Here's Why These 2 Undervalued Stocks Are Gems in the Tech Sector

Sometimes, solid companies with increasing profits see their stocks fall as the result of industry disruptions.

That is the case with both Integrated Device Technology (IDTI) and On Assignment (ASGN) .

Integrated Device Technology are a bargain. At less than $25 apiece, shares of the semiconductor company sell for more than a 20% discount to their one-year high.

Founded nearly four decades ago, the company has a diverse product mix that positions it for outstanding growth in the global semiconductor market. Analysts see the bottom line compounding almost 19% annually over the next five years.

Management is especially optimistic about the company's high-performance memory chips.

Tech titan Intel needs the chips for its newest central processing units that came out this year. Demand for the chips should remain strong, because Intel regularly upgrades its CPUs and expects another release next year.

Integrated Device Technology is also well-known for expertise in wireless battery charging, a feature that Apple recently added to the iconic iPhone. Integrated Device Technology is already partnering with South Korean tech giant Samsung Electronics to provide wireless charging for the company's Galaxy smartphones, as well as for several other Samsung Electronics mobile devices.

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Management at Integrated Device Technology expects big things from ZMDI, a highly profitable German chip maker that it bought in December. The buyout immediately made Integrated Device Technology a force in the steadily expanding, multi-billion-dollar market for components of smart sensors that improve handling and safety in cars and the precision of industrial machinery.

Integrated Device Technology is financially healthy, even after shelling out $307 million for ZMDI.

The company has excellent free cash flow, which is the amount of cash from business operations remaining after subtracting maintenance costs. At $191 million a year, free cash flow far exceeds the 10-year average of $102 million.

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