The technology landscape is set to witness sustained growth this year, driven by transformative trends that foster innovation and shape the future. Moreover, with the Technology Select Sector SPDR Fund (XLK) boasting a stellar 50.2% return over the past year, outpacing the broader S&P 500’s 21.4% gain, the momentum in the tech industry is undeniable.
So, I present robust tech stocks Fujitsu Limited (FJTSY), Teledyne Technologies Incorporated (TDY), and Lantronix, Inc. (LTRX), which are igniting investors’ interest in 2024.
In the dynamic tech scenario, Generative AI took center stage in 2023 and is set to redefine our daily lives in 2024. Besides, this year is poised to be a transformative year for quantum computing as the theoretical buzz translates into tangible benefits. Revenue in the IT services market is projected to reach $495.30 billion this year.
The ever-evolving tech industry also demands cutting-edge hardware to run advanced applications as software progresses seamlessly. Increasing digitization investments across sectors fuel the demand for hardware like servers and data centers. Additionally, the increased use of technology in healthcare, automotive, and industry has boosted demand for high-quality hardware components. The global hardware market is expected to reach $164.21 billion by 2027, growing at a CAGR of 7.9%.
Furthermore, a significant trend in electronics this year will be the synergy of AI and the metaverse, ushering in innovative virtual applications. Moreover, the electronic devices market has seen substantial growth recently, driven by the widespread adoption of hybrid work and enhanced lifestyle convenience. The electronic market is projected to reach $122.70 billion this year. It is further expected to grow at a CAGR of 4%, reaching $143.79 billion by 2028.
With these favorable trends in mind, let's delve into the fundamentals of the three tech stock picks.
Fujitsu Limited (FJTSY)
Headquartered in Tokyo, Japan, FJTSY operates as an information and communication technology company in Japan and internationally. The company operates through three segments: Technology Solutions; Ubiquitous Solutions; and Device Solutions.
FJTSY’s trailing-12-month net income margin of 4.87% is 106.3% higher than the 2.36% industry average. Its 5.97% trailing-12-month EBIT margin is 20.8% higher than the industry average of 4.94%.
On December 21, 2023, FJTSY announced that it was actively working to revive stalled negotiations for the sale of its $730 million stake in the air-conditioning business. The successful completion of this deal will be crucial for FJTSY, not only for financial reasons but also as a strategic move to facilitate its expansion into the emerging and lucrative market for AI services.
In September, FJTSY and the Linux Foundation officially launched the former company's automated machine learning and AI fairness technologies as open-source software (OSS). The projects, named "SapientML" and "Intersectional Fairness," aim to provide users with tools for generating code for new machine learning models and addressing biases in training data. The move is expected to contribute to the advancement and widespread adoption of AI.
It pays an annual dividend of $0.35, which yields 1.22% on the current market price.
FJTSY’s revenue increased marginally year-over-year to ¥1.71 trillion ($11.78 billion) in the six months that ended September 30, 2023. Its operating profit came in at ¥44.78 billion ($308.37 million). The company’s profit for the period and EPS came in at ¥43.94 billion ($302.59 million) and ¥200.44.
FJTSY’s revenue is expected to increase 94% year-over-year to $26.14 billion in the fiscal year ending March 2024.
Over the past six months, the stock has soared 12.4% to close the last trading session at $28.61.
FJTSY’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted optimally.
It has a B grade for Value. Within the Technology – Services industry, it is ranked #17 out of 76 stocks.
Click here to access FJTSY’s Growth, Momentum, Stability, Sentiment, and Quality ratings.
Teledyne Technologies Incorporated (TDY)
TDY and its subsidiaries provide enabling technologies for industrial growth markets internationally. The company operates in four main segments: Instrumentation; Digital Imaging; Aerospace and Defense Electronics; and Engineered Systems.
TDY’s trailing-12-month net income margin of 14.02% is 494.4% higher than the industry average of 2.36%. Its 18.74% trailing-12-month EBIT margin is 279% higher than the industry average of 4.94%.
On November 30, TDY’s company Teledyne DALSA launched its AxCIS™ line scan imaging modules, integrating sensors, lenses, and lights for cost-effective machine vision. Powered by TDY’s multiline CMOS image sensors, AxCIS offers high-resolution imaging at up to 120 kHz line rates. Its unique design covers the entire field of view without missing pixels, providing seamless images with 900 dpi resolution.
On October 3, TDY revealed its acquisition agreement with Xena Networks, a prominent provider of Terabit Ethernet validation and test solutions. This move aims to enhance TDY LeCroy’s Protocol Test Portfolio by incorporating high-speed traffic generation and network emulation capabilities.
TDY’s net sales for the fiscal third quarter ended October 1, 2023, increased 2.9% year-over-year to $1.40 billion. The company’s operating income rose 7.8% over the prior-year quarter to $264.30 million. Its non-GAAP net income attributable to TDY rose 11.7% year-over-year to $241.90 million. Also, its non-GAAP earnings per common share increased 11.2% year-over-year to $5.05.
For the fiscal first quarter ending March 2024, TDY’s revenue is expected to increase 2.8% year-over-year to $1.42 billion. Its EPS for the same quarter is expected to increase 6% year-over-year to $3.95. It surpassed the consensus EPS estimates in each of the trailing four quarters, which is notable.
Over the past month, the stock has gained 7.1% to close the last trading session at $440.83.
TDY’s sound outlook is reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
It has a B grade for Stability and Sentiment. It is ranked #10 out of 41 stocks in the B-rated Technology – Electronics industry.
To see TDY’s Growth, Value, Momentum, and Quality ratings, click here.
Lantronix, Inc. (LTRX)
LTRX provides solutions for video surveillance, infotainment systems, and intelligent substations infrastructure in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.
LTRX’s trailing-12-month asset turnover ratio of 0.88x is 41.2% higher than the industry average of 0.62x, while its trailing-12-month levered FCF margin of 10.53% is 29.7% higher than the industry average of 8.12%.
On January 3, LTRX and P3 Digital Services3 partnered to pre-integrate LTRX's embedded in-vehicle infotainment platform with SPARQ OS, the flagship IVI software by P3. This collaboration offers automakers accelerated time-to-market, reduced technology risk, and significant savings in engineering and management time.
On October 25, LTRX broadened its embedded product line to meet the changing needs of the automotive sector. Leveraging Qualcomm Technologies Inc.'s (QCOM) latest Snapdragon Ride and Cockpit Platforms, including the Snapdragon Ride Flex Platform, LTRX introduces the Snapdragon Ride SX Automotive Development Platform (ADP). This platform is designed to expedite the development of customizable infotainment, cluster, and driver monitoring systems (DMS).
In the fiscal first quarter that ended September 30, 2023, LTRX’s net revenue increased 3.9% year-over-year to $33.03 million. Its gross profit increased marginally from the prior year's quarter to $14.10 million. The company’s non-GAAP net income and net income per share stood at $2.46 million and $0.07, respectively.
As of September 30, 2023, LTRX’s total current assets stood at $98.91 million, compared to $96.55 million as of June 30, 2023.
Analysts expect LTRX’s revenue and EPS in the fiscal second quarter ending December 2023 to increase 19.3% and 105% year-over-year to $37.59 million and $0.08, respectively.
The stock has gained 37.7% over the past three months to close the last trading session at $6.10. Over the past year, it has soared 32.6%.
LTRX’s POWR Ratings reflect robust prospects. The stock has an overall rating of A, translating to a Strong Buy in our proprietary system.
It has an A grade for Sentiment and a B for Growth, Momentum, and Quality. Within the B-rated Technology – Hardware industry, it is ranked #5 out of 35 stocks.
In addition to the POWR Ratings stated above, one can access LTRX’s additional Value and Stability ratings here.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
FJTSY shares were trading at $28.30 per share on Thursday morning, down $0.31 (-1.08%). Year-to-date, FJTSY has declined -5.76%, versus a -0.56% 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.
3 Tech Stocks Investors Are Buying in 2024 StockNews.com
