What are these IT Companies Worth?
Glen is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Hello, my name is Glen Bradford and I am taking on the seemingly insurmountable task of valuing every company in the S&P500. I'm a fan of IT companies, so let's take a look.
351. Fidelity National Information Services (NYSE: FIS) bottomed at $24, and it's poised to run much higher ... if you ignore that the company is reliant on the economics of the banking system. Unfortunately, those actually do matter. The company has bought back loads of shares around $29. I don't see much growth here on a forward basis. Target: $25-$30. I don't think that the company's organic growth forecast is what it's made out to be after being through over 50 acquisitions in the last 10 years -- that's five a year for you math nerds.
352. F5 Networks (NASDAQ: FFIV) looks pretty darn expensive. I'm not surprised to see that it is trading in the middle of all of the analyst predictions. If you own, sell and then wait for a better buy-in price. Target: $85-$110. I do like the business that they are in, and with their virtualization of servers, they serve their market at better prices and performance than their competition. If you look at the metrics, they're in another class. The cloud is huge and growing and if you're going to sit in a stock for five years, this could be a big winner. I just think that the price here is a little too steep for me to justify going long F5 and not expecting to be able to average down at lower prices.
353. Fiserv Inc. (NASDAQ: FISV) is also suffering from the fear of heights, in this case $66. Target: $54-$62. I'm looking at their guidance and I see this trading at a forward P/E of 12.5 with an E of $5.1 for FY 2012. The company intends to be a slow-growth stalwart and I think that the price at present is justified. It's not a bargain but I don't see much upside given these metrics. The company wants to grow even faster: 4%-8% internally, and that would justify a price of $70, but I just don't see it happening soon. For the last quarter, you have to back out their termination fees to get their real growth of 3%, not 4%.
354. Applied Materials Inc. (NASDAQ: AMAT) has net cash of $3.50 so you're looking at a $9.50 stock at play that kicks off a 2.5% dividend. Target: $13-$15. I'm a little late on this one for the buy, but back when it bottomed, RBC made a good, timely call and so did Bret Jensen, who is worth following on his own accord. With earnings between $1.10 and $1.50 and a price of $9.50, this has upside and pays you to sit and wait. I think that the analyst estimates will bounce back to somewhere between $17 and $22 sometime in the next 12 months.
355. Apple (NASDAQ: AAPL) is the love of so many investment dollars, but not mine. I forecast lower forward margins. I'm thinking that what you see right now is what I'd like to call "Peak Apple." Want to have some fun? Go to your nearest electronics store and ask a few different people in the store to show you their favorite phone, their favorite tablet and their favorite computer. The results, unless you go to an Apple store, are going to be non-Apple products. Target: $390-$420. Their P/E looks a lot higher with lower margins, cranking from the top and the bottom (higher direct costs and lower sales prices). I think hedge funds are running the stock up so they can dump it sometime in the next nine months at higher prices.
That's all for now, if you want me to price your company, send it my way at globalspeculation at gmail.com
Motley Fool newsletter services recommend Apple. The Motley Fool owns shares of Apple and Fiserv. bradford86 has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
