7 Big Tech Companies That Are Better Buys Than Apple

NEW YORK (TheStreet) -- All eyes were on Apple (AAPL) Monday as it showcased a new operating system and introduced a new streaming music service at its annual developer conference in San Francisco.

While investors love to talk endlessly about Apple, you might be surprised to find out that there are other tech companies you can invest in. And -- even more of a shock -- some are rated higher than Apple, which is rated "buy, A" by TheStreet Ratings, TheStreet's proprietary ratings tool. Here are seven large tech companies that are rated "buy, A+" by TheStreet Ratings.

TheStreet Ratings projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.

Note: Research and ratings are as of June 7, 2015. Year-to-date returns are based on June 8, 2015 closing prices.

ADI Chart ADI data by YCharts

1. Analog Devices Inc. (ADI)
Sub-industry: Semiconductors
Market Cap: $20.7 billion
Year-to-date return: 18.8%

Analog Devices, Inc. engages in the design, manufacture, and marketing of analog, mixed-signal, and digital signal processing integrated circuits (ICs) for use in industrial, automotive, consumer, and communication markets worldwide.

TheStreet said: "We rate ANALOG DEVICES (ADI) a BUY. 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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 0.6%. Since the same quarter one year prior, revenues rose by 18.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ADI's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.26, which clearly demonstrates the ability to cover short-term cash needs.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 27.52% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ADI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The gross profit margin for ANALOG DEVICES is currently very high, coming in at 70.56%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 25.01% is above that of the industry average.
  • Net operating cash flow has increased to $344.03 million or 44.29% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 19.77%.

 

AVGO Chart AVGO data by YCharts

2. Avago Technologies Ltd. (AVGO)
Sub-industry: Semiconductors
Market Cap: $36 billion
Year-to-date return: 37.8%

Avago Technologies Limited designs, develops, and supplies semiconductor devices with a focus on analog III-V based products. The company operates through four segments: Wireless

Communications, Wired Infrastructure, Enterprise Storage, and Industrial & Other segments.

TheStreet said: "We rate AVAGO TECHNOLOGIES LTD (AVGO) a BUY. 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 robust revenue growth, expanding profit margins, good cash flow from operations, increase in net income and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • AVGO's very impressive revenue growth greatly exceeded the industry average of 0.6%. Since the same quarter one year prior, revenues leaped by 134.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for AVAGO TECHNOLOGIES LTD is rather high; currently it is at 63.83%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 20.91% is above that of the industry average.
  • Net operating cash flow has significantly increased by 164.14% to $663.00 million when compared to the same quarter last year. In addition, AVAGO TECHNOLOGIES LTD has also vastly surpassed the industry average cash flow growth rate of 19.77%.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 117.7% when compared to the same quarter one year prior, rising from $158.00 million to $344.00 million.
  • Powered by its strong earnings growth of 95.08% and other important driving factors, this stock has surged by 97.17% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.

 

DOX Chart DOX data by YCharts

3. Amdocs Ltd. (DOX)
Sub-industry: IT Consulting & Other Services
Market Cap: $8.7 billion
Year-to-date return: 20%

Amdocs Limited provides software and services for communications, media, and entertainment industry service providers worldwide.

TheStreet said: "We rate AMDOCS LTD (DOX) a BUY. 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, growth in earnings per share, increase in net income and reasonable valuation levels. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 22.5%. Since the same quarter one year prior, revenues slightly increased by 0.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • AMDOCS LTD has improved earnings per share by 8.8% 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, AMDOCS LTD increased its bottom line by earning $2.62 versus $2.52 in the prior year. This year, the market expects an improvement in earnings ($3.35 versus $2.62).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the IT Services industry average. The net income increased by 5.3% when compared to the same quarter one year prior, going from $110.36 million to $116.26 million.

 

MA Chart MA data by YCharts

4. MasterCard (MA)
Sub-industry: Data Processing & Outsourced Services
Market Cap: $104.8 billion
Year-to-date return: 6.7%

MasterCard Incorporated, a technology company, provides transaction processing and other payment-related products and services in the United States and internationally.

TheStreet said: "We rate MASTERCARD INC (MA) a BUY. 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, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 22.5%. Since the same quarter one year prior, revenues slightly increased by 2.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • MA's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.43, which illustrates the ability to avoid short-term cash problems.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • MASTERCARD INC has improved earnings per share by 21.9% 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, MASTERCARD INC increased its bottom line by earning $3.09 versus $2.57 in the prior year. This year, the market expects an improvement in earnings ($3.44 versus $3.09).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the IT Services industry. The net income increased by 17.2% when compared to the same quarter one year prior, going from $870.00 million to $1,020.00 million.

 

SWKS Chart SWKS data by YCharts

5. Skyworks Solutions Inc. (SWKS)
Sub-industry: Semiconductors
Market Cap: $19.6 billion
Year-to-date return: 40.7%

Skyworks Solutions, Inc., together with its subsidiaries, designs, develops, manufactures, and markets analog and mixed signal semiconductors worldwide.

TheStreet said: "We rate SKYWORKS SOLUTIONS INC (SWKS) a BUY. 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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • SWKS's very impressive revenue growth greatly exceeded the industry average of 0.6%. Since the same quarter one year prior, revenues leaped by 58.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SWKS 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 4.46, which clearly demonstrates the ability to cover short-term cash needs.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, SKYWORKS SOLUTIONS INC's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for SKYWORKS SOLUTIONS INC is rather high; currently it is at 51.31%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 21.84% is above that of the industry average.
  • Powered by its strong earnings growth of 112.50% and other important driving factors, this stock has surged by 125.87% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SWKS should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.

 

TSM Chart TSM data by YCharts

6. Taiwan Semiconductor Manufacturing Co. (TSM)
Sub-industry: Semiconductors
Market Cap: $117.5 billion
Year-to-date return: 1.2%

Taiwan Semiconductor Manufacturing Company Limited engages in the computer-aided design, manufacture, packaging, testing, sale, and marketing of integrated circuits and other semiconductor devices.

TheStreet said: "We rate TAIWAN SEMICONDUCTOR MFG CO (TSM) a BUY. 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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, solid stock price performance and impressive record of earnings per share growth. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 0.6%. Since the same quarter one year prior, revenues rose by 46.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • TSM's debt-to-equity ratio is very low at 0.21 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.30, which clearly demonstrates the ability to cover short-term cash needs.
  • 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. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, TAIWAN SEMICONDUCTOR MFG CO's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • TAIWAN SEMICONDUCTOR MFG CO 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, TAIWAN SEMICONDUCTOR MFG CO increased its bottom line by earning $1.61 versus $1.18 in the prior year. This year, the market expects an improvement in earnings ($1.83 versus $1.61).

 

TSS Chart TSS data by YCharts

7. Total System Services Inc. (TSS)
Sub-industry: Data Processing & Outsourced Services
Market Cap: $7.6 billion
Year-to-date return: 20.6%

Total System Services, Inc. provides electronic payment processing services to banks and other financial institutions in the United States, Europe, Canada, Mexico, and internationally.

TheStreet said: "We rate TOTAL SYSTEM SERVICES INC (TSS) a BUY. 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, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 22.5%. Since the same quarter one year prior, revenues rose by 11.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.84, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, TSS has a quick ratio of 1.87, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Powered by its strong earnings growth of 61.53% and other important driving factors, this stock has surged by 34.25% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • TOTAL SYSTEM SERVICES 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, TOTAL SYSTEM SERVICES INC increased its bottom line by earning $1.46 versus $1.27 in the prior year. This year, the market expects an improvement in earnings ($2.24 versus $1.46).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the IT Services industry. The net income increased by 57.7% when compared to the same quarter one year prior, rising from $49.30 million to $77.76 million.

 

 

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