The tech sector has been hard hit in 2011 as the Japanese disasters interrupted supply chains and a broad exit from equities prompted many investors to sell their shares in the notoriously risky sector. Anxiety over slowing global economic growth also had a negative impact on consumer electronics and the perception of historically strong companies within the tech company. A string of disappointing earnings from major names in the most recent reports further chipped away at enthusiasm for tech companies.
Some more recent earnings and domestic commerce reports are painting a rosier picture for the economy; however, meaning many of the names that have been unfairly depleted or just ignored amidst hazy forecasts, could head higher in 2012. Equities.com looked at the most recent list of tech recommendations from Barron’s and determined the stocks with the highest upside.
Fusion-io is the data storage company masterminded by Apple’s Steve Wozniak. While the company has only been public for a little over the year it has endured significant volatility as a result of its big name founder and the major swings within the sector. It’s most recently been on a strong bull run alongside more optimistic currents on the market.
The bullishness is not based solely on broader market conditions: the digital data storage concept championed by the company has the potential to rise into popularity in the coming years, so much so that an analyst mentioned in Barron’s expects shares of the company to double and revenue to reach $1 billion in 2012.
Essentially, FIO technology eliminates the need for a middle man between content and a device while improving efficiency. Rather than rely on a disk to store content, the storage provided by Fusion-io exists exclusively digital form. This permits multiple computers to engage in simultaneous streaming by eliminating the need for multiple disks. The services are currently in use at Apple (AAPL) and Facebook.
Earlier this month the company announced the evolution of its memory platform for powering application acceleration data center optimization. The new ioDrive2 and ioDrive2 Duo flash drives, can increase digital capacity to as much as 2.4TB capacity and include a self-repair feature that allows memory to easily recover in the event of a crash or failure. The options come in three sizes and appear to be the next, more efficient version of an extra hard drive.
Electronic Arts (ERTS)
There has been no shortage of discussion about the future of gaming and the importance of interactive networks and mobility. Electronic Arts, which has created such popular games as Madden and Sims, is doing its best to enter into this realm. The company is attempting to leverage the mobile technology already commonly used in Asian into the U.S. by allowing more of its games to be played on phones and involve networking. Already, its Sims for facebook has been a huge hit and is currently trailing on Zynga’s CityVille as the most played game.
Shares of the company have been bullish in recent trading and the combination of a novel idea and existing strong revenue growth, solid financials and manageable debt have are all helping the company. The Barron’s piece said it predicts shares of the company to add as much as 70 percent in 2012 as the company debuts games that focus on more mobility and networking which tends to keep players engaged for longer.
Barron’s slapped a 98 percent upside prediction on Ancestry on the basis of a new user interface that increases clarity and user interest. The site, designed to research family history, has done well over the years but lost considerable strength amid a broader sell off in the sector in spite of continuing to have solid performance. The company lost over 50 percent of its value and Barron’s is now predicting not only a recovery but new strength from its streamlined appearance that is expected to bring in as much as 30 percent more annual revenue.
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