The 3 Best Tech Stocks to Buy in Q4 The Fed's hawkish rate hikes and growing recession fears have caused a massive sell-off in the tech sector this year. However, the industry is expected to witness solid long-term growth...
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The Fed's hawkish rate hikes and growing recession fears have caused a massive sell-off in the tech sector this year. However, the industry is expected to witness solid long-term growth with increasing global tech spending. Hence, fundamentally sound tech stocks Oracle Corporation (ORCL), Adobe (ADBE), and Rimini Street (RMNI) might be ideal buys in the fourth quarter. Read more.
Amid the Fed's aggressive rate hikes to battle high inflation, the tech sector has witnessed a massive sell-off this year. Technology stocks went from most loved during the pandemic to the most heavily sold.
Jamie Dimon, CEO of JPMorgan Chase, cited the impact of runaway inflation, hawkish hike in rates, and Russia's war in Ukraine, likely to tip both the U.S. and global economy into recession by the middle of next year.
On the bright side, global tech spending is expected to grow on the backs of the widespread deployment of cloud and enterprise applications and the adoption of emerging technologies like artificial intelligence and machine learning. Moreover, software spending is expected to grow at a 10.3% CAGR from 2021 to 2023.
Given this backdrop, fundamentally strong tech stocks Oracle Corporation (ORCL), Adobe Inc. (ADBE), and Rimini Street, Inc. (RMNI) might be solid buys now.
Oracle Corporation (ORCL)
ORCL offers products and services for enterprise IT environments, including applications, platforms, and infrastructure. The company offers its cloud, license, hardware, support, and services offerings directly to businesses in various industries.
On October 5, ORCL unveiled Oracle Network Analytics Suite, which combines network function data with machine learning and artificial intelligence to help operators make more informed, automated decisions around the performance and stability of their entire 5G network core. The new launch is likely to help operators better manage and optimize their 5G networks and should be in demand.
On September 20, ORCL announced the availability of Java 19, the latest version of the programming language and development platform. The Java ecosystem is expected to be able to meet developer and enterprise needs better through the update.
For the fiscal first quarter ended August 31, 2022, ORCL's total revenue increased 17.7% year-over-year to $11.45 billion. Its non-GAAP operating income increased 3.3% year-over-year to $4.48 billion. The company's net cash provided by operating activities rose 18.6% from its previous-year quarter to $6.39 billion, while non-GAAP EPS amounted to $1.03.
ORCL's revenue for the third fiscal quarter ending February 2023 is estimated to rise 16.9% from the same quarter last year to $12.29 billion. The company's EPS is expected to be $1.23 for the same quarter, representing a 9.3% improvement year-over-year.
The stock declined 1.1% intraday to close the last trading session at $62.57.
ORCL's strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, translating to a 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 and Stability. It is ranked #27 of 148 stocks in the Software – Application industry.
In addition to the POWR Rating grades I've just highlighted, you can see the ORCL ratings for Value, Momentum, Sentiment, and Quality here.
Adobe Inc. (ADBE)
ADBE functions as a diversified software company internationally. It operates through three segments: Digital Media, Digital Experience, and Publishing and Advertising.
On September 15, ADBE announced that it had entered into a definitive merger agreement to acquire Figma, a leading web-first collaborative design platform, for approximately $20 billion in cash and stock. The combined company is expected to have a massive, fast-growing market opportunity and capabilities to drive significant value for customers, shareholders, and the industry.
During the fiscal third quarter ended September 2, ADBE's total revenue increased 12.7% year-over-year to $4.43 billion. Its operating income amounted to $1.48 billion, up 3% year-over-year. The company's non-GAAP net income and net income per share came in at $1.60 billion and $3.40, rising 6.6% and 9.3% from the prior-year period, respectively.
Streets expect ADBE's revenue for the fiscal fourth quarter ending November to come in at $4.53 billion, representing an increase of 10.3% from the same period last year. The company's EPS is likely to grow 9.3% year-over-year to $3.50 for the same quarter. The company has surpassed the consensus EPS estimates in each of the trailing four quarters.
ADBE declined 1.1% intraday yesterday to close its last trading session at 285.72.
The company has an overall rating of B, which translates to Buy in our proprietary rating system. ADBE has an A grade for Quality. It is ranked #26 in the Software – Application industry.
Click here to see additional POWR Ratings for Growth, Value, Momentum, Stability, and Sentiment for ADBE.
Rimini Street, Inc. (RMNI)
RMNI offers enterprise software products, services, and support for various industries. It provides software support services for Oracle and SAP enterprise software products. The company sells its solutions mainly through direct sales organizations.
On August 24, RMNI announced that the University of Technology Sydney (UTS) switched to RMNI for improved support and security of its Oracle database and technology platforms. This might bolster the company's position in the education market.
On July 27, RMNI announced the launch of Rimini Protect, a new suite of security solutions that provides better protection to organizations from continuously evolving cybersecurity threats. This innovative solution might add to the company's revenue substantially.
RMNI's revenue came in at $101.20 million for the second quarter that ended June 30, representing a 10.5% year-over-year growth. Its non-GAAP operating income grew 21.3% from the prior-year quarter to $11.95 million, while adjusted EBITDA rose 10.8% year-over-year to $11.02 million.
Analysts expect RMNI's revenue for the third quarter ending September 2022 to be $102.42 million, indicating a 7.1% year-over-year growth. The company's EPS for the same quarter is expected to be $0.12. In addition, RMNI has beaten the consensus EPS estimates in each of the trailing four quarters, which is impressive.
RMNI has declined 2.3% intraday to close its last trading session at $4.60.
RMNI has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The stock also has an A grade for Quality and a B for Value and Growth. It is ranked #2 in the same industry.
Click here for additional RMNI POWR Ratings for Momentum, Stability, and Sentiment.
ORCL shares fell $0.01 (-0.02%) in premarket trading Tuesday. Year-to-date, ORCL has declined -27.77%, versus a -23.44% 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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