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Tickers in this Article: AAPL, HPQ, MSFT, GOOG, XOM, NFLX, INTC, CSCO
It was a mixed bag of performance for tech stocks in 2010. Thanks to continued success of the iPhone and strong iPad sales, shares in Apple (Nasdaq:AAPL) have continued to enrich investors. Apple shares are up over 50% year to date after more than doubling in 2009. Investor enthusiasm for the stock has bestowed a nearly $300 billion market cap on the company, raising Apple closer to the top spot as the most valuable company on the planet based on market cap. Only ExxonMobil (NYSE:XOM), the largest publicly traded oil company in the world, is ahead at $360 billion.

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Stealing The Show

Apple clearly stole the show in the tech industry in 2010. Tech titan Microsoft (Nasdaq:MSFT) is down approximately 10% for the year. Google (Nasdaq:GOOG), once the darling in the tech industry, is down nearly 5% for the year. And after a reshuffling in the executive suite earlier this year, shares in Hewlett Packard (NYSE:HPQ) are down nearly 18% heading into the year's final weeks. The two other tech gorillas, Intel (Nasdaq:INTC) and Cisco (Nasdaq:CSCO), did not excite in 2010. Intel shares advanced by 2%, while Cisco saw its shares decline nearly 18%.

Bargains To Be Had

If we are still in the midst of a tech upgrade cycle, this year's duds may be tomorrow's stars. While I have no doubt that Apple will sell more iPhones and iPads next - especially when the deal with Verizon Wireless gets under way - it may succumb to its own success in the future. At current valuations, a 20% appreciation in Apple shares would require an additional $60 billion of buying. But if Apple continues to blow away expectations, the market could easily allocate billions and billions more to the company. Despite the company's enormous success, its P/E of 22 appears reasonable to high-growth tech investors, especially when companies like Netflix (Nasdaq:NFLX) are trading over 73 times earnings. Then you have Microsoft trading under 12 times earnings and yielding close to 2.5%. With a bulging cash pile of $40 billion plus and growing, increased share buybacks or dividend payouts could prove very rewarding to investors in the upcoming years.

A Few Favorites

As is often the case in the technology sector, the favorite few delivered exceptional results versus mediocre scores for the rest. In many cases, valuations didn't matter. Only future prospects did. (Beta says something about price risk, but how much does it say about fundamental risk factors? Check out Beta: Know The Risk.)

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