The 10 largest U.S. technology stocks trade at a 16-year low based on their price-earnings ratios, according to Steve Leuthold, of Leuthold...

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The 10 largest U.S. technology stocks trade at a 16-year low based on their price-earnings ratios, according to Steve Leuthold, of Leuthold Weeden Capital Management.

He’s not the only one who sees value in the group. Cleve Rueckert, research analyst with Birinyi Associates, also sees good buys in technology but warns that “it’s a difficult time in the market to use some of these traditional gauges” like price-to-earnings and dividends. “That’s because of the broad reallocation taking place,” he says.

This year’s steep market decline and volatility have made a stock’s P-E ratio, price divided by per-share earnings for the past 12 months, seem woefully out of date. A stock may appear cheap based on P-E compared with its sector or the market.

Rueckert says investors should take a top-down approach, looking at attributes beyond valuation. For instance, they might seek companies likely to withstand economic and market head winds. “Safe-haven” sectors like consumer staples and health care have their pitfalls, says Rueckert, who prefers utilities for safety.

“With consumer staples, you’re still putting your portfolio at risk based on tastes and trends,” says Rueckert, and with health care, especially drug companies, there are too many variables.

Rueckert thinks it’s time to start braving financials and technology, with Bank of America (BAC) and Apple (AAPL) topping his list. BofA’s P-E is slightly above its peer group but on a forward basis, it looks like a bargain, trading at 14 times estimated earnings for the next 12 months, compared with 16.1 for financials on average.

Apple, trading at more than 31 times earnings, looks rich. But, says Rueckert, “Apple’s earnings grow like clockwork, and once the market sorts itself out, its value now will become evident.”