5 Technology Stocks That (Almost) Are the Next Apple

by Jeff Reeves | January 31, 2012 1:01 pm

All right, so everyone knows Apple (NASDAQ:AAPL[1]) is king of the universe.

Its growth is stunning: Apple just plunked down 118% earnings growth[2] last quarter.

Its cash horde is legendary: As of the first of the year, Apple had a staggering $10.3 billion in cash, $19.8 billion in short-term investments and $67 billion in long-term investments.

Its outperformance is well known: AAPL stock is up 35% in the past year to lap the Dow seven times over, and up 430% in the past five years vs. a mostly flat stock market.

How can you find the next Apple? Sadly, contrary to the the hyped-up marketing messages you see on financial sites, there is no “next Apple.” And if there is, I guarantee you some huckster sellin’ newsletters for a few hundred bucks isn’t going to be the one to discover it.

That said, there assuredly are a group of stocks out there with a lot in common with Apple. They might not have a bulletproof brand with a balance sheet that is the envy of all Wall Street, but these tech stocks have a heck of a lot to offer.

Here are five tech giants with big growth, no debt and almost as much potential as Apple.

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F5 Networks

F5 Networks LogoF5 Networks (NASDAQ:FFIV[4]) is a software company that helps folks manage data and optimize networks. It’s not as glamorous as Apple, but it has a lot in common with the tech stock:

Growth: F5 has posted 10 quarters of year-over-year revenue growth, and fiscal 2011 sales have almost doubled fiscal 2008 numbers and were up 31% over 2010 numbers. F5 has posted at least 13 straight quarters of EPS growth, and its fiscal 2011 profits more than tripled 2008 numbers and were up almost 60% above 2010 earnings.

Cash: F5 has zero debt and a decent stockpile of $550 million in cash.

Performance: FFIV stock has outperformed the market in the past 12 months, up more than 10% to double the Dow Jones’ return in the same period. It also has returned 140% since February 2010 vs. just 25% for the Dow.

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Citrix Systems (NASDAQ:CTXS[5]) is at the forefront of cloud computing and mobile access, allowing workers to be productive from anywhere in the world.

Growth: Citrix has posted 11 quarters of year-over-year revenue growth, and fiscal 2011 sales should be up about 15% over the previous year. That’s on track with the same growth last fiscal year. CTSX has also posted 11 straight quarters of EPS growth — with its fiscal 2011 profits doubling 2009 earnings and up about 45% from 2010.

Cash: Citrix has zero debt and $775 million in cash and short-term investments.

Performance: Though lagging the market slightly in the last 12 months, mostly because of waning momentum since Thanksgiving, the stock has doubled the Dow since early 2010 with 55% returns. Admittedly, there are signs Citrix might be slowing down, but Barclays Capital (NYSE:BCS[6]) just initiated coverage in December with an outperform rating, and average price targets on CTXS are north of $80 per share.

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Red Hat

Red HatYou might think there’s no money in open source software, but think again. Red Hat (NYSE:RHT[7]) and its trademark Linux software is in demand, and Linux offers a decent revenue stream for this mid-cap tech stock.

Growth: Red Hat has posted at least 15 quarters of year-over-year revenue growth (as far back as I cared to look), with 15% to 20% growth annually. RHT also has posted five consecutive quarters of EPS growth at a steady annual clip of 10% to 20% each year, give or take a bit.

Cash: Red Hat has zero debt and $800 million in cash and short-term investments.

Performance: RHT stock is up 12% in the last year, easily double the Dow Jones, and up 70% since early 2010 — triple the market.

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Autodesk (NASDAQ:ADSK[8]) is the gold standard in computer-animated design. The company provides products that are a mainstay of both engineering firms and entertainment companies worldwide.

Growth: Autodesk has seen seven straight quarters of year-over-year revenue growth, though admittedly sales still are down from their pre-recession peak. The company also has seen eight straight quarters of EPS increases, with fiscal 2012 earnings forecast to be up more than 50% over last year and more than five times earnings in fiscal 2010.

Cash: Total debt is zero, and cash and short-term investments at Autodesk tally over $1.3 billion.

Performance: Autodesk actually is down moderately in the last year, though it has doubled the market since early 2010 with a 50% gain in the past two years. Shares have done fairly well as of late, however, tallying 18% gains since Jan. 1 to trounce the market. ADSK recently had its buy rating reaffirmed by analysts at Jefferies Group (NYSE:JEF[9]) just last week.

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Cognizant Technology Solutions

IT service provider Cognizant Technology Solutions (NASDAQ:CTSH[10]) is a leading choice for companies looking to streamline operations or cut costs through outsourcing.

Growth: Cognizant has notched at least 11 straight quarters of year-over-year revenue growth, tracking about 33% sales growth for fiscal 2011. Sales will almost double 2009 numbers. On the earnings side, CTSH has had at least 11 straight quarters of year-over-year growth, with total profits up 20% in 2011 and EPS set to roughly double 2008 numbers.

Cash: Total debt is zero, and cash and short-term investments tally an impressive $2.3 billion.

Performance: Another short-term underperformer with a slight loss in the past 12 months, CTSH has broken out with double-digit returns across January 2012. What’s more, the stock is up about 64% since 2010 to easily double the Dow Jones’ 25% returns in the same period.

Jeff Reeves is the editor of InvestorPlace.com. Write him at editor@investorplace??.com, follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook. Jeff Reeves holds a position in Alcoa, but no other publicly traded stocks.

  1. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  2. 118% earnings growth: https://investorplace.com/2012/01/apple-earnings-nasdaq-aapl-iphone-sales/
  3. Compare Brokers: https://investorplace.com/options-trading/broker-center/
  4. FFIV: http://studio-5.financialcontent.com/investplace/quote?Symbol=FFIV
  5. CTXS: http://studio-5.financialcontent.com/investplace/quote?Symbol=CTXS
  6. BCS: http://studio-5.financialcontent.com/investplace/quote?Symbol=BCS
  7. RHT: http://studio-5.financialcontent.com/investplace/quote?Symbol=RHT
  8. ADSK: http://studio-5.financialcontent.com/investplace/quote?Symbol=ADSK
  9. JEF: http://studio-5.financialcontent.com/investplace/quote?Symbol=JEF
  10. CTSH: http://studio-5.financialcontent.com/investplace/quote?Symbol=CTSH

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