If you can't decide, then don't worry. I've found three tech stocks that land into each camp and, if taken together, then they may give you the perfect GARP positioning.
1. Polycom (Nasdaq: PLCM): Cheap and unloved
This maker of video and audio-conferencing equipment has stalled out after a solid growth spurt, which saw sales rise more than 150% to $1.5 billion between 2005 and 2011. The global economic crisis has led enterprises to hold off on new equipment purchases that aren't seen as vital to ongoing operations. As a result, sales are expected to drop 5% this year and rebound only modestly in 2013.
Yet a flat top line is masking an important change that will affect the company's bottom line. Polycom is rolling out new products that focus on high-margin software and away from low-margin hardware. As a result, although earnings are likely to be stuck at around 70 cents a share in 2012 and 2013 as the product transition takes hold, they are expected to rise back up to around 90 cents a share in 2014, thanks to expanding profit margins.
Investors initially applauded these new product plans, but those gains have already evaporated in this tough market.
Until Polycom's profit picture strengthens, investors can focus on the company's $630 million net cash balance, which accounts for a hefty 39% of the entire market value of the company.
NEW TIME Today, at 9:30 AM PT: Get the Market Movements in Advance; Williams Edge Webinar for January 28th 2014 | John Ransom
NEW TIME Today, at 9:30 AM PT: Get the Market Movements in Advance; Williams Edge Webinar for January 26th, 2014 | John Ransom