Tickers in this Article: AAPL, MSFT, EBAY, AMZN
Technology stocks were a mixed bag in 2010. Some names, like Apple (Nasdaq:AAPL), continued to reward an ever-growing loyal investor base. Shares in Apple appreciated by over 50% in 2010, significantly besting the Nasdaq, which delivered its own impressive return of nearly 20% for the year. But Apple was a special treat for investors in 2010. While the company will likely earn more profits in 2011, investors may want to consider other - and cheaper - alternatives.

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Big But Not Boring
Once the darling of the tech industry, Microsoft (Nasdaq:MSFT) could deliver pleasant results in 2011. Amidst an increasingly inflated marketplace, shares in Microsoft still trade at 12 times trailing earnings and nearly 10 times forward earnings. This is one of the cheapest multiples for which MSFT has ever traded. While gone are the days of 1990s growth rates for Microsoft, the company still spits out a ton of free cash flow each year. The company is giving that cash back to shareholders via dividends as Microsoft sports a quality 2.3% yield. The tech industry seems to be in the midst of an upgrade cycle, and Microsoft's dominant market share in operating systems should deliver a healthy bottom line in 2011. The possibility of future dividend increases or special dividends is also a big upside option. (For more, see Microsoft: By The Numbers.)

A Valuable Marketplace
Online shopping site eBay (Nasdaq:EBAY) is another good prospect in 2011. Trading at 16 times forward earnings, eBay's business model looks very attractive in this current economy. And eBay is no longer about just bidding on used merchandise. The company is home to many online retail shopping sites, and new items can often be found for 50% less than retail. The company's valuation is a fraction of that being given to Amazon (Nasdaq:AMZN), which is trading for 51 times forward earnings. Yet eBay sports profit margins near 30%, while Amazon's net margins are closer to 5%. (For more, see 3 Value Plays Revealed Using Forward P/E.)

Bottom Line
Names like eBay and Microsoft have attractive fundamentals that make them very attractive tech plays going into 2011. Tech investors may want to focus more on the quality valuations and cash flows, and less on the exciting tech fad of the day. While excitement can lead to quick riches in tech land, for many the actual result is much more painful and expensive. (For more, see 4 Reasons To Buy Tech Stocks.)

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