For the last 20 years, InformationWeek magazine has published a list of the top 500 business technology users. The magazine looks for companies with revenues of more than $500 million that allocate their information technology funds using the most innovative approach.

Stockpickr has reviewed this year's top 500 and compiled a portfolio of the top publicly traded IT innovators , all taken from the InformationWeek list.
 
The No. 1 publicy traded IT innovator is integrated circuit manufacturer National Semiconductor (NSM). The company just announced that it is cutting about 5% of its workforce and owering its second-quarter sales estimate to $420 million to $425 million, down from $470 million to $480 million estimated in September. The stock has a P/E ratio of 7.8, which is slightly lower than the industry average of 8.3, and a low PEG ratio of 0.81, which is in line with most of its competitors. It also pays a yield of 3.2%.
 
National Semi is owned by the Fidelity Value Fund, managed by Richard B. Fentin, which invests in stocks that have valuable fixed assets or are undervalued in relation to factors such as assets, earnings or growth potential. Fidelity has had an average annual return of 0.5% over the last five years. As of Sept. 30, it also owned Avon Products (AVP), with a P/E of 7 and a PEG of 0.72; Allied Waste Industries (AW), with a P/E of 11 and a PEG of 0.83; and Xerox (XRX), which has a P/E of 9 and a very low PEG of 0.33 and for which Goldman Sachs recently maintained its neutral rating.
 
Another top IT stock on the IW 500 list is NetApp (NTAP), a provider of storage and data management services. The company recently announced a 15%increase in revenue over the same period last year, beating analysts' estimates by a reasonable margin. The stock has a P/E ratio of 16 and a PEG ratio of 0.85, far better than the industry average of 1.07.
 
NetApps shows up in the Stockpickr portfolio called InsiderPurchases and Buybacks LXVI, which lists stocks with significant insider purchases or stock buybacks, because NetApp approved the buyback of up to $1 billion in common stock, in addition to the $96.3 million left over from its previous repurchase plans. Also in the Insider Purchases portfolio is Federated Investors (FII), due to its new share repurchase program of as many as 5 million additional shares; Nvidia (NVDA), because will increase its buyback program by $1 billion; and Cadence Design (CDNS), because itincreased its buyback plan by $500 million. Cadence also just cut 12% of its workforce.
 
For more ideas, check out the top publicly traded IT innovators portfolio of stocks selected from the InformationWeek 500 list at Stockpickr.com.

Posted on Nov. 25, 2008