Remember the old names in tech such as IBM (IBM) and Oracle (ORCL) ? One may want to give them some love given their attractive cash levels that could be spun into fatter dividend checks and beefy buyback announcements. "While P/E ratios for the [tech] sector look expensive, tech remains attractive on a free cash flow basis," says Credit Suisse analyst Jonathan Golub.
"Old Tech (Hardware and Semis) are currently trading at a discount to the S&P 500 - return of capital to shareholders is likely to rise given elevated cash balances and strong fundamentals," Golub adds.
The free cash flow yield, a metric used by Wall Street to assess the prospect for shareholder returns by companies, for the tech sector is 4.4% vs. 4.2% for the S&P 500, according to Credit Suisse's research. But the hardware space, which is dominated by old tech names, sports an attractive free cash flow yield of 5.8%.
On the Latest 'Technically Speaking' Podcast
Speaking of old tech names, TheStreet's tech editor Nelson Wang hosts a podcast discussion on the Qualcomm (QCOM) and Broadcom (AVGO) battle. Listen in below. Broadcom is a holding in Jim Cramer's Action Alerts Plus.