Growing concerns over the escalating geopolitical tensions and the potential aggressive interest rate hikes have led to the technology sector witnessing a massive sell-off lately. The tech-heavy Nasdaq Composite closed yesterday’s session at its 2022 low. However, rapid digital transformation and increasing dependency on technology should help the sector rebound soon. According to David Groombridge, VP Analyst, Gartner. "CEOs know they must accelerate the adoption of digital business and are seeking more direct digital routes to connect with their customers."
The Fed's plans to raise interest rates aggressively this year to curb the surging inflation could weigh further on the tech sector. However, according to Wedbush analyst Dan Ives, this might be an opportune time to aggressively own tech names as the sector looks oversold. According to Gartner, worldwide IT spending is expected to reach $4.4 trillion in 2022, increasing 4% from 2021.
That’s why today we're highlighting 3 exciting stocks from our Top 10 Technology screen, which is just 1 of the 10 screens in our POWR Screens 10 service (more on that below). We think it could be wise to add under-the-radar tech stocks Progress Software Corporation (PRGS), Rimini Street, Inc. (RMNI), and Photronics, Inc. (PLAB) to your portfolio now. These stocks are rated a Strong Buy in our proprietary POWR Ratings system.
Progress Software Corporation (PRGS)
PRGS develops, deploys, and manages business applications. The company offers OpenEdge, a development software, which builds multi-language applications for secure deployment across various platforms and devices, as well as cloud; developer tools that comprise components for user interface development for Web, mobile, desktop, chat, and AR/VR apps, as well as automated application testing and reporting tools.
Last month PRGS announced the availability of 35+ new Progress DataDirect connectors to assist organizations in overcoming the challenge of accessing data and business intelligence from different applications. In addition to the industry-leading portfolio of pre-built connectors, the new series provides fast and direct access to various popular data sources, including Foursquare, Google Calendar, Twitter, WordPress, YouTube, Zoom, and more.
Also, last month PRGS announced the latest release of Progress WhatsUp Gold, its award-winning IT infrastructure monitoring software. With the release of WhatsUp Gold, which was less than six months after PRGS acquired Kemp, PRGS introduced integration with the comprehensive network traffic performance monitoring and diagnostics capabilities of Progress Flowmon and the monitoring of Progress LoadMaster. PRGS now provides organizations a comprehensive and easy-to-understand view of their networks' performance from a single pane of glass.
In the first quarter ending February 28, 2022, PRGS' non-GAAP revenue increased 11.9% year-over-year to $147.51 million. The non-GAAP income from operations grew 3.7% from its year-ago value to $58.73 million, while its non-GAAP net income amounted to $43.56 million, up 2.5% from its prior-year quarter. The company's non-GAAP EPS rose 2.1% from its previous period to $0.97.
Analysts expect PRGS' revenue to increase 13.4% year-over-year to $146.45 million for the second quarter ending May 2022. The consensus EPS estimate of $0.95 for the second quarter ending May 2022 represents a 15.9% improvement year-over-year. In addition, it has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in all of the trailing four quarters. The stock has gained 4.7% over the past three months.
PRGS' POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
PRGS has also rated an A grade for Quality and a B for Value and Growth. Within the Software - Application industry, it is ranked #3 of 156 stocks. To see additional PRGS ratings for Momentum, Stability, and Sentiment, click here.
Rimini Street, Inc. (RMNI)
RMNI offers enterprise software products, services, and support for multiple industries. The company provides software support services for Oracle and SAP enterprise software products. It sells its solutions primarily through direct sales organizations in North America, Latin America, Europe, Africa, the Middle East, Asia, and the Asia-Pacific.
During the fourth quarter ended December 31, 2021, RMNI's revenue increased 13% year-over-year to $99.28 million. The non-GAAP operating income grew 62.4% from its year-ago value to $19.36 million, while the non-GAAP net income improved 600.6% from its prior-year quarter to $77.83 million. The company's EPS came in at $0.77 compared to a loss per share of $0.06 in the previous period.
The consensus EPS estimate of $0.11 for the first quarter ending March 2022 represents 2.1% year-over-year growth. Analysts expect revenue to increase 8.9% year-over-year to $95.67 million for the first-quarter ending March 2022. In addition, it has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in all of the trailing four quarters. The stock has gained 13.3% over the past three months.
It is no surprise that RMNI has an overall A rating, which equates to Strong Buy in our POWR Ratings system. RMNI has an A grade for Quality and a B grade for Value and Growth. Within the same industry, it is ranked #1. Click here to see the additional POWR Ratings for RMNI (Stability, Sentiment, and Momentum).
Photronics, Inc. (PLAB)
PLAB, along with its subsidiaries, engages in the manufacture and sale of photomask products and services internationally. The company provides photomasks that are used to manufacture integrated circuits and flat panel displays (FPDs) and to transfer circuit patterns onto semiconductor wafers, FDP substrates, and other electrical and optical components.
PLAB's revenue increased 24.8% year-over-year to $189.83 million for the first quarter ending January 30, 2022. The operating income grew 224.6% from its year-ago value to $38.20 million, while its net income attributable to PLAB improved 187% from its prior-year quarter to $23.06 million. The company's EPS rose 192.3% year-over-year to $0.38.
Analysts expect PLAB's revenue to increase 20.4% year-over-year to $192.37 million for the second quarter ending April 2022. The consensus EPS estimate of $0.35 during the same period indicates a 105.9% improvement year-over-year. In addition, it has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in all of the trailing four quarters. The company's shares have gained 20.9% over the past six months.
PLABs strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock also has an A grade for Growth and a B grade for Value and Sentiment. In the B-rated Semiconductor & Wireless Chip industry, it is ranked #1 of 96 stocks.
In total, we rate PLAB on eight different levels. Beyond what we've stated above, we have also given PLAB grades for Quality, Stability, and Momentum. Get all the PLAB ratings here.
Want more stocks like these?
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PRGS shares were trading at $47.24 per share on Thursday morning, up $1.04 (+2.25%). Year-to-date, PRGS has declined -1.74%, versus a -11.07% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
3 Under-the-Radar Tech Stocks to Add to Your Portfolio This Month StockNews.com
