While macroeconomic uncertainty could hamper near-term growth, the tech industry's long-term prospects remain promising in light of government initiatives and digital transformation across industries.
So, quality tech stocks Panasonic Holdings Corporation (PCRFY), Spirent Communications plc (SPMYY), and TransAct Technologies Incorporated (TACT) could be worth buying.
According to Gartner, global government IT spending is expected to reach $589.80 billion in 2023, a 7.6% rise from 2022.
Also, the digital transformation market is expected to grow at a 21% CAGR to $2.74 trillion by 2030. The market is driven by technological advancements, changing customer expectations, competitive pressures, evolving business models, operational efficiency, and sustainability.
Moreover, spending on new technologies is expected to hit $1.36 trillion in 2023, adding nearly 30% to the expected spending on traditional items.
The information technology market is expected to grow at a 7.9% CAGR until 2027. Investors’ interest in tech stocks is evident from the iShares U.S. Technology ETF (IYW) 42.2% returns over the past six months.
Let us look deeper into the fundamentals of the featured stocks.
Panasonic Holdings Corporation (PCRFY)
Headquartered in Kadoma, Japan, PCRFY manufactures and sells various electronic products through five segments: Appliances; Life Solutions; Connected Solutions; Automotive; and Industrial Solutions. Its main product offerings include automotive-use batteries, refrigerators, and industrial motors and sensors.
PCRFY’s forward EV/Sales multiple of 0.54 is 54.6% lower than the industry average of 1.19. Its forward Price/Sales multiple of 0.46 is 48.1% lower than the industry average of 0.88.
PCRFY’s trailing-12-month CAPEX/Sales of 3.45% is 7.9% higher than the industry average of 3.20%. Its trailing-12-month asset turnover ratio of 1.04% is 3.6% higher than the industry average of 1.01%.
PCRFY’s sales increased 113% year-over-year to ¥8.38 trillion ($59.19 billion) for the year ended March 31, 2023. Its operating profit rose 81% from the same period last year to ¥288.60 billion ($2.04 billion). Its net profit grew 104% from the year-ago value to ¥265.50 billion ($1.88 billion). Its EPS grew 4% year-over-year to ¥113.72.
The consensus revenue estimate of $59.83 billion for the year ending March 2024 represents a significant increase year-over-year. Its EPS is expected to grow 30.3% year-over-year to $1.10 for the same period. It surpassed its EPS estimates in three of four trailing quarters.
PCRFY’s shares have gained 48.5% over the past nine months to close the last trading session at $11.79.
PCRFY’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
PCRFY has an A grade for Value and a B for Stability and Sentiment. Within the Technology - Hardware industry, it is ranked first among 43 stocks. Click here for the additional POWR Ratings for Growth, Momentum, and Quality for PCRFY.
Spirent Communications plc (SPMYY)
Headquartered in Crawley, the United Kingdom, SPMYY offers automated test and assurance solutions in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. The company operates in Lifecycle Service Assurance and Networks & Security segments.
SPMYY’s forward EV/Sales multiple of 1.93 is 35.1% lower than the industry average of 2.98. Its forward EV/EBITDA multiple of 9.11 is 38.1% lower than the industry average of 14.71.
SPMYY’s trailing-12-month ROCE of 21.89% is significantly higher than the industry average of 0.50%. Its trailing-12-month ROTA of 14.16% is significantly higher than the industry average of 0.02%.
For the year that ended December 31, 2022, SPMYY’s adjusted revenues increased 5.5% year-over-year to $607.50 million. Also, its adjusted operating profit came in at $129.5 million, up 9.3% year-over-year. Its adjusted profit and EPS came in at $114.5 million and $18.75, up 13.5% and 14% year-over-year.
Analysts expect SPMYY’s revenue to increase marginally year-over-year to $597.82 million for the year ending December 2023. The stock has gained 8.1% over the past three months to close the last trading session at $9.30.
SPMYY’s POWR Ratings reflect its robust outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
It is ranked #2 in the same industry. It has an A grade for Stability and Quality and a B for Value. To see additional SPMYY’s ratings for Sentiment, Momentum, and Growth, click here.
TransAct Technologies Incorporated (TACT)
TACT designs, develops, and markets transaction-based and specialty printers and terminals worldwide. It offers thermal printers and terminals to generate labels, coupons, and transaction records, such as receipts, tickets, and other documents, as well as printed logging and plotting of data.
TACT’s forward EV/Sales multiple of 1.15 is 61.2% lower than the industry average of 2.98. Its forward Price/Sales multiple of 1.18 is 58.3% lower than the industry average of 2.84.
TACT’s trailing-12-month ROTA of 2.98% is significantly higher than the industry average of 0.02%. Its trailing-12-month ROCE of 4.29% is 751.3% higher than the industry average of 0.50%.
TACT’s non-GAAP net income for the first quarter ended March 31, 2023, came in at $3.14 million, compared to its non-GAAP net loss of $4.35 million for the prior-year quarter. Its adjusted EBITDA came in at $4.46 million, compared to its adjusted EBITDA loss of $5.12 million in the year-ago quarter. Additionally, its net EPS increased 241.9% year-over-year to $0.31.
Street expects TACT’s revenue to increase marginally year-over-year to $74.40 million for the year ending December 2024. Its EPS is expected to come in at $0.20 for the same period. It surpassed EPS estimates in three of four trailing quarters. Over the past year, the stock has gained 100% to close the last trading session at $8.72.
TACT has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade for Sentiment and a B grade for Value and Growth. It is ranked #3 in the same industry.
Beyond what is stated above, we’ve also rated TACT for Stability, Momentum, and Quality. Get all TACT ratings here.
What To Do Next?
Get your hands on this special report with 3 low priced companies with tremendous upside potential even in today’s volatile markets:
3 Stocks to DOUBLE This Year >
PCRFY shares were trading at $11.64 per share on Tuesday afternoon, down $0.12 (-1.02%). Year-to-date, PCRFY has gained 40.68%, versus a 14.94% 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.
3 Tech Stocks You Don't Want to Miss StockNews.com
