The rising adoption of advanced technologies and digitization trends are driving the tech market growth. As the industry shows solid potential, investors could consider watching tech stocks, including Cisco Systems, Inc. (CSCO), Satellogic Inc. (SATL), and 36Kr Holdings Inc. (KRKR).
The global IT services market is expected to grow to $49.10 billion in 2027 at a CAGR of 8%, driven by the rising penetration of e-commerce, the increasing development of smart cities, the emergence of start-ups, and the rising adoption of IoT.
Moreover, IT service providers are increasingly using artificial intelligence (AI) to increase the efficiency and speed of cloud computing services.
Furthermore, with the recent focus on digitization, digital workplaces, and remote working, AI and automation technological proliferation play a vital role in automating manual processes and creating new opportunities for organizations to improve productivity and streamline the process.
In addition, the global digital transformation market is anticipated to witness a CAGR of 26.7% until 2030, mainly attributed to the growing adoption of cutting-edge technologies such as cloud, big data analytics, among others, which has caused exponential growth of all size of businesses across the globe.
Let’s discuss the stocks mentioned above in detail:
Cisco Systems, Inc. (CSCO)
CSCO is engaged in designing, manufacturing, and selling Internet Protocol-based networking and other products related to the communications and information technology industry. The company offers wireless products, routed optical networking, 5G, silicon, optics solutions, etc.
On June 7, 2023, CSCO and AT&T (T) unveiled new hybrid workforce solutions to improve connection and develop the calling environment. The modern workforce is not bound to a particular area, device, or territory, whether on the shop floor, the top floor, the branch office, the home office, or the journey in between.
CSCO’s trailing-12-month ROCE of 27.74% is significantly higher than the industry average of 0.03%. Its trailing-12-month net income margin of 20.89% is 938.9% higher than the industry average of 2.01%.
CSCO pays $1.56 annually as dividends which translates to a yield of 2.94% at the current price. Its four-year average dividend yield is 3.06%.
CSCO’s total revenue increased 13.5% year-over-year to $14.57 billion in the third quarter that ended April 29, 2023. The company’s gross margin rose 13.7% from the year-ago value to $9.23 billion, while its non-GAAP net income increased 13.9% from the prior-year quarter to $4.10 billion. Also, its non-GAAP EPS stood at $1 per share, up 15% year-over-year.
The consensus revenue estimate of $56.82 billion for the year ending July 2023 represents a 10.2% increase year-over-year. Its EPS is expected to grow 13.2% year-over-year to $3.80 for the same period. It surpassed revenue and EPS estimates in all four trailing quarters, which is impressive.
CSCO’s shares have gained 16.9% over the past nine months to close the last trading session at $53.37.
CSCO’s POWR Ratings reflect its fundamentals. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
CSCO has an A grade for Quality and a B grade for Stability. It is ranked #4 out of 51 stocks in the Technology – Communication/Networking industry.
Click here for the additional POWR Ratings for Growth, Sentiment, Momentum, and Value for CSCO.
Satellogic Inc. (SATL)
Headquartered in Montevideo, Uruguay, SATL operates as an integrated geospatial analytics company in the Asia Pacific, North America, and internationally. It engages in tasking satellites with monitoring assets and keeping up with their changing reality for government and commercial customers; control satellites on top of specific areas of interest for governments; and sale and support satellites.
SATL’s trailing-12-month CAPEX/Sales of 453.29% is significantly higher than the industry average of 2.94%. Its trailing-12-month gross profit margin of 45.38% is 49.6% higher than the industry average of 30.33%.
SATL’s revenue for the fiscal year ended December 31, 2022, increased 41.6% year-over-year to $6.01 million. Its gross margin came in at $2.70 million, as compared to $2.40 million for the year ended December 31, 2021. The company ended 2022 with $76.5 million of cash on hand.
The stock has plunged 66.6% over the past nine months to close the last trading session at $1.76.
The stock has an overall C rating, equating to a Neutral in our proprietary rating system.
SATL also has a C grade for Value, Stability, Momentum, and Growth. It is ranked #28 in the same industry.
Beyond what is stated above, we’ve also rated SATL for Quality and Sentiment. Get all SATL ratings here.
36Kr Holdings Inc. (KRKR)
Headquartered in Beijing, the People’s Republic of China, KRKR provides content and business services in the People’s Republic of China. It creates and distributes various content, including insightful reports on companies and timely market updates, as well as editorials and commentaries in various industries, such as technology, media and entertainment, consumer, retail, and healthcare.
On July 31, 2023, KRKR announced the launch of its 36Kr Media Lab in Silicon Valley, an initiative to embrace the large language models (LLM) revolution taking place in the content creation industry and optimize the application of artificial intelligence (AI) for the new economy sector.
KRKR’s trailing-12-month gross profit margin of 55.43% is 12.3% higher than the 49.37% industry average. Its trailing-12-month asset turnover ratio of 0.66x is 35.5% higher than the 0.48x industry average.
KRKR’s total revenues increased by 11.9% to RMB55.50 million ($8.10 million) in the fiscal first quarter that ended March 31, 2023. Its gross profit came in at RMB32.40 million ($4.70 million).
KRKR’s revenue is expected to increase 4.9% year-over-year to $49.14 million for the fiscal year ending December 2023. KRKR has declined 14.2% year-to-date to close its last trading session at $0.89.
It’s no surprise that KRKR has an overall rating of C, which translates to a Neutral in our POWR Ratings system.
KRKR also has a C grade for Quality. It is ranked #19 in the same industry.
For additional ratings for KRKR for Momentum, Sentiment, Stability, Value, and Growth, click here.
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CSCO shares were trading at $53.79 per share on Friday morning, up $0.42 (+0.79%). Year-to-date, CSCO has gained 15.54%, versus a 17.32% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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