The Search For Value Continues

In a tech sector full of disasters, Microsoft, eBay and Nokia are holding up okay. But how much higher can investors bid the stocks?

Microsoft met lowered estimates – not counting that 20-cent investment loss, of course – and guided forward estimates slightly lower. But at a PE of 45, the company is as expensive as it was in the high 60s. At a price-to-sales ratio of 12, and a price-to-book of 6, we’re not sure if investors have priced in what the company’s own CFO calls “unprecedented global uncertainty.” The stock has support at 53 and 48, and resistance is 58 and 59.25.

eBay as an investment? Fuhgedaboutit. At a PE of 195, a price to sales ratio of 28, and a price to book of 13, we’re not sure if there’s a more expensive stock out there. A lot to pay for a growth rate that is slowing down. One heck of a good trader if you can grab it at oversold market extremes, but for the nimble only. Support is 52.50 and 48, and resistance is 60-62.

Nokia is promising investors sequential growth, and they’re bidding up the stock this morning. At a PE of 27, a price to sales ratio of 3, and 9 times book, the company now has to deliver. Resistance is 21-22, and support is 18.50-19 and 17.50. And there’s that half-filled gap at 13.95 that begs to be filled, but we’re not so sure that’s going to happen anytime soon.

The bargain of the day, based on a relatively strong balance sheet, earnings and valuation – you can qualify all three of those terms with “relatively” – is Scientific Atlanta , which is trading at 9 times declining earnings, 1.25 times sales and 2 times book. Up 3 points today, it appears that investors have rediscovered the stock. Resistance is 21-22.50, and support is 20, 19, and 17.50.

There are other stocks that reported earnings overnight that could be considered attractive, with price-to-sales and price-to-book ratios around 1.0, but they continue to lose money. Corning , Nortel and Gateway are three.

And here’s a link to a good valuation resource at MarketGuide: http://www.marketguide.com/MGI/mg.asp?target=%2Fstocks%2Fcompanyinformation%2Fratio&Ticker=MSFT. Registration is required, but it’s free.

And finally, Argentina is very close to defaulting on its debt, which amounts to about one-quarter of the world’s emerging market bonds. Something to keep an eye on.