With growing investments, rising demand for tech talent, and the rapid adoption of digital solutions worldwide, the tech industry is expected to remain a significant driver of economic innovation and growth in the coming years. Thus, investors could consider adding fundamentally sound tech stocks Informatica Inc. (INFA), Upwork Inc. (UPWK), and PRA Group, Inc. (PRAA), trading below $50.
The tech industry is poised for strong growth, fueled by advancements in artificial intelligence and increasing digital transformation across various sectors. The Biden-Harris Administration, through the U.S. Department of Commerce’s Economic Development Administration (EDA), announced a funding round of approximately $504 million in implementation grants to 12 Tech Hubs to scale up the production of critical technologies.
Meanwhile, significant tech spending is driving infrastructure development, with companies expanding their AI investments. Gartner predicts global IT spending will reach $5.74 trillion in 2025, a 9.3% increase from 2024. Likewise, software spending is expected to grow 14% to $1.23 trillion, while communication services will rise 4.4% to $1.60 trillion.
Considering these factors, let’s take a look at the fundamentals of the three tech stock picks.
Informatica Inc. (INFA)
INFA is an enterprise cloud data management company that has developed an artificial intelligence-powered platform that connects, manages, and unifies data across multi-vendor, multi-cloud, and hybrid systems at an international enterprise scale.
On November 12, INFA announced the expansion of the GenAI-powered data management assistant, CLAIRE GPT, in Europe and the Asia Pacific (APAC) regions, followed by its launch in North America this year.
This expansion will enable customers more flexibility and accessibility to leverage GenAI-powered data management capabilities. It will also allow INFA to set its footprint in the Asia Pacific region.
On September 12, INFA announced that Ricoh Company, Ltd., a leading provider of document management solutions, selected its Intelligent Data Management Cloud™ (IDMC) to accelerate Ricoh’s GLIDER data infrastructure project to support the overall business transformation of Ricoh becoming a digital services company.
INFA’s 3.89% trailing-12-month net income margin is 7.6% higher than the 3.61% industry average. Furthermore, the stock’s 80.25% trailing-12-month gross profit margin is 58.3% higher than the 50.70% industry average.
In the fiscal third quarter (which ended on September 30), INFA’s total revenues increased 3.4% year-over-year to $422.48 million. Its non-GAAP income from operations improved 18% from the year-ago value to $151.04 million. The company’s non-GAAP net income came in at $88.95 million and $0.28 per share, indicating growth of 10.3% and 3.7% year-over-year, respectively.
Furthermore, the company’s adjusted EBITDA increased 17.1% from the prior year’s quarter to $154.79 million, and its adjusted free cash flow grew 85.5% from the year-ago value to $107.78 million.
According to the company’s financial guidance for the full year 2024, INFA now forecasts revenue to range from $1.66 billion-$1.68 billion and its non-GAAP operating income to range from $538 million-$558 million. The company also expects adjusted unlevered free cash flow to be between $545 million and $565 million.
The consensus revenue estimate of $457.09 million for the fiscal fourth quarter (ending December 2024) represents a 2.7% increase year-over-year. The consensus EPS estimate of $0.38 for the current quarter indicates a 17.5% improvement year-over-year. The company has an impressive surprise history; it surpassed the consensus revenue and EPS in three of the trailing four quarters.
The stock has gained 5.6% over the past three months, closing the last trading session at $26.39.
INFA’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. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
INFA has a B grade for Quality and Growth. It is ranked #5 out of 18 stocks in the A-rated Software - SAAS industry.
Beyond what is stated above, we’ve also rated INFA for Stability, Momentum, Sentiment, and Value. Get all INFA ratings here.
Upwork Inc. (UPWK)
UPWK operates a work marketplace that connects businesses with various independent professionals and agencies. The company's work marketplace provides access to talent with various skills across a range of categories, including administrative support, sales and marketing, design and creative, and customer service, as well as web, mobile, and software development.
UPWK’s 11.26% trailing-12-month net income margin is 72.5% higher than the 6.53% industry average. Furthermore, the stock’s 76.72% trailing-12-month gross profit margin is 137.7% higher than the 32.28% industry average.
UPWK’s marketplace revenue for the third quarter ended September 30, 2024, increased 12% year-over $167.34 billion. The company’s gross profit increased 14% year-over-year to $150.37 million. Its non-GAAP net income increased 35.6% year-over-year to $39.16 million, and non-GAAP earnings per share increased 38.1% year-over-year to $0.29.
Street expects UPWK’s revenue to be $181.17 million for the year ending December 2024. The company’s EPS for the same quarter is expected to increase 27.9% year-over-year to $0.26. Also, UPWK surpassed the consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.
The stock has gained 73% over the past three months to close the last trading session at $16.91.
UPWK’s robust fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to a Buy in our proprietary rating system.
The stock has a B grade for Growth, Value, and Quality. UPWK is ranked #3 out of 24 stocks in the Internet - Services industry.
Click here to access the additional UPWK ratings (Sentiment, Momentum, and Stability).
PRA Group, Inc. (PRAA)
PRAA is a financial and business services company that engages in the purchase, collection, and management of portfolios of nonperforming loans worldwide. It is involved in the purchase of accounts that are primarily the unpaid obligations of individuals owed to credit originators, which include banks and other types of consumer, retail, and auto finance companies.
PRAA’s 27.94% trailing-12-month EBIT margin is 22% higher than the 22.91% industry average. Furthermore, the stock’s 100% trailing-12-month gross profit margin is 68.5% higher than the 59.34% industry average.
PRAA’s revenue for the fiscal second quarter ended June 30, 2024, total revenues grew 2% year-over-year to $284.23 million. Its net income attributable to PRAA and net income per common share attributable to PRAA came in at $21.52 million and $0.55, compared to a net loss of $3.80 million and $0.55 per share.
Street expects PRAA’s revenue for the quarter ending November 2024 to increase 24.6% year-over-year to $275.81 million. It surpassed Street revenue and EPS estimates in each of the trailing four quarters.
The stock gained 14% over the past month, closing the last trading session at $21.47.
PRAA’s POWR Ratings reflect bright prospects. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
The stock has an A grade for Sentiment and a B for Growth and Momentum. PRAA is ranked #5 out of 83 stocks in the Financial Services (Enterprise) industry.
In addition to the POWR Ratings highlighted above, one can access PRAA’s ratings (Value, Stability, and Quality) here.
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INFA shares were trading at $26.39 per share on Thursday afternoon, down $0.21 (-0.79%). Year-to-date, INFA has declined -7.04%, versus a 27.18% 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 Trading Below $50 With High Growth Potential StockNews.com
