2 Tech Stocks on Top of Their Industry Soaring demand for digitized solutions is poised to keep the tech industry resilient in the foreseeable future. Therefore, two leading stocks of the tech industry, Shutterstock (SSTK) and Liquidity Services...
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Soaring demand for digitized solutions is poised to keep the tech industry resilient in the foreseeable future. Therefore, two leading stocks of the tech industry, Shutterstock (SSTK) and Liquidity Services (LQDT) could be wise portfolio additions now. Read on….
The tech industry faced severe challenges amid geopolitical turmoil and economic headwinds last year. In addition, it is not entirely immune from the existing macroeconomic obstacles. But thanks to the robust demand for digitized tech solutions, owing to which, the tech industry is well-positioned to remain afloat in the long term.
Given this backdrop, let us now look into some leading tech stocks, such as Shutterstock, Inc. (SSTK) and Liquidity Services, Inc. (LQDT). Let us delve deeper to know more.
Even though the tech sector is not immune from the existing macroeconomic headwinds and risks of an impending recession, it is poised to maintain its positive growth trajectory amid the rising adoption of stand-out technologies.
In addition, with inflation cooling again in April, there are anticipations that the Fed's rate hike stance could come to a halt soon, which could be beneficial for the tech sector.
The tech industry invests heavily in research and development, and an immediate cause of a rate hike pause would lead to a decline in the borrowing cost. The funding could be accessed by tech companies at favorable terms.
Technology is growing exponentially and is ever-evolving. Technology continues to become a part of everyday life, and its capabilities are progressing rapidly. Game-changing technologies, such as Artificial Intelligence (AI), cloud computing, the Internet of Things (IoT), and robotics, are moving toward mass adoption.
Digital transformation is considered to be a necessity for businesses to remain resilient and competitive in today's globalized world. The digital transformation market size is slated to rise to $6.78 trillion by 2029, exhibiting a CAGR of 20.9%.
Therefore, quality tech stocks, SSTK and LQDT, could be wise portfolio additions now to capitalize on the industry tailwinds.
Shutterstock, Inc. (SSTK)
SSTK is a technology company that provides quality content and creative workflow solutions internationally. It offers image services consisting of photographs, vectors, and illustrations used in visual communications. SSTK provides services under the Shutterstock, Bigstock, Offset, TurboSquid, and PremiumBeat brands.
On April 17, SSTK's board of directors declared a dividend of $0.27 per share of outstanding common stock, payable to shareholders on June 15, 2023. This reflects its shareholder return abilities.
SSTK's trailing-12-month gross profit margin of 61.73% is 24% higher than the 49.77% industry average. Its trailing-12-month net income margin of 9.76% is 247.2% higher than the industry average of 2.81%.
SSTK's revenue has grown at 9.2% and 7.8% CAGRs over the past three and five years, respectively. Moreover, its EBIT has grown at a 76.4% CAGR over the past three years.
SSTK's revenue increased 8.1% year-over-year to $215.28 million in the fiscal first quarter that ended March 31, 2023. The company's adjusted net income was $47.13 million, representing a 26.8% year-over-year increase, while its adjusted net income per share came in at $1.29, up 29% year-over-year. Also, its adjusted EBITDA grew 27.3% from the prior-year quarter to $69.76 million.
For the full year 2023, the company expects its revenue to be in the range of $844 million to $853 million, representing annual growth of 2% to 3%. Also, its adjusted net income per diluted share is expected to be in the range of $4 to $4.10.
Analysts expect SSTK's revenue and EPS to increase 4.1% and 16.9% year-over-year to $215.31 million and $0.97, respectively, for the fiscal second quarter ending June 2023. Moreover, it surpassed the consensus EPS estimates in three of the trailing four quarters.
Shares of SSTK have lost 1.1% intraday to close the last trading session at $52.04.
SSTK's POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Growth, Value, and Quality. SSTK is ranked #2 within the 28-stock Internet – Services industry.
Click here to see the additional POWR Ratings for SSTK (Momentum, Stability, and Sentiment).
Liquidity Services, Inc. (LQDT)
LQDT provides e-commerce marketplaces, self-directed auction listing tools, and value-added services in the United States and internationally. It operates through four segments: GovDeals; Retail Supply Chain Group (RSCG); Capital Assets Group (CAG); and Machinio.
LQDT's trailing-12-month gross profit margin of 54.88% is 83.8% higher than the 29.85% industry average. Its trailing-12-month net income margin of 11.03% is 72.3% higher than the industry average of 6.40%.
LQDT's revenue has grown at 11.1% and 3.8% CAGR over the past three and five years, respectively. Moreover, its total assets have grown at a 15.9% CAGR over the past three years.
LQDT's revenue increased 19.3% year-over-year to $81.45 million in the fiscal second quarter that ended March 31, 2023. The company's non-GAAP adjusted net income was $6.41 million, representing a 10.4% year-over-year increase.
Its adjusted non-GAAP net income per share came in at $0.20, up 17.6% year-over-year. Also, its non-GAAP adjusted EBITDA grew 7.7% from the prior-year quarter to $9.93 million.
For the third quarter of the fiscal year 2023, the company expects its non-GAAP adjusted EBITDA to range from $10 million to $13 million, while its non-GAAP adjusted EPS is expected to range from $0.16 to $0.24.
Analysts expect LQDT's revenue and EPS to increase 10.8% and 19.1% year-over-year to $77.42 million and $0.25, respectively, for the fiscal third quarter ending June 2023. Moreover, it surpassed the consensus revenue estimates in three of the trailing four quarters.
Shares of LQDT have gained 20.4% over the past year to close the last trading session at $15.53. Moreover, it has gained 16.4% over the past three months.
It's no surprise that LQDT has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
It has an A grade for Quality and a B for Value and Sentiment. LQDT is ranked first within the same industry.
Beyond what we have mentioned above, to see the additional POWR Ratings for LQDT (Growth, Momentum, and Stability), click here.
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SSTK shares were trading at $52.49 per share on Monday morning, up $0.45 (+0.86%). Year-to-date, SSTK has declined -0.08%, versus a 8.04% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy.Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
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