The recent global sell-off in technology stocks, in particular in the US markets, has seen Australian technology stocks also sold down despite no change in the underlying performance of the companies. This correction has presented value in the sector and provided investors with an opportunity to purchase quality Australian technology companies at cheaper prices.
1. DWS Limited (ASX:DWS)
DWS is an Australian-based information technology services company. The company should continue to benefit over the long term from increasing demand in outsourced services. The share price of DWS has been smashed over the last six months, falling from $1.50 to $1.23 today. Despite the fall in the company's share price, DWS provided a positive trading update during May, stating that while trading conditions remain difficult, it is starting to see a number of positive signs. Analysts have a $1.30 share price target on the stock and have forecast a 15% increase in net profit during FY15.
In addition to potential share price appreciation, DWS pays an extremely attractive dividend yield of 8%. The dividend alone is reason in itself to purchase shares at the current price. Trading on a price earnings ratio of just 10 times, the company appears cheap.
2. Integrated Research Limited (ASX: IRI)
Integrated Research is a global provider of performance management monitoring and diagnostics software solutions for business-critical computing environments. The company services customers in more than 50 countries. It is best known as the creator of Prognosis, a performance management system used by the world's largest banks, airlines and telecommunications companies.
Its new product, Prognosis 10, was released in November 2013, providing a consolidated software system platform which allows the company to bring new solutions to the market, including web interfacing and mobile access.
The company generates revenue from licence and maintenance fees, and consulting services. Licence fee revenue grew by an impressive 28% in the first half to $13.8 million, which represents just over half of the company's income. Analysts have forecast strong full-year results, predicting that earnings per share will increase by over 20%. The current share price of $1.04 looks cheap given the company trades on an underwhelming price earnings ratio of 16 times. The company also has an attractive dividend yield of 5%. At the current price, Integrated Research represents good value.
