Longtime rivals Apple and Microsoft now share a common bond: Their stocks are battered. See why they and two other bargain-priced tech titans are buys. By Steven Goldberg, Contributing Columnist February 7, 2013 Some of the stock market's best values today are in "old tech," technology companies that have been around for years. In fact, some of these graybeards are dirt-cheap.See Also: Our 2013 Investing Outlook That's not the case for tech as a whole. The Dow Jones U.S. Technology index trades at 17 times earnings for the past 12 months. That compares with the long-term average price-earnings ratio of 16 for Standard & Poor's 500-stock index (the S&P 500 today trades at 15 times trailing earnings). So based on P/Es alone, tech stocks are a tad expensive. But tech companies typically command relatively high P/Es because they grow at an above-average rate. Grady Burkett, who heads Morningstar's tech analysts, identifies four old-tech stocks that he says are solid buys today. They're all awash in cash and may well buy up smaller competitors. In my view, his picks are compelling. Apple (symbol AAPL) will never be the magic company it was before Steve Jobs died in 2011. But, at $457.35, its stock trades at just 8 times analysts' estimated earnings for the coming 12 months. (All share prices are as of the February 6 close.) A crucial key to the company's success is repeat business: Once you buy one Apple device, you tend to buy others. They all work together so well that it's hard to switch to another supplier. Advertisement Apple's latest earnings report wasn't nearly as bad as the headlines made it out to be. But its dim outlook for this year shocked investors. Morningstar analyst Brian Colello slashed his estimate of the stock's fair value from $770 to $600. But that still leaves plenty of room for appreciation. Burkett says the new estimate anticipates little growth in Apple's earnings over the next five years. But the current stock price implies a big drop in earnings. "We think that's very unlikely for a company with such durable competitive advantages," Burkett says. "Apple is just too cheap right now." Check Point Software Technologies (CHKP) is a leading supplier of software that protects computers from cyber attacks. Its biggest-selling products are sophisticated firewalls for computer networks. Cyber security is growing rapidly as more computing is done in the cloud. Morningstar says the Israeli-based company has an advantage over other computer-security firms because its products are easy to use. At $51.05, the stock trades at 13 times estimated earnings for the next 12 months. It's the smallest company in this article, with a market value of $10.2 billion. Morningstar puts Check Point's fair value at $61 per share. Intel (INTC) is a name synonymous with technological progress and the growth of the personal-computer business. Intel's shares surged during the 1990s. But times have changed. The stock, at $20.99, is some 72% below its 2000 peak and trades for just 10 times estimated 2013 earnings. Not only that, the stock yields 4.3% — double what you can get on a ten-year Treasury bond. Advertisement The largest semiconductor maker in the world, Intel has long spent heavily on research and development. But today it faces big challenges. The PC market, once its growth engine, is moribund. Burkett doesn't see much growth there. But Intel also dominates the growing and highly profitable market for microprocessors for computer network servers. By contrast, it's way behind ARM Holdings (ARMH) in the market for low-powered chips that operate mobile devices, however. Intel has "plenty of work to do," but it's making a run at mobile devices, says Morningstar's Andy Ng. He thinks the stock is worth $26 a share. Microsoft (MSFT) is another onetime growth stock that's now the province of value investors. The stock, at $27.34, trades at 8 times estimated earnings for the coming 12 months and yields 3.4%. The software giant has a string of failures behind it, however, and many view it as a company in long-term decline. Increased computing in the cloud is a big threat to both its Windows operating system and Office productivity software. With fewer applications housed on computers and more in the cloud, consumers don't need to upgrade their PCs nearly as often. But Microsoft is still dominant in computer systems for corporations. "No one can compete," Burkett says. And who knows? Its efforts to compete in the cloud may pay off someday. Morningstar thinks the stock is worth $35. Steven T. Goldberg is an investment adviser in the Washington, D.C. area.Several of his clients own Apple, Intel and Microsoft.