Buy These 3 Tech Stocks for a Profitable July After a challenging 2022, the technology sector has experienced a significant rebound in the first two quarters of 2023. Given the solid prospects of the industry, fundamentally strong tech stocks...
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After a challenging 2022, the technology sector has experienced a significant rebound in the first two quarters of 2023. Given the solid prospects of the industry, fundamentally strong tech stocks Panasonic Holdings (PCRFY), Ricoh (RICOY), and Spirent (SPMYY), which are rated an A (Strong Buy) in our proprietary rating system, might be solid buys this month. Read on.
While the technology sector experienced a challenging period in 2022, the first quarter of 2023 marked a turnaround, with tech making a remarkable recovery. The second quarter witnessed an even more impressive surge, largely fueled by the immense hype and increased demand for all things related to artificial intelligence.
As a result, the sector has emerged as a top performer compared to the overall market performance over the past 12 months.
Therefore, I think quality tech stocks Panasonic Holdings Corporation (PCRFY), Ricoh Company, Ltd. (RICOY), and Spirent Communications plc (SPMYY), which are rated an A (Strong Buy) in our proprietary rating system, could be ideal buys this month to capitalize on the industry tailwinds. These companies also pay stable dividends and exhibit robust profit margins.
The computer hardware market is poised to benefit significantly from the accelerated growth in investments in smart city projects worldwide. Moreover, as governments and municipalities prioritize the development of smart cities, the demand for computer hardware solutions is anticipated to experience substantial growth.
The computer hardware market is expected to grow at a CAGR of 6.6% to reach $909.80 billion in 2027.
In addition, the growing demand for high-speed data connectivity for unified Internet of Things (IoT) applications, such as smart home energy management, is estimated to propel the adoption of technological services.
Furthermore, the rapid growth of emerging technologies, such as the Internet of Things (IoT) and blockchain, presents new opportunities for IT service providers. These technologies require specialized knowledge and expertise for successful implementation and integration into existing systems.
As a result, revenue in the IT service market is expected to grow at a CAGR of 6.3%, resulting in a market volume of $561 billion by 2027.
Take a look at the above-mentioned stocks in detail:
Panasonic Holdings Corporation (PCRFY)
Headquartered in Kadoma, Japan, PCRFY manufactures and sells various electronic products through five segments: Appliances; Life Solutions; Connected Solutions; Automotive; and Industrial Solutions. Its main product offerings include automotive-use batteries, refrigerators, and industrial motors and sensors.
PCRFY's trailing-12-month CAPEX/Sales of 3.45% is 8% higher than the industry average of 3.20%. Its trailing-12-month cash from operations of $3.92 billion is significantly higher than the industry average of $195.08 million.
On April 15, PCRFY announced firmware update programs for the HC-X2, HC-X20, HC-X2000, and HC-X1500 camcorders.
Version updates will support background recording and super slow-motion recording in the MP4 file format, which until now has been limited to MOV. In addition, the updates will enable the use of face detection/tracking AE&AF function when shooting in manual mode. For every model, the user will be able to assign a button to an additional seven functions.
The company pays an annual dividend of $0.22, which translates to a yield of 1.74% on the prevailing price level. Its four-year average yield is 2.92%.
During the fiscal year that ended March 31, 2023, PCRFY's sales increased 113% year-over-year to ¥8.38 trillion ($58 billion). Its operating profit rose 81% from the same quarter last year to ¥288.60 billion ($2 billion).
Moreover, the company's net profit grew 104% from the year-ago quarter to ¥265.50 billion ($1.84 billion), and EPS grew 4% year-over-year to ¥113.72.
Analysts expect PCRFY's EPS to rise 39.5% year-over-year to $0.21 in the fiscal first quarter ending June 2023. Its revenue is expected to be $13.88 billion in the current quarter. Also, it has surpassed its revenue estimates in each of the four trailing quarters, which is impressive.
PCRFY has gained 72.7% over the past nine months to close the last trading session at $12.40. The stock has soared 48.5% year-to-date.
PCRFY's POWR Ratings reflect this promising outlook. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
PCRFY has a B grade for Value, Stability, and Sentiment. Within the 42-stock Technology – Hardware industry, the stock is ranked first.
Click here for the additional POWR Ratings for Growth, Momentum, and Quality for PCRFY.
Ricoh Company, Ltd. (RICOY)
Headquartered in Tokyo, Japan, RICOY provides various office and commercial printing solutions and related solutions worldwide. It operates through Digital services; Digital Products; Graphic Communications; and Industrial Solutions segments.
RICOY's trailing-12-month ROCE of 5.93% is significantly higher than the 0.09% industry average. Its trailing-12-month ROTC of 3.80% is 132.8% higher than the 1.63% industry average.
While RICOY's four-year average dividend yield is 2.55%, the company pays an annual dividend of $0.24, translating to a dividend yield of 2.78%. Also, it has grown its dividend payout at a CAGR of 3.7% over the past five years.
RICOY's sales increased 21.3% year-over-year to ¥2.13 trillion ($14.74 billion) in the fiscal year ended March 31, 2023. Also, its operating income rose 96.6% year-over-year to ¥78.74 billion ($544.98 million). Its profit and EPS came in at ¥54.37 billion ($380.46 million) and ¥88.10, up 79% and 94.3% year-over-year.
Street expects RICOY's revenue to increase 2.8% year-over-year to $3.53 billion in the fiscal first quarter ending June 2023. The company has surpassed consensus revenue estimates in each of the trailing four quarters.
The stock has gained 12.7% year-to-date and 13.3% over the past three months to close its last trading session at $8.54.
It's no surprise that RICOY has an overall A rating, equating to a Strong Buy in our POWR Ratings system.
It has a B grade for Growth, Value, Stability, and Quality. The stock is ranked #3 in the same industry.
Beyond what is stated above, we've also rated RICOY for Sentiment and Momentum. Get all RICOY ratings here.
Spirent Communications plc (SPMYY)
Headquartered in Crawley, the United Kingdom, SPMYY offers automated test and assurance solutions in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. The company operates in Lifecycle Service Assurance and Networks & Security segments.
SPMYY's trailing-12-month EBITDA and net income margins of 21.96% and 16.44% are 166.2% and 860.3% higher than the industry averages of 8.25% and 1.71%.
On June 29, SPMYY announced that Indonesia's new Telecommunication Equipment Testing Center (BBPPT) had selected it to conduct high-speed Ethernet network equipment and electromagnetic compatibility (EMC) testing. Utilizing Spirent TestCenter enables labs to facilitate advanced testing features that include high scalability, automation, and real-time reporting for complex network systems.
On June 27, SPMYY announced the availability of an industry-first 400G probe for next-generation network testing and monitoring. The company offers the only network assurance solution that provides such highly dense capacity for emulation, activation testing, and performance monitoring of 400G network traffic.
The company pays an annual dividend of $0.42, which translates to a 4.90% yield on the current share price. Its four-year dividend yield is 2.49%.
In the fiscal year that ended December 31, 2022, SPMYY's adjusted revenues increased 5.5% year-over-year to $607.50 million. Its adjusted operating profit rose 9.3% year-over-year to $129.5 million. Its adjusted profit and EPS grew 13.5% and 14% year-over-year to $114.5 million and $18.75.
SPMYY's revenue is expected to increase marginally year-over-year to $597.82 million for the fiscal year 2023.
The stock has declined 5% over the past three months to close the last trading session at $8.49.
SPMYY's POWR Ratings reflect its robust outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
It has an A grade for Stability and Quality and a B for Value. It is ranked #2 in the same industry.
To see additional SPMYY's ratings for Sentiment, Momentum, and Growth, click here.
What To Do Next?
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PCRFY shares were unchanged in premarket trading Wednesday. Year-to-date, PCRFY has gained 49.86%, versus a 16.92% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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