The Philadelphia Semiconductor Sector Index (SOX) has advanced nearly 80% from its March lows, led by several high-flying companies that experienced substantial share price appreciation. The NASDAQ-100 Technology Sector Index (NDXT) has done even better. So, the technology sector is no more a pariah. One with sharp reflexes can make good money in the short term. Those who are not endowed with sharp reflexes also can make money by understanding the stories that are driving the stock prices in the sector. Let's look at some of the stories that are more appealing at least to me.

1) International Business Machines (NYSE:IBM) stock compelling on valuations

International Business Machines is a large-scale company which is well positioned in computer hardware, software, and related services markets. To date, it has demonstrated an ability to grow EPS in the midst of an information technology industry downturn begun in 2008.

IBM's portfolio today is built around networked, modularized and embedded technologies, such as service-oriented architecture (SOA), virtualization, business intelligence and analytics. As a result, it is well positioned to build the kinds of IT infrastructures and solutions that will be of the highest value to its clients.

I expect the company can continue to grow EPS through 2011 despite sluggish trends in global information technology spending. Pathways to growth include relatively strong revenue growth in some emerging markets, margin improvements from economies of scale in mature markets, acquisitions, and expansion into promising higher-margin markets. In addition, I view IBM's valuation as compelling, based on P/E and DCF analyses, and note its above-peers dividend yield.

2) Microsoft (MSFT) – dogged pursuance in difficult markets

One essential difference between Microsoft and any other company in this industry is its willingness to enter new markets and embrace disruptive business trends. Eighteen years ago, the company began to diversify by expanding beyond the desktop and entering the enterprise server software market. Today, server software is a $11.5 billion business for Microsoft.