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 data by YCharts
1. Analog Devices Inc. (ADI)
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%.
- You can view the full analysis from the report here: ADI Ratings Report