Tech stocks experienced significant selling pressure last year due to the Fed’s aggressive interest rate hikes. However, most have bounced back strongly this year, driving the 32.7% year-to-date gains for the tech-heavy Nasdaq Composite.
With inflation easing considerably since last year and the Fed contemplating whether it would be necessary to raise interest rates again in September, the sector will likely witness a turnaround. Amid this backdrop, it could be wise to add tech stocks Murata Manufacturing Co., Ltd. (MRAAY), Logitech International S.A. (LOGI), and GoPro, Inc. (GPRO) to one’s watchlist.
Last year, the demand for hardware slowed down, as was evident from the 16.2% decline in worldwide PC shipments. The struggles continued this year, as was clear from the worldwide PC shipments, which fell 30% year-over-year during the first quarter.
However, the demand for specialized and quality hardware will likely remain robust in the long term thanks to increasing reliance on digital devices and the growing adoption of emerging technologies like artificial intelligence (AI), IoT, and virtual reality (VR).
Moreover, as businesses continue to invest in transforming their operations digitally, the requirement for hardware to be used in internal processes, data centers, and cloud infrastructure will help drive the demand for advanced hardware solutions.
As inflation continues to decline, consumer sentiment is expected to improve, thereby driving the sales of specialized hardware. The computer peripheral equipment market is expected to grow at a CAGR of 3.3% to $166.70 billion in 2027.
Let’s take a closer look at the featured stocks:
Murata Manufacturing Co., Ltd. (MRAAY)
Headquartered in Nagaokakyo, Japan, MRAAY designs, manufactures, and sells ceramic-based passive electronic components and solutions. It operates through Components, Devices and Modules, and Other segments. The company offers capacitors, inductors, noise suppression products/EMI suppression filters, ESD protection devices, resistors, thermistors, sensors, timing devices, quartz devices, sound components, etc.
In terms of the trailing-12-month net income margin, MRAAY’s 14.08% is 599.9% higher than the 2.01% industry average. Likewise, its 25.97% trailing-12-month EBITDA margin is 202.3% higher than the industry average of 8.59%. Furthermore, the stock’s 13.61% trailing-12-month Capex/Sales is 455.5% higher than the industry average of 2.45%.
MRAAY’s revenue for the first quarter ended June 30, 2023, declined 15.8% year-over-year to ¥367.69 billion ($2.57 billion). Its operating profit came in at ¥50.11 billion ($349.91 million), representing a decline of 44.8% year-over-year. Its profit attributable to owners of parent declined 34.1% year-over-year to ¥50.10 billion ($349.84 million).
The company’s net cash provided by operating activities rose 81.1% year-over-year to ¥59.37 billion ($414.57 million).
Analysts expect MRAAY’s revenue for the quarter ending December 31, 2023, to increase 6.3% year-over-year to $3.46 billion. Over the past nine months, the stock has gained 18.4% to close the last trading session at $14.30.
MRAAY’s prospects are reflected in its POWR Ratings. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It is ranked #15 out of 42 stocks in the Technology – Hardware industry. It has a B grade for Quality. Click here to see the additional ratings of MRAAY for Growth, Value, Momentum, Stability, and Sentiment.
Logitech International S.A. (LOGI)
Headquartered in Lausanne, Switzerland, LOGI designs, manufactures, and markets products that connect people to working, creating, gaming, and streaming worldwide. The company offers pointing devices, such as wireless mouse; corded and cordless keyboards, living room keyboards, and keyboard-and-mouse combinations; PC webcams; and keyboards for tablets and smartphones, as well as other accessories for mobile devices.
On July 18, LOGI announced the acquisition of Loupedeck, a custom consoles and software creator designed to make the creative process faster and more intuitive for streamers, creators, and gamers based in Helsinki.
LOGI’s general manager Ujesh Desai said, “This acquisition augments Logitech’s product portfolio today and accelerates our software ambitions of enabling keyboards, mice, and more to become smarter and contextually aware, creating a better experience for audiences across Logitech.”
In terms of the trailing-12-month EBIT margin, LOGI’s 10.69% is 138.6% higher than the 4.48% industry average. Likewise, its 12.97% trailing-12-month EBITDA margin is 51% higher than the industry average of 8.59%. Furthermore, the stock’s 1.20x trailing-12-month asset turnover ratio is 94.4% higher than the industry average of 0.62x.
For the fiscal first quarter ended June 30, 2023, LOGI’s net sales declined 16% year-over-year to $974.50 million. Its non-GAAP gross profit declined 18.1% year-over-year to $380.20 million. The company’s non-GAAP net income declined 16% over the prior-year quarter to $103.40 million. Also, its non-GAAP EPS came in at $0.65, representing a decline of 12.2% year-over-year.
Its net cash provided by operating activities came in at $239.80 million, compared to net cash used in operating activities of $35.67 million in the year-ago period.
Street expects LOGI’s EPS for the quarter ending September 30, 2023, to decline 24.7% year-over-year to $0.63. Its revenue for fiscal 2025 is expected to increase 7.9% year-over-year to $4.36 billion.
LOGI is ranked #20 in the same industry. It has a B grade for Quality. To see LOGI’s Growth, Value, Momentum, Stability, and Sentiment ratings, click here.
GoPro, Inc. (GPRO)
GPRO develops and sells cameras, mountable and wearable accessories, and subscription services and software internationally.
In terms of the trailing-12-month asset turnover ratio, GPRO’s 1.01x is 1.7% higher than the 1x industry average.
GPRO’s revenue for the second quarter ended June 30, 2023, declined 3.9% year-over-year to $241.02 million. Its non-GAAP gross margin came in at 31.6%, compared to a non-GAAP gross margin of 38.5% in the year-ago period. The company’s non-GAAP operating loss came in at $12.09 million, compared to a non-GAAP operating income of $14.99 million in the year-ago period.
Its non-GAAP net loss came in at $11.29 million, compared to a non-GAAP net income of $12.79 million. Also, its non-GAAP loss per share came in at $0.07, compared to a non-GAAP EPS of $0.08 in the prior-year quarter. Its net cash provided by investing activities rose 127.4% year-over-year to $55.73 million.
Analysts expect GPRO’s EPS for the quarter ending September 30, 2023, to decline 89.5% year-over-year to $0.02. Its revenue for the quarter ending December 31, 2023, is expected to increase 5.6% year-over-year to $338.83 million. Over the past month, the stock has declined 7.5% to close the last trading session at $3.81.
GPRO’s outlook is reflected in its POWR Ratings. Within the Technology – Hardware industry, it is ranked #27.
It has a B grade for Value and Quality. Click here to see the other ratings of GPRO for Growth, Momentum, Stability, and Sentiment.
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MRAAY shares were trading at $14.23 per share on Wednesday morning, down $0.07 (-0.49%). Year-to-date, MRAAY has gained 15.69%, versus a 17.52% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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