Real Money's John Reese: Pick Up These Tech Stocking Stuffers

NEW YORK ( TheStreet) -- The holiday shopping season is now in full swing, and technology of all types is on just about everyone's list. That got me wondering if there are any tech companies that Santa might want to invest in, if he had some extra cash.

Of course, you do not need Rudolph to lead you to the A-list, uber-technology behemoth, Apple (AAPL) . With a stock price in near-record territory, you might think Apple is too pricey, even though the iPhone is the greatest communication tool we've seen since you tied two cans together as a kid. But think again. I use a strategy that thinks Apple's stock is, if not cheap, certainly a good buy.

This strategy, which is based on Peter Lynch's writings, judges the desirability of a stock's price by calculating how much the investor is paying for that all-important variable: growth. A price-to-earnings ratio relative to growth (P/E/G) of up to one is perfectly acceptable -- and so it is telling that Apple's stock is well below this upper threshold, with a P/E/G of 0.62. That is due to the stock's reasonable P/E ratio of about 18, and a robust growth rate of 29%, based on the average of the three-, four- and five-year historical earnings-per-share growth rates.

Take-Two Interactive Software (TTWO) is another tech company whose products are likely to be found under plenty of Christmas trees. The maker of computer games has a stable of popular products, including Grand Theft Auto, Midnight Club, Sid Meier's Civilization and NBA 2K.

Another strategy I use to identify solid investment opportunities is based on Joel Greenblatt's writings. It focuses on just two variables: earnings yield and return on total capital. A company's performance in each of these is then compared with the thousands of publicly traded companies in our database, and the company is given a ranking in each -- which are then combined into a final one.

Returning to Take-Two, the Greenblatt strategy thinks this stock is well worth playing. Of all the companies in our database, the company comes in No. 4. You do not have to be a gamer to appreciate that score.

A popular place to buy Take-Two's games and Apple products is GameStop (GME) , a retailer of video games and consumer electronics with more than 6,600 stores worldwide, and a company with a Web presence as well. Its retail nameplates include GameStop and Simply Mac. Like Take-Two, GameStop is a Greenblatt-strategy favorite. It comes in directly behind Take-Two in the strategy's overall ranking among all stocks -- at No. 5.

Apple, Take-Two and GameStop are leaders in their fields, and will be destinations for millions of shoppers in the coming weeks. With their well-priced stocks, as well, they might just become your favorite Christmas gifts.

(Editor’s note: This article was originally published on Real Money Dec. 6 at 12 p.m. EST.)

At the time of publication, Reese and his clients were long AAPL, TTWO and GME, although holdings can change at any time.

John P. Reese is founder and CEO of Validea.com, an investment research firm, and Validea Capital Management, an asset management firm serving affluent investors and companies. He is also co-author of two investing books, including The Guru Investor: How to Beat the Market Using History's Best Investment Strategies (Wiley). Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Reese appreciates your feedback. Click here to send him an email.

TheStreet.com has a revenue-sharing relationship with Amazon.com under which it receives a portion of the revenue from Amazon purchases by customers directed there from TheStreet.com.

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