected "conventional valuation methods." He stopped short of identifying which companies fit the bubble criteria. But one thing is certain, it's unclear what will pop it.
To that end, here are five companies (in no particular order) that have not participated in the bubble. Not only have they recently reported solid earnings results, they have the fundamental metrics to back their valuations, which still points to higher highs.
It's hard to ignore Intel's prospects are the company's solid first-quarter report. The stock is at $26, up only 0.2% for the year to date but 8% for the past 52 weeks. Aside from being one of the tech sector's best dividend payers with a yield of 3.5%, Intel's push into the "Internet of Things" makes the chip giant one of the best turnaround candidates on the market.
The Internet of Things, which includes wearable devices, can potentially become a lucrative opportunity for Intel, especially given that consumers are buying fewer PCs. Wearable gadgets market is predicted to grow to $8 billion in the next four years, or six times 2013's market value at $1.4 billion.
Intel, which still relies on PCs for a significant portion of its revenue, is working to shed that dependency. Equally impressive is that the company would not need a big chunk of the smartphones/tablets market to grow. By embracing the Internet of Things, Intel is skating to where the puck is going to be. And I'm expecting a goal.
For exactly the opposite reason I love Qualcomm, which pays a 2.1% yield. The stock is at $80, up 7.7% for the year to date and 20% for the past 52 weeks. Qualcomm's world-class product cycle continues to impress analysts, including analysts at CLSA, who recently raised their price target on the stock from $82 to $90 per share.
As more global consumers choose phones that use Qualcomm's technology to connect to high-speed data networks, like the new long-term evolution (LTE) systems, Qualcomm creates more separation. The company continues to invest capital to develop chips that works on multiple frequencies at the same time.
It was Qualcomm multi-band technology that spearheaded Apple's long-awaited deal with China Mobile (CHL). On the basis of market share growth and expanding margins, Qualcomm shares should trade at $90 by the second half of the year.
Next on the list is Apple (AAPL). It makes sense here given that Apple is one of David Einhorn's largest positions. Apple stock is at $606, up 8% for the year to date and 40% for 52 weeks. Apple pays a yield of 2.2%. Shares have been on an incredible run following the company's strong earnings and revenue beat.
Aside from reporting having sold 43 million iPhones in its second-quarter (versus estimates of 38 million), Apple is becoming more shareholder-friendly. The company added $30 billion to its stock-buyback plan, raised its dividend about 8% and declared a 7-for-1 stock split.
Add the possibility of new product launches like an iWatch or iTV, Apple is poised to recapture the magic it had more than a decade ago when it caught fire with the original iPod. Remarkably, despite the recent surge in the stock, Apple shares are still more-than 15% below their all-time high, which makes it, according to Carl Icahn, the best "no-brainer" on the market. With the company's plan to return $130 billion back to shareholders I have to agree.
Cisco (CSCO) stock trades around $24.50. Shares are up nearly 9% year to date and close to 1% over 52 weeks. With a yield of 3.1%, the network giant continues to be one of the most underrated names on the market.
Cisco's main challenge is to find ways to offset the corporate shift to cloud services and outsourcing, which has eaten into the company's growth. But following an earnings and revenue beat in its fiscal third-quarter results, management has begun to put the right combination together to leverage Cisco's enterprise position and its market-leading infrastructure capabilities.
The company delivered revenue of $11.5 billion, down 5.5% year over year. But was still $200 million above Street estimates of $11.3 billion. With concerns about a slowing global economy, that Cisco posted sequential growth from all of its geographic areas was impressive. The Americas, Europe, Middle East and Africa all increased by low-to-mid single digit percentage points.
I'm not ready to say that growth has fully returned to these markets. But investors should feel more confident that Cisco has seen the worst of this recent dry spell. And when you factor in management's push in the to emerge as a leader in the Internet of Things, there is still plenty of value that can be extracted. But it's going to take some patience. And $30 in the next 12 months seems highly attainable.
I haven't been IBM's (IBM) biggest fan of late, but regardless of what the market does Big Blue isn't going anywhere. The stock trades around $187, up less than 1% year to date and down 10.5% for 52 weeks. There are now concerns that IBM, which pays a yield of 2.4%, is too big to succeed.
Although revenue has been unimpressive, IBM is a money-making machine. Very few companies can match Big Blue when it comes to cash flow and returns on capital. Management has made significant capital investments within the cloud and entering the realm of Databse-as-a-Service with its recent acquisition of Cloudant.
It remains to be seen how potent these moves make IBM. With $10 billion in cash on the balance sheet, I don't expect the company to stop shopping for growth. But investors should be encouraged that management now understands that IBM's future relies on strengthening its cloud capabilities. In the next five years, investors may not recognize what IBM has become, which will be a good thing.
At the time of publication, the author was long AAPL.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
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