While macroeconomic challenges have severely impacted the tech industry, its long-term prospects remain optimistic. So, we think tech stocks TDK Corporation (TTDKY), Sharp Corporation (SHCAY), and Quantum Corporation (QMCO) could be ideal watchlist additions for value investors.
According to the most recent Gartner, Inc. prediction, worldwide IT spending would hit $4.7 trillion in 2023, a 4.3% increase from 2022.
Moreover, the global need for hardware acceleration is expected to grow at a 51% CAGR until 2033. The increasing usage of numerous data accelerators by a wide range of enterprises is expected to significantly contribute to market growth.
Furthermore, the digital transformation market is expected to increase at a CAGR of 25% to $ 6.50 trillion by 2032. Organizations are using digital transformation to mitigate disruption risks such as corporate rebuilding, market volatility, and geopolitical crises.
Investors’ interest in tech stocks is evident from the iShares U.S. Technology ETF (IYW) 24.4% returns over the past six months.
Let’s delve deeper into the fundamentals of the featured stocks.
TDK Corporation (TTDKY)
Headquartered in Tokyo, Japan, TTDKY engages in the manufacture and sale of electronic components worldwide. The company operates through the following segments: Passive Components; Sensor Application Products; Magnetic Application Products; Energy Application Products; and Other segments.
TTDKY’s forward EV/Sales of 1.04x is 63% lower than the industry average of 2.81x. Its forward Price/Sales of 0.92x is 66.1% lower than the industry average of 2.72x.
TTDKY’s trailing-12-month ROCE of 6.51% is 947.3% higher than the industry average of 0.62%. Its trailing-12-month net income margin of 4.49% is 123% higher than the industry average of 2.01%.
TTDKY’s total current assets came in at ¥1.69 trillion ($11.60 billion) for the period that ended June 30, 2023, compared to ¥1.61 trillion ($11.05 billion) for the period that ended March 31, 2023. Its total assets came in at ¥3.30 trillion ($22.70 billion), compared to ¥3.15 trillion ($21.63 billion) for the same period.
Analysts expect TTDKY’s revenue to increase 290.2% year-over-year to $14.46 billion for the year ending March 2024. Its EPS is expected to come in at $2.29 for the same period. TTDKY’s stock has gained 7.3% year-to-date to close its last trading session at $34.90.
TTDKY’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 assess stocks by 118 different factors, each with its own weighting.
Within the Technology – Hardware industry, it is ranked #13 out of 42 stocks. The stock has an A grade for Value and a B for Stability and Momentum. Click here to see the additional ratings of TTDKY for Growth, Sentiment, and Quality.
Sharp Corporation (SHCAY)
Headquartered in Sakai, Japan, SHCAY manufactures and sells telecommunication equipment, electric and electronic application equipment, and electronic components in Japan, China, and internationally.
SHCAY’s forward EV/Sales of 0.39x is 67.5% lower than the industry average of 1.20x. Its forward Price/Sales of 0.22x is 75.9% lower than the industry average of 0.90x.
SHCAY’s trailing-12-month asset turnover ratio of 1.29x is 29.4% higher than the industry average of 1x.
SHCAY’s total liabilities came in at ¥1.48 trillion ($10.19 billion) for the period that ended June 30, 2023, compared to ¥1.55 trillion ($10.66 billion) for the period that ended March 31, 2023. Its net assets came in at ¥272.59 billion ($1.87 billion), compared to ¥222.36 billion ($1.53 billion) for the same period.
Street expects SHCAY’s revenue to increase 330.7% year-over-year to $17.78 billion for the year ending March 31, 2024. Over the past month, the stock has gained 10.4% to close the last trading session at $1.49.
SHCAY’s POWR Ratings reflect strong prospects. It 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 Quality. It is ranked #11 in the same industry.
Beyond what is stated above, we’ve also rated SHCAY for Growth, Stability, Momentum and Sentiment. Get all SHCAY ratings here.
Quantum Corporation (QMCO)
QMCO delivers end-to-end solutions to analyze, enrich, store, manage, protect, and preserve unstructured data across its entire lifecycle. The company specializes in solutions for video data, images, and other large files. Its portfolio of products includes primary storage software and systems, secondary storage software and systems, as well as devices and media.
QMCO’s forward EV/Sales of 0.43x is 84.8% lower than the industry average of 2.81x. Its forward Price/Sales multiple of 0.18 is 93.3% lower than the industry average of 2.72.
QMCO’s trailing-12-month CAPEX / Sales of 2.91% is 20% higher than the 2.42% industry average. Its trailing-12-month asset turnover ratio of 1.89% is 206.8% higher than the 0.61% industry average.
QMCO’s gross profit increased 2.6% year-over-year to $34.93 million for the first quarter that ended June 30, 2023, while its operating expenses decline marginally from the year-ago value to $40.78 million.
Also, its total current liabilities came in at $142.86 million for the period that ended June 30, 2023, compared to $152.60 billion for the period that ended March 31, 2023.
Over the past month, the stock has lost 37.4% to close the last trading session at $0.68.
QMCO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It is ranked #12 in the same industry. It has a B grade for Value. To see additional QMCO’s rating for Growth, Stability, Sentiment, Momentum and Quality, click here.
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TTDKY shares were trading at $34.90 per share on Monday morning, down $0.00 (0.00%). Year-to-date, TTDKY has gained 7.25%, versus a 17.75% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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