The technology industry is growing significantly due to consistent advancements transforming several end-use industries. Given the favorable industry trends, quality tech stocks TTM Technologies, Inc. (TTMI), PC Connection, Inc. (CNXN), and Ceragon Networks Ltd. (CRNT) look poised for steady returns this week.
The IT Services market in the United States has been experiencing significant growth in recent years, driven by various factors such as technological advancements, increasing demand for cloud computing, and the need for digital transformation across industries. Revenue is expected to grow at a CAGR of 6.2% until 2028.
Additionally, the global electronic components market is expected to grow at a CAGR of 6.8% to reach $368.40 billion by 2032. Increasing demand for consumer electronics, the rollout of 5G networks and, the growth of high-speed data communication, advancements in IoT, and increasing industrial automation are expected to drive growth in the market.
Furthermore, in an era where high-speed communication is more important than ever, 5G is ready to match these lofty expectations. As firms begin to progressively roll out 5G ready products and infrastructures, it is reasonable to conclude that connectivity is making significant progress.
Global telecommunication market is expected to grow at a CAGR of 6.2% until 2030.
With these favorable trends in mind, let's delve into the fundamentals of the three best technology stock picks mentioned above.
TTM Technologies, Inc. (TTMI)
TTMI is a global manufacturer and seller of engineered systems, radio frequency components and, RF microwave/microelectronic assemblies, and printed circuit boards (PCB). It operates in the PCB and RF&S Components segments. The company offers a range of engineered systems, RF and microwave assemblies, HDI PCBs, flexible PCBs, custom assemblies, and system integration, IC substrates, and other components.
TTMI’s trailing-12-month EBIT margin of 5.29% is 13.4% higher than the industry average of 4.66%. Its trailing-12-month EBITDA margin of 12.20% is 34.2% higher than the industry average of 9.09%.
For the fiscal third quarter ended October 2, 2023, TTMI’s net sales amounted to $572.58 million. The company’s non-GAAP net income and EPS stood at $44.88 million and $0.43, respectively. Also, its adjusted EBITDA came in at $84.08 million. As of October 2, 2023, TTMI’s total current liabilities came at $688.29 million, compared to $761.33 million as of January 2, 2023.
Street expects TTMI’s revenue to increase 4.9% year-over-year to $2.35 billion for the fiscal year ending December 2024. Its EPS is expected to grow 13.4% year-over-year to $1.46 for the same year. It surpassed EPS estimates in three of four trailing quarters.
The stock has gained 24.6% over the past three months to close the last trading session at $14.32.
TTMI’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has an A grade in Sentiment and B in Growth and Momentum. It is ranked #6 out of 42 stocks in the Technology - Electronics industry.
Click here to see the other ratings of TTMI (Value, Stability, and Quality).
PC Connection, Inc. (CNXN)
CNXN provides various information technology (IT) solutions worldwide. The company operates through three segments: Business Solutions; Enterprise Solutions; and Public Sector Solutions.
CNXN’s trailing-12-month net income margin of 2.71% is 29.5% higher than the industry average of 2.09%, while its trailing-12-month ROCE of 9.94% is 436.5% higher than the industry average of 1.85%.
CNXN’s net sales for the fiscal third quarter ended September 30, 2023 came in at $693.09 million. Net income rose 10.3% year-over-year to $25.60 million. Its earnings per common share increased 10.2% year-over-year to $0.97.
Analysts expect CNXN’s revenue for the fourth quarter ended December 31, 2023, to be $673.59 million. Its EPS is expected to increase 23.2% year-over-year to $0.88 for the same quarter.
Shares of CNXN increased 64% over the past nine months to close the last trading session at $66.06.
CNXN’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It has a B grade for Stability, Momentum, Quality, and Sentiment. Within the Technology - Services industry, it is ranked #3 out of 76 stocks.
Beyond what is stated above, we’ve also rated CNXN for Growth and Value. Get all CNXN ratings here.
Ceragon Networks Ltd. (CRNT)
Based in Rosh HaAyin, Israel, CRNT offers wireless transport solutions for cellular operators and other wireless service providers. Its solutions use microwave and millimeter-wave radio technologies to transfer telecommunication traffic between base stations, service provider’s networks, wireless 5G and 4G, 3G, and other cellular base stations.
On January 11, 2024, CRNT signed an agreement with a global integrator in support of a network modernization project for a Tier 1 Operator in India. As per the agreement, Ceragon will support a massive modernization project focused on upgrading existing network capabilities, expanding capacity, improving country-wide connectivity, and delivering services.
On December 5, 2023, CRNT announced the completion of the acquisition of Siklu, a provider of multi-gigabit “wireless fiber” connectivity in urban, suburban, and rural areas. This acquisition creates a more comprehensive, end-to-end offering ideally targeted to small service providers and private networks around the world.
This strategic acquisition of Siklu is anticipated to increase Ceragon’s market presence, mainly in North America, with private networks and small service providers.
CRNT’s trailing-12-month ROTC and CAPEX/Sales of 4.05% and 2.66% are 49.36% and 11.6% higher than the respective industry averages of 2.71% and 2.38%.
In the third quarter that ended September 30, 2023, CRNT’s revenue increased 10.9% year-over-year to $87.26 million. Its non-GAAP gross profit grew 8.8% year-over-year to $30.42 million. The company’s non-GAAP operating income was $8 million, indicating a growth of 25% from the previous year’s quarter.
In addition, its non-GAAP net income came in at $4.96 million, or $0.06 per share, up 20.4% and 20% from the prior year’s quarter, respectively. The company’s cash and cash equivalents as of September 30, 2023, were $33.97 million, compared to $22.95 million as of December 31, 2022.
Street expects CRNT’s revenue for the fiscal year (ended December 2023) to increase 15.8% year-over-year to $341.79 million. The company’s EPS is expected to be $0.17. Moreover, it has surpassed the consensus EPS and revenue estimates in three of the trailing four quarters.
Over the past three months, the stock has surged 42.4% to close the last trading session at $2.42.
It’s no surprise that CRNT has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It has an A grade for Sentiment and a B in Value and Growth. Within the Technology - Communication/Networking industry, it is ranked #2 out of 46 stocks.
In addition to the POWR Ratings stated above, one can access CRNT's ratings for Momentum, Quality, and Stability here.
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TTMI shares were trading at $14.33 per share on Friday morning, up $0.01 (+0.07%). Year-to-date, TTMI has declined -9.36%, versus a 3.89% 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.
3 Tech Stocks Bursting With Opportunities This Week StockNews.com
