Everyone knows that tech stocks are where all the excitement is in the markets.
Tech stocks are the companies with the hot new smartphones, tablets and apps that everyone wants. They’re the ones that make us more productive at work and help us stay in touch with the world around us.
They are the biggest and sexiest of stocks, and they usually trade at multiples of earnings and assets that look like nosebleed levels to value types like me.
But there are still a few solid companies that escape the attention of the momentum crowd. Many of them make parts for or assemble the high-tech gadgets being sold by bigger-name companies. These stealthy tech stocks still trade at price levels that mark them as bargain issues.
Multi-Fineline Electronics (MFLX)
Multi-Fineline Electronics (MFLX) makes flexible printed circuit boards and related component assemblies that go into smartphones, tablets and personal electronics products. MFLX supplies many of the big manufacturers including Apple (AAPL) and several of the Android phone manufacturers.
The company has focused on reducing excess capacity and reducing costs, which should pay dividends in the second half of 2014. Multi-Fineline has a solid balance sheet with very little debt and almost half the market capitalization in cash. Shares of MFLX trade at just 82% of book value right now and appear to be a solid pick for long-term, asset-based investors who want exposure to hot technology products.
Photronics (PLAB) makes photomasks that, according to the company’s website, “are used to transfer circuit patterns onto semiconductor wafers and flat panel substrates during the fabrication of integrated circuits and flat panel displays.”
The company said that it expects to see a strong pickup in the second half of the year, and the stock is still cheap at the current price. Photolab has manageable debt levels and plenty of cash to fund its operations in the short term. The stock is priced at just 90% of book value right now and seems to have significant upside from here.
Richardson Electronics (RELL)
Richardson Electronics (RELL) makes electronic components and sub-assemblies that are used in a broad range of industries, including areas like alternative energy, broadcast/communication, industrial equipment, marine avionics, healthcare and semiconductors.
RELL also makes picture archiving communication systems and patient monitoring displays that are used in the healthcare field. The stock currently trades at 81% of book value and just 92% of net current assets so it a classic bargain issues. As a bonus, the stock yields 2.4%, so you get paid to wait for conditions and the stock price to improve.
Big tech stocks that make exciting consumer electronics, medical products and business productivity tools get all the press from the financial media. As a result, they are far from bargain-priced securities. However, many of the companies that make the stuff that go into those products are available at deep discounts from their asset value and are worth considering by long-term, deep-value investors.
As of this writing, Tim Melvin was long RELL.