The global tech industry is experiencing significant growth, driven by the increasing demand for enterprise management platforms, asset intelligence solutions, and Software-as-a-Service (SaaS) offerings. Hence, as businesses strive to adapt to remote work, 5G, IoT, and digital transformation, the need for advanced tech services continues to rise.
Against this backdrop, investors may consider buying high-growth tech stocks such as Zebra Technologies Corporation (ZBRA), Clearwater Analytics Holdings, Inc. (CWAN), and Smartsheet Inc. (SMAR) before year-end.
In today’s tech-driven market, AI’s expansion in sectors like healthcare and finance, along with growth in the private space industry, energy extraction technologies, and evolving regulatory landscapes, is creating new opportunities before 2025 for innovation and growth outside major tech giants.
Meanwhile, significant tech spending is driving infrastructure development, with companies expanding their AI investments. Gartner predicts global IT spending will reach $5.74 trillion in 2025, a 9.3% increase from 2024. Likewise, software spending is expected to grow 14% to $1.23 trillion, while communication services will rise 4.4% to $1.60 trillion.
Furthermore, investors’ interest in tech stocks is evident from the Technology Select Sector SPDR Fund’s (XLK) 26.7% returns over the past nine months. Considering all these conducive trends, let’s assess the fundamentals of the abovementioned tech stocks.
Zebra Technologies Corporation (ZBRA)
ZBRA and its subsidiaries provide enterprise asset intelligence solutions in the automatic identification and data capture industry worldwide. It operates in two segments: Asset Intelligence & Tracking and Enterprise Visibility & Mobility.
On October 15, 2024, ZBRA announced that TAS GmbH improved the production quality of electric vehicle battery caps using ZBRA’s Aurora Vision Studio with deep learning. The custom machine vision system enhances precision, safety, and adaptability in defect detection for TAS’s manufacturing process.
On September 10, 2024, ZBRA announced three new solutions; Zebra Kiosk System, Workcloud Actionable Intelligence 7.0, and ET6x Windows rugged tablets; designed to enhance efficiency, productivity, and customer experiences in retail and warehouse operations. These innovations were unveiled at the ZONE customer conference.
ZBRA’s total assets grew at a CAGR of 9.5% over the past three years. Also, its revenue grew at a CAGR of 1% over the past five years.
In terms of the trailing-12-month Return on Total Capital, ZBRA’s 6.95% is 123.5% higher than the 3.11% industry average. Similarly, its 4.97% trailing-12-month Return on Total Assets is 156.3% higher than the industry average of 1.94%. Its 8.20% trailing-12-month net income margin is 129.7% higher than the industry average of 3.57%.
For the fiscal third quarter that ended on September 28, 2024, ZBRA’s net sales increased 31.3% year-over-year to $1.26 billion. Its adjusted gross profit rose 43.9% over the prior-year quarter to $616 million. Moreover, ZBRA’s non-GAAP net income and non-GAAP EPS were $181 million and $3.49 per share, up 302.2% and 301.1%, respectively, from the prior year.
Street expects ZBRA’s EPS and revenue for the quarter ending December 31, 2024, to increase 130.8% and 30.6% year-over-year to $3.95 and $1.32 billion, respectively. It surpassed the revenue estimates in each of the trailing four quarters. Over the past year, the stock has gained 75.1% to close the last trading session at $400.94.
ZBRA’s POWR Ratings reflect robust prospects. It has an overall rating of B, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It is ranked #8 out of 45 stocks in the Technology - Communication/Networking industry. It has an A grade for Growth and a B for Sentiment and Quality. Click here to see ZBRA’s Value, Momentum, and Stability ratings.
Clearwater Analytics Holdings, Inc. (CWAN)
CWAN develops and provides Software-as-a-Service (SaaS) solutions for automated investment data aggregation, reconciliation, accounting, and reporting services to insurers, investment managers, corporations, institutional investors, and government entities in the United States and internationally.
On October 29, 2024, CWAN announced a new integration with Snowflake's AI Data Cloud to streamline investment data management. The collaboration enables seamless data access, advanced AI tools, and improved reporting for institutional asset managers and asset owners.
On October 15, 2024, CWAN announced three strategic EMEA leadership hires: Adrien de La Grange, Amina Troger, and Jose Salas, to drive localized growth and partnerships in Europe. These appointments align with its strategy to expand services and support for global clients.
CWAN’s revenue grew at a CAGR of 21.4% over the past three years. Also, its tang book value grew at a CAGR of 17.4% over the past three years.
In terms of the trailing-12-month asset turnover ratio, CWAN’s 0.73x is 19% higher than the 0.62x industry average. Likewise, the stock’s 3.80% trailing-12-month Return on Total Capital is 22.2% higher than the 3.11% industry average. Also, its 34.28% trailing-12-month levered FCF margin is 206.3% higher than the 11.19% industry average.
CWAN’s revenues for the fiscal third quarter, which ended September 30, 2024, increased 22.4% year-over-year to $115.83 million. Similarly, its non-GAAP income from operations rose 34.3% to $38.34 million. For the same quarter, its non-GAAP net income increased 30.5% to $30.96 million, or 33.3% year-over-year to $0.14 per share, respectively.
For the quarter ending December 31, 2024, CWAN’s revenue is expected to increase 21.6% year-over-year to $120.43 million. Its EPS for the same quarter is expected to increase 14.9% year-over-year to $0.11. CWAN surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past six months, the stock has gained 69.6% to close the last trading session at $32.40.
CWAN’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has an A grade for Growth and a B for Quality. Within the Software - Application industry, it is ranked #36 out of 128 stocks. To access the additional POWR Ratings of CWAN for Value, Momentum, Stability, and Sentiment, click here.
Smartsheet Inc. (SMAR)
SMAR provides an enterprise platform to plan, capture, manage, automate, and report on work for teams and organizations.
On October 8, 2024, SMAR unveiled a revamped user experience and innovative features, including enhanced file organization, data visualization, and secure sharing through collections, aimed at simplifying collaboration and boosting productivity. These updates were announced at its ENGAGE customer conference to address evolving work management needs.
On the same date, SMAR announced a new connector with AWS's Amazon Q Business, enabling seamless synchronization of work management data. This integration leverages generative AI to enhance decision-making, productivity, and data insights across enterprise systems.
SMAR’s Total Assets grew at a CAGR of 13.4% over the past three years. Similarly, its revenue grew at a CAGR of 31.6% during the same period.
In terms of the trailing-12-month levered FCF margin, SMAR’s 25.65% is 129.2% higher than the 11.19% industry average. Likewise, its 81.61% trailing-12-month gross profit margin is 61.5% higher than the 50.53% industry average. Additionally, its 0.83x trailing-12-month asset turnover ratio is 34.2% higher than the industry average of 0.62x.
In the fiscal second quarter that ended July 31, 2024, SMAR’s revenue stood at $276.41 million, up 17.3% year-over-year, and non-GAAP operating income rose 135.7% year-over-year to $45.29 million. In addition, the company’s non-GAAP net income amounted to $61.64 million and $0.44 per share, reflecting increases of 180% and 175% year-over-year, respectively.
Analysts expect SMAR’s EPS and revenue for the quarter ended October 31, 2024, to increase 90.1% and 15.4% year-over-year to $0.30 and $283.87 million, respectively. It surpassed the Street EPS and revenue estimates in each of the trailing four quarters. SMAR’s stock has gained 41.3% over the past six months to close the last trading session at $56.07.
SMAR’s positive outlook is reflected in its POWR Ratings. It has an overall rating of B, equating to a Buy in our proprietary rating system.
It is ranked #6 out of 18 stocks in the A-rated Software – SAAS industry. It has an A grade for Growth and a B for Sentiment and Quality. To see SMAR’s Value, Momentum, and Stability ratings, click here.
What To Do Next?
Get your hands on this special report with 3 low priced companies with tremendous upside potential even in today’s volatile markets:
3 Stocks to DOUBLE This Year >
ZBRA shares were trading at $401.12 per share on Tuesday morning, up $0.18 (+0.04%). Year-to-date, ZBRA has gained 46.75%, versus a 27.10% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
3 High-Growth Tech Stocks to Buy Before Year-End StockNews.com
