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Tickers in this Article: GRMN, GOOG, UEIC, NTE, SANYY, SNE
Have you ever heard the phrase "Don't throw the baby out with the bathwater"? It's a cliché warning us to hold on to what's valuable when we're getting rid of what we don't want. Sometimes investors forget the sage advice, and when they do, it can be a big opportunity to find undervalued stocks.

When it comes to consumer electronics stocks, there's plenty of bathwater to go around. This group is literally one of the worst performers for the last 52 weeks, and the Dow Jones U.S. Consumer Electronics Index (DJUSCE) is 40% lower than it was a year ago. However, there are some substantial values to be found here, if you're willing to dig, that is. (Read more on comparing your returns, check out Benchmark Your Returns With Indexes.)

Garmin on the Rebound?
Say what you want to about the stock, but don't think for a minute that Garmin Limited (Nasdaq:GRMN) isn't getting it done on its side of the table. Yes, this story is getting tired. Yes, Tom-Tom is taking on market share. But no, Garmin is not down for the count, not by a long shot. In fact, Garmin's seen a lot of things fall into place recently that could draw some interest for the stock again.

The near-term primary catalyst for the stock may be the upcoming launch of Garmin's handheld device called "Nuviphone". With Google's (Nasdaq:GOOG) phone being delayed most likely until next year, the near-term playing field just got a little bit bigger for everyone else. Garmin is now reaching well beyond U.S. borders and has extended its deal with Mercedes-Benz. It also recently acquired another European distributor Formar Electronics NV/SA.

It's true that Garmin hasn't seen much love from analysts, who've been downgrading the stock pretty indiscriminately since April (four downgrades since April 8, plus new coverage by Stanford Research with a 'sell' rating). That's all the more reason why I like it though. These guys were late to the party when the stock was getting crushed between October of last year and April 28 of this year; why wouldn't they be late for the recovery as well?

Along those lines, here's some food for thought: The stock gained 18.9% in May in the shadow of all the downgrades. (For more on analysts expectations read Can Earnings Guidance Accurately Predict The Future?)

Universal Appeal
If you're a pure fundamentalist (or if you at least appreciate home theater technology), then Universal Electronics (Nasdaq:UEIC) may sound bullish to your ears.

Universal Electronics' expertise lies in wirelessly connecting all sort of technological devices. Though United Sates investors may not be familiar with its products, as Universal seems to sell them anywhere but the United Sates, a few lucky investors are more than familiar with the results. Check out the fundamental snapshot:

I'm not sure which is the most impressive, a forward looking price multiple of 14, a trailing price-to-sales ratio of 1.3, or the fact that Universal is profitable.

So, why can't the stock catch a break? I think it mostly has to do with expectations. Net sales during Q1 of this year came in 7.3% under the previous Q1 figure, while the net income figure was about half of income from the same quarter a year earlier. The market was understandably disappointed but may have lost sight of the bigger picture.

Other Names On The Move
If you're more concerned about momentum than actual performance (which is fine), perhaps you'd be more interested in a Nam Tai Electronics (NYSE:NTE), Sanyo (Nasdaq:SANYY) or a Sony (NYSE:SNE). They're all up decisively over the last three months. Nam Tai up 23%, Sanyo up 31% and Sony up 10.5%.

Despite the fact that Nam Tai fell short of revenue expectations thanks to soft demand in its mobile phones accessory business, the stock has managed to rally 11.6% since dropping the bad news in early May. There has to be a reason.

As for Sanyo and Sony, again there's no specific reason that I can find for such a strong outperformance. Perhaps it's an omen of a recovering U.S. dollar, which could bolster demand from their products from U.S. consumers. Regardless, the stocks have produced results. (To learn more about momentum investing, check out Riding The Momentum Investing Waves.)

Bottom Line
The bigger point is that the market discarded the whole consumer electronics group over the last several months, but those same investors are now realizing the error. The pickin's are still a little slim, but based on some of the renewed interest here, there appears to be substantial opportunity.

For related reading, see Using Consumer Spending As A Market Indicator.

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