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Four Tech Stocks Every Investor Should Consider


Each of these is a stalwart of one particular corner of the technology universe; each offers investors some upside potential over the longer haul and has a solid argument for representing value at their current price levels.

Another pick in this group is an even more venerable player, and one of the original Four Hoursemen: Cisco, which also recently reported big gains in both earnings and revenues, and also beat forecasts. Cisco has long been providing the work with all the routers and switches that enable us to become Internet addicts and has moved on to establish itself as a player in cloud computing as well. True, the company's gross margins narrowed very slightly, sales of both switches and routers dipped, and CEO John Chambers warned he doesn't see any signs of improvement in the European market as likely any time soon. But Cisco is still a company that has shown itself able to deliver healthy gains in both earnings and revenues (a tricky proposition these days), and its stock is trading at an even bigger discount than Apple (at about 11.5 trailing 12 month earnings) and offers a much bigger dividend yield of 3.17%. Some investors might be steering clear because they're worried that their dividend income might be taxed at a higher rate next year, but that strikes me as cutting off your nose to spite your face.

And then there is the outlier, Facebook. Yes, I know. The combination overhyped and messily executed IPO has had an unpleasant lingering impact on the stock, aggravated by the disappointing set of quarterly results released over the summer. When the lockup on the company's stock (set in place at the time of the IPO) expired this week, the expectation was that a flood of new stock would hit the market, further weighing on Facebook's share price, still trading 41% below its IPO level. But even before it became clear that insiders would choose to hang on to their stock rather than sell at those low prices, Facebook's shares had been doing well, rising 14% in the last month.

Don't misunderstand: Facebook still faces plenty of headwinds, notably the need to prove that its management team has what it takes to formulate new and profitable strategies for the company as it evolves, and to solve the most immediate challenge: making Facebook a profitable business on smartphones and other mobile devices. Odds are that Wednesday's pop in the value of Facebook's stock has more to do with a rush by short-sellers to cover their bearish bets than it does on a wave of sudden conviction on the part of investors that Facebook is the next Apple, poised for dramatic outperformance over the long haul. But whether it's just a short squeeze driving the share price or a longer-lasting trend, it's worth remembering that even though that first earnings announcement as a public company was a blow to investors, its second, only a few weeks ago, was a signal that better things could lie ahead.

None of these four technology companies is kicking back and eyeing the landscape complacently; each faces significant strategic challenges. But for investors interested in finding a way to combine growth and value objectives, all of them could be a good place to begin that quest. These are the four technology companies on which you shouldn't turn your back.

Editor's Note: This article by Suzanne McGee originally appeared on The Fiscal Times.

For more from The Fiscal Times:

The Long, Treacherous Climb Up the Fiscal Cliff

The Stunning Collapse in Business Confidence

Obama Takes His 'Tax the Rich' Show on the Road

Follow The Fiscal Times on Twitter @TheFiscalTimes.
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