Although the tech industry was slammed by macroeconomic headwinds earlier this year, technology executives remain optimistic about the sector's future growth. According to an Ernst & Young poll of tech leaders, 74% of leaders see opportunities for their organizations despite a recessionary environment.
In addition, the adoption of advanced technologies, with most firms opting for a cloud-first strategy, should be the driving force for the industry’s growth. The global information technology market is expected to grow at an 8.8% CAGR to $13.09 trillion in 2026.
Also, as per CompTIA, spending on new technologies, including the internet of things (IoT), robotics, and mixed reality, is expected to hit $1.36 trillion in 2023. This is also expected to add nearly 30% to the projected spending on traditional items.
Given the bright growth prospects of the tech industry, it could be wise to pick up quality tech stocks Cisco Systems, Inc. (CSCO), Arista Networks, Inc. (ANET), and AudioCodes Ltd. (AUDC) at bargain prices this week.
Cisco Systems, Inc. (CSCO)
CSCO manufactures and sells Internet Protocol-based networking and other products related to the communications and information technology industry. The company serves businesses of various sizes, governments, public institutions, and service providers.
On December 7, CSCO’s board of directors announced a quarterly dividend of $0.38 per common share, payable to shareholders on January 25, 2023. This reflects the shareholder return ability of the company.
On November 1, CSCO expanded its portfolio of specializations available through the company’s partner program. The six new specializations would focus on customer priorities and represent fast-growing market opportunities for the company and its partners in areas where CSCO has been innovating.
On October 12, CSCO and Microsoft Corporation (MSFT) announced their partnership to add Microsoft Teams natively on Cisco Room and Desk devices certified for it. The offering is expected to be available in the first half of 2023.
In terms of forward P/E, CSCO is currently trading at 13.37x, 27.56% lower than the industry average of 18.45x. The stock’s forward EV/EBIT multiple of 10.37 is 32.61% lower than the industry average of 15.39x.
For the fiscal first quarter ended October 29, CSCO’s total revenue increased 5.7% year-over-year to $13.63 billion. The company’s non-GAAP net income increased 2.1% year-over-year to $3.55 billion. CSCO’s non-GAAP EPS for the fiscal quarter increased 4.9% from the prior-year period to $0.86.
For the fiscal second quarter ending January 2023, analysts expect CSCO’s revenue to come in at $13.41 billion, representing an increase of 5.4% year-over-year. For the same quarter, the consensus EPS estimate of $0.86 indicates a 1.8% year-over-year increase. The company has surpassed the consensus EPS estimates in each of the trailing four quarters, which is impressive.
The stock has gained 9.2% over the past six months to close its last trading session at $47.37. Moreover, it gained 11.2 % over the past three months.
CSCO’s POWR Ratings reflect a promising outlook. CSCO's overall B rating translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
CSCO is also rated an A for Quality and a B for Stability. Within the Technology - Communication/Networking industry, it is ranked #3 out of 47 stocks.
Click here to see the additional POWR Ratings for CSCO (Growth, Value, Momentum, and Sentiment).
Arista Networks, Inc. (ANET)
ANET develops, markets, and sells cloud networking solutions. The company’s cloud networking solutions consist of extensible operating systems, a set of network applications, and gigabit Ethernet switching and routing platforms.
On December 14, ANET announced the expansion of its widely deployed 7050X4 Series. The company also announced an expansion of the 7060X5 Series with the addition of 800G. This should add to ANET’s revenue stream.
In November, ANET announced a comprehensive network automation solution with the Arista Continuous Integration (CI) Pipeline, built on its EOS Network Data Lake (NetDL). The Arista CI suite is expected to be available in 2023.
In terms of forward non-GAAP PEG, ANET is currently trading at 1.31x, 12.57% lower than the industry average of 1.50x.
ANET’s revenues increased 57.2% year-over-year to $1.18 billion for its fiscal third quarter ended September 30. The company’s non-GAAP net income grew 65.4% year-over-year to $391.92 million. Also, its non-GAAP net income per share came in at $1.25, up 68.9% year-over-year.
For the fiscal fourth quarter ending December 2022, analysts expect ANET’s revenue and EPS to come in at $1.20 billion and $1.21, representing an increase of 45.6% and 47.9% year-over-year, respectively. The company has surpassed the consensus EPS and revenue estimates in each of the trailing four quarters.
The stock has gained 33.9% over the past six months and 6.8% over the past three months to close its last trading session at $121.77.
It’s no surprise that ANET has an overall B rating, which translates to Buy in our POWR Ratings system. The stock has an A grade for Quality and a B for Growth and Sentiment. ANET is ranked #15 within the Technology - Communication/Networking industry.
Beyond what has been stated above, we’ve also rated the stock for Value, Momentum, and Stability. Get all ANET ratings here.
AudioCodes Ltd. (AUDC)
AUDC, headquartered in Lod, Israel, provides advanced communications software, products, and productivity solutions for the digital workplace. The company provides solutions, products, and services for unified communications, contact centers, VoiceAI business lines, and service provider businesses.
In terms of forward P/E, AUDC is trading at 12.54x, 32.1% lower than the industry average of 18.45x. The stock’s forward EV/Sales multiple of 1.55 is 37.3% lower than the industry average of 2.47x.
AUDC’s revenues came in at $69.72 million for the third quarter ended September 30, 2022, up 10% year-over-year. Its non-GAAP net income came in at $10.52 million. Its non-GAAP net earnings per share came in at $0.32.
Street expects AUDC’s revenue to increase 10.2% year-over-year to $73.15 million for the first quarter ending March 2023. For the same quarter, the consensus EPS estimate of $0.36 indicates a 9% year-over-year increase.
AUDC’s shares have gained 2% intraday to close the last trading session at $17.34.
AUDC has an overall A rating, which translates to a Strong Buy in our proprietary rating system. It has an A grade for Quality and a B for Value and Stability. Within the same industry, it is ranked first.
Click here for the additional POWR Ratings for Growth, Momentum, and Sentiment for AUDC.
CSCO shares were trading at $47.73 per share on Wednesday afternoon, up $0.36 (+0.76%). Year-to-date, CSCO has declined -22.32%, versus a -17.46% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
3 Tech Stocks to Pick up at Bargain Prices This Week StockNews.com
