Tech stocks have been facing some major challenges since the beginning of 2022. Concerns about 40-year high inflation, the Fed’s planned aggressive interest rate increases, the Russia-Ukraine war, and expectations of an economic slowdown have dampened investor sentiment toward the tech sector. Consequently, these concerns triggered a broad sell-off in tech stocks this month and pushed U.S. indices further into bear territory. The tech-heavy NASDAQ Composite Index has plunged 9.5% over the past month.
The growing inflationary pressures have weighed on corporate profits and earnings in the tech industry. Most tech companies have been struggling to maintain the momentum required to justify their rich valuations. However, a few companies have maintained positive cash flows and strong fundamentals, even in the risk-off environment, and have therefore guaranteed impressive returns to the investors. Certain tech stocks have been leading a comeback rally since Wednesday and are trying to recover from this month’s massive sell-off.
Given these factors, we think it could be wise to invest in fundamentally solid tech stocks Amdocs Limited (DOX) and Box, Inc. (BOX), which are outperforming the market.
Amdocs Limited (DOX)
DOX, which is headquartered in Saint Peter Port, the Channel Islands, provides software and services worldwide. The company designs, develops, operates, and markets open and modular cloud portfolios. It offers CES21, a 5G and cloud-native customer experience suite, the Commerce and Customer suite, the Monetization suite, Intelligent Networking suite, and more. It also offers home operating systems, data intelligence solutions, media services, mobile network services, and consulting services.
This week, DOX was selected by Vodafone Group Plc (VOD) to automate and modernize the latter’s inventory portfolio across Europe for its mobile, fixed, and cable offerings. The advanced inventory capabilities should provide a strong data foundation by allowing it to automate its network and service operations across multiple countries. This partnership with VOD is expected to boost the company’s growth and revenues.
Also this month, DOX unveiled MetaVU, a Vubiquity platform that allows content providers and video distributors to store, manage, and distribute metadata effectively. MetaVU aggregates metadata from both the internal and external data sources into a single integration point, ensuring comprehensiveness and enabling a rich and unified consumer experience. This launch is expected to extend DOX’s customer reach and profitability.
In its fiscal year 2022 first quarter, ended Dec. 31, 2021, DOX's revenue increased marginally year-over-year to $1.10 billion. Its non-GAAP operating income improved 3% from the prior-year period to $193.61 million. And the company’s non-GAAP net income amounted to $150.14 million. In addition, its non-GAAP earnings per share rose 3.4% year-over-year to $1.20.
The $1.13 billion consensus revenue estimate for its fiscal year 2022 first quarter, ended March 31, 2022, represents 7.5% growth from the same period in 2021. It is no surprise that DOX has surpassed the consensus revenue estimates in three of the trailing four quarters. The $1.24 consensus EPS estimate for the to-be-reported quarter indicates a 9.7% year-over-year rise.
The stock gained 7.3% in price year-to-date and 4.9% over the past year and closed yesterday's trading session at $80.57.
DOX's POWR Ratings reflect this promising outlook. It has an overall A grade, which equates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
DOX has a B grade for Quality and Stability. Within the Software - Business industry, it is ranked #2 of 60 stocks. To see additional POWR Ratings (Momentum, Value, Growth, and Sentiment) for DOX, click here.
Recently the Reitmeister Total Return Portfolio (RTR) closed a winning trade in BOX for a 25% gain. Learn more about the RTR service here.
Click here to check out our Software Industry Report for 2022
Box, Inc. (BOX)
BOX offers a cloud content management platform that enables organizations to manage and share their content from anywhere. The Los Altos, Calif.-based company provides a Software-as-a-Service platform that allows collaboration on content internally and with external parties. It also provides web, mobile, and desktop applications and serves financial services, healthcare, government, and legal services industries.
On April 27, BOX was chosen by Polpharma Biologics, a European biotechnology company, for cloud content management. Polpharma selected BOX Enterprise Plus for the full suite of content cloud features and will use it as an integrated solution to centralize regulated and sensitive content in the cloud. This collaboration might boost the company’s revenue streams.
On April 14, BOX introduced a new Box App center, enabling users, admins, and developers to access more than 1500 applications that integrate with Box. In addition, it showcased several enhancements, including updates to Box Sign, enhanced capabilities to Box Shield, and a deepened integration with Zoom Video Communications Inc. (ZM). These new additions are expected to boost the company’s business growth, market reach, and profits.
BOX's revenue increased 17.3% year-over-year to $233.40 million, while its non-GAAP gross profit grew 20.3% year-over-year to $175.20 million in its fiscal 2022 fourth quarter, ended Jan. 31, 2022. The company’s non-GAAP operating income improved 33.2% year-over-year to $48.50 million. Its non-GAAP net income attributable to common stockholders rose 9.1% from its year-ago value to $0.24.
Analysts expect BOX's revenue for its fiscal 2023 first quarter, ending April 30, 2022, to come in at $234.48 million, representing a 15.8% rise year-over-year. The Street expects the company's EPS for the current quarter to come in at $0.25, representing a 39.5% increase year-over-year. The company has surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock gained 17.3% in price year-to-date and 39% over the past year. It closed yesterday's trading session at $30.70.
BOX’s POWR Ratings reflect a strong outlook. The stock has an overall rating of B, which translates to Buy in our POWR Ratings system.
BOX has a grade of A for Quality and Growth. It is ranked #14 of 81 stocks in the Technology - Services industry. Click here to see BOX’s POWR Ratings for Stability, Sentiment, Value, and Momentum.
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DOX shares were trading at $80.22 per share on Friday afternoon, down $0.35 (-0.43%). Year-to-date, DOX has gained 7.70%, versus a -11.30% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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