This year, tech stocks have been the market's shining stars, driving it to new heights. The Technology Select Sector SPDR Fund (XLK) has been a standout, soaring 35.1%, outpacing the S&P 500's 25.4% returns in the past year. Given this trend, tech giants Nokia Oyj (NOK), Dolby Laboratories, Inc. (DLB), and Indra Sistemas, S.A. (ISMAY), could be excellent investment opportunities, as they currently exhibit solid upward momentum.
Tech services are the lifeline for communication, work, and entertainment in our hyper-connected world. With AI, and IoT leading the charge, the future is buzzing with possibilities for the tech sector. Global IT spending is set to soar by 8% in 2024, hitting a staggering $5.10 trillion, as businesses gear up for digital transformation and innovation.
Moreover, the tech hardware industry is booming due to increasing demand for components in display devices and IoT, coupled with technological advancements driving frequent device upgrades. The electronic market is expected to reach $847.88 billion by 2032, growing at a CAGR of 10.1%.
Let's now delve into a comprehensive examination of the top tech stocks.
Nokia Oyj (NOK)
Headquartered in Espoo, Finland, NOK offers innovative mobile, fixed, and cloud network solutions worldwide. With its four distinct segments, Mobile Networks; Network Infrastructure; Cloud and Network Services; and Nokia Technologies, the company serves a diverse clientele, including communications service providers, webscales, digital industries, and government agencies.
NOK’s trailing-12-month EBIT and net income margins of 10.24% and 3.89% are 120.8% and 61.5% higher than the industry averages of 4.64% and 2.41%, respectively.
On May 8, 2024, NOK and O2 Telefónica in Germany announced the deployment of 5G standalone core software on Amazon Web Services (AWS) in Espoo, Finland. This deployment highlights NOK's multi-cloud capabilities and its leadership in 5G standalone core technology, with 107 CSP customers globally.
On April 30, NOK and Vodafone Group Public Ltd. Co. (VOD) successfully concluded an end-to-end Open RAN trial on Vodafone Italy's live 5G standalone network in Espoo, Finland. The trial showcased NOK's AirScale Massive MIMO radios and baseband software running on Dell PowerEdge XR8000 servers and Red Hat OpenShift.
In the fiscal first quarter that ended March 31, 2024, NOK’s net sales stood at €4.67 billion ($5.03 billion). Its gross margin and operating margin rose to 47.9% and 8.6%, respectively, from 37.5% and 7.3% in the previous-year quarter. Its profit for the period and EPS improved 51.6% and 50% year-over-year to $438 million ($471.43 million) and $0.08.
For the fiscal year 2024, NOK expects its comparable operating profit to range from €2.30 billion ($2.48 billion) to €2.90 billion ($3.12 billion). Its free cash flow is likely to converge 30% to 60% from the comparable operating profit.
Street expects NOK’s revenue for the third quarter (ending September 2024) to increase 9.6% year-over-year to $5.78 billion. Its EPS for the same quarter is expected to rise 68.5% from the prior-year quarter to $0.09.
Over the past six months, the stock has gained 9% to close the last trading session at $3.74. It is currently trading above its 50-day and 100-day moving averages of $3.57 and $3.53, indicating an uptrend.
NOK’s POWR Ratings reflect this 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.
It has an A grade for Value. In the 47-stock Technology – Communication/Networking industry, it is ranked #8.
Click here to see NOK’s ratings for Growth, Momentum, Stability, Sentiment, and Quality.
Dolby Laboratories, Inc. (DLB)
DLB pioneers audio and imaging technologies that revolutionize entertainment across various platforms, including cinema, DTV transmissions and devices, mobile devices, OTT video and music services, home entertainment devices, and automobiles.
DLB’s trailing-12-month EBIT and net income margins of 18.79% and 15% are 305.1% and 522.4% higher than the industry averages of 4.64% and 2.41%, respectively.
The company pays an annual dividend of $1.20, which yields 1.45% at current market prices. This is higher than its four-year average dividend yield of 1.20%. Over the past five years, it has raised its dividend payouts at a CAGR of 10.3%.
DLB reported a total revenue of $364.52 million for the second quarter ended on March 29, 2024. Within this, revenue from products and services saw a notable 8.2% year-over-year increase, reaching $26.28 million. Its gross profit was $325.75 million for the quarter.
Furthermore, non-GAAP net income attributable to DLB and EPS came in at $123.19 million and $1.27, up marginally from the prior year’s quarter, respectively. The company’s total assets stood at $3.04 billion as of March 29, 2024, compared to $2.98 billion as of September 29, 2023.
As per DLB's fiscal 2024 third-quarter outlook, the company anticipates total revenue to fall between $270 million and $300 million, with non-GAAP EPS projected to range from $0.51 to $0.66. Looking ahead to the full year, DLB expects total revenue to reach $1.30 billion, with non-GAAP EPS in the range of $3.60 to $3.75.
The market anticipates DLB's revenue to increase 12.4% year over year and EPS to surge 30.3% year over year for the fiscal fourth quarter ending September 2024, reaching $326.60 million and $0.59, respectively. Additionally, DLB has exceeded consensus EPS estimates in each of the last four quarters, which is promising.
DLB’s stock soared 1.2% intraday to close the last trading session at $82.94. It trades above its 10-day and 50-day moving averages of $80 and $81.64.
DLB’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has an A grade for Quality. DLB is ranked #4 in the 43-stock Technology – Electronics industry.
In addition to the POWR Ratings above, one can access DLB’s additional Growth, Sentiment, Stability, Momentum, and Value grades here.
Indra Sistemas, S.A. (ISMAY)
Based in Alcobendas, Spain, ISMAY operates as a technology and consulting company worldwide. It designs, develops, produces, integrates, operates, maintains, repairs, and markets systems, solutions, and services based on the use of information technologies; computing, electronics, and communications.
ISMAY’s trailing-12-month EBIT and net income margins of 8.11% and 4.85% are 74.8% and 101.4% higher than the industry averages of 4.64% and 2.41%, respectively.
During the fiscal first quarter ended March 31, 2024, ISMAY’s total revenues increased 21.9% year-over-year to €1.14 billion ($1.23 billion). Also, its net income increased 40.1% year-over-year to €61.2 million ($65.87 million), while its EPS increased 52.2% year-over-year to €0.35.
Analysts expect ISMAY’s revenue to increase 8.3% year-over-year to $5.10 billion for the year ending December 2024.
The stock has gained 47.5% over the past six months to close the last trading session at $10.18. It is currently trading above its 50-day and 100-day moving averages of $9.84 and $8.67.
ISMAY’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has a B grade for Growth, Value, and Stability. It is ranked #16 in the Technology - Services industry.
To see ISMAY’s additional ratings for Sentiment, Momentum, and Quality, click 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.
NOK shares were trading at $3.72 per share on Wednesday morning, down $0.02 (-0.53%). Year-to-date, NOK has gained 10.28%, versus a 8.95% 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.
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