The tech sector has experienced a major sell-off since the beginning of the year, amid worries over the looming interest rate hikes. The tech-heavy Nasdaq witnessed a 9% decline year-to-date. However, the tech industry holds immense growth potential, and the heightened digital inclination across industries should help stage a rebound.
Gartner expects digital market prosperity to continue to boost technology investments this year, driving worldwide IT spending to $4.50 trillion in 2022, an increase of 5.1% from 2021. Moreover, with tech companies investing heavily in fast-advancing technologies and breakthrough solutions, the industry should remain on track for solid growth.
Given the industry’s solid long-term prospects, under-the-radar tech stocks Celestica Inc. (CLS), Liquidity Services, Inc. (LQDT), inTest Corporation (INTT), and Travelzoo (TZOO) could be ideal bets now.
Celestica Inc. (CLS)
Headquartered in Toronto, Canada, CLS provides hardware platforms and supply chain solutions worldwide. It operates through two segments: Advanced Technology Solutions; and Connectivity and Cloud Solutions. The company offers manufacturing and supply chain services such as design and development and after-market repair and return services.
This month, CLS announced its AbelConn Electronics facility in Maple Grove, MN, has earned ISO 13485:2016 certification for medical device production. This certification should expand CLS’s global expertise in design and manufacturing and generate a new revenue stream.
In November, CLS announced the acquisition of Singapore-based PCI Private Limited (PCI), an electronics manufacturing services (EMS) provider in Asia. With more than 50 years of operational expertise and a deep understanding of competitive dynamics in the Asia Pacific region, PCI should enable CLS to expand its capabilities in key markets, strengthen its presence in Asia and diversify its customer base.
CLS’s IFRS revenue increased 9.1% year-over-year to $1.51 billion in the fiscal fourth quarter ended December 31. Its non-IFRS operating earnings grew 48.6% from the year-ago value to $74.30 million, while its non-IFRS adjusted net earnings improved 65.8% year-over-year to $55.20 million. Its non-IFRS adjusted earnings per share increased 69.2% from its year-ago value to $0.44.
Street expects the company’s revenue to increase 19% year-over-year to $1.47 billion in the fiscal first quarter ending March 2022. The consensus EPS estimate of $0.34 indicates a rise of 56.7% year-over-year in the same period. Also, CLS beat Street EPS estimates in each of the trailing four quarters, which is impressive.
CLS shares have gained 39.3% over the past six months and 17% over the past five days to close its last trading session at $12.48.
CLS’s POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
CLS is rated an A in Growth and a B in Value, Stability, and Sentiment. Within the Technology-Services industry, it is ranked #1 of 77 stocks.
In addition to the POWR Ratings grades I’ve highlighted, you can see the CLS’s Momentum and Quality ratings here.
Liquidity Services, Inc. (LQDT)
LQDT provides e-commerce marketplaces, self-directed auction listing tools, and value-added services. It operates through four segments: Retail Supply Chain Group; Capital Assets Group; GovDeals; and Machinio. The company’s services include surplus management, asset valuation, asset sales, marketing, returns management, asset recovery, and e-commerce services.
This month, LQDT retained Three Part Advisors, LLC, a rapidly growing, full-service investor relations consulting firm. Bill Angrick, CEO and Chairman of the Board of Liquidity Services, said, “We have retained Three Part Advisors (“TPA”) to execute a comprehensive, strategic investor relations program that focuses on educating investors and increasing our exposure within the investment community. TPA will be instrumental in proactively increasing awareness and educating investors about the significant opportunities that lie ahead for Liquidity Services.”
In November, LQDT announced its northeast expansion by opening a new 100,000 square foot warehouse in Northern Pennsylvania for its Retail segment. Given the solid growth of e-commerce in the past years, the company expects this expansion to help better serve buyers and large omnichannel retailers and growing e-commerce brands, operating fulfillment and return centers in the area.
LQDT’s total revenue increased 25.8% year-over-year to $70.30 million in the fiscal fourth quarter ended September 30. Its non-GAAP adjusted net income grew 17% from the year-ago value to $9.26 million, while its non-GAAP adjusted EBITDA improved 26.7% year-over-year to $11.37 million. Its non-GAAP adjusted EPS increased 13% from its year-ago value to $0.26.
The consensus revenue estimate of $257.53 million for the fiscal year ended December 2021 indicates an increase of 25.1% year-over-year.
The stock gained 5.4% over the past five days and 2.2% intraday to close its last trading session at $18.29.
It’s no surprise LQDT has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The stock is rated an A in Quality and a B in Growth and Sentiment. It is ranked #1 among the 35 stocks in the Internet-Services industry. Click here to see the LQDT’s ratings for Value, Momentum, and Stability.
inTest Corporation (INTT)
INTT supplies test and process solutions for use in manufacturing and testing to semiconductor manufacturers, semiconductor test subcontractors, and third-party foundries worldwide. The company operates in two segments: Thermal Products (Thermal); includes ThermoStream, Thermal Chambers, Thermal Platforms and Electromechanical Semiconductor Products (EMS); includes in2, Cobal, and LS series.
Last month, INTT closed the acquisition of Acculogic, Inc., which provides a broad range of electronic test solutions and operates engineering and sales support facilities in Maple Grove, MN, Lake Forest, CA, and Hamburg, Germany. This acquisition should allow INTT to grow its business by expanding its global reach and enhancing its product portfolio.
In October 2021, INTT announced the acquisition of the assets of Videology Imaging Solutions Inc, a provider of OEM digital streaming and image capturing solutions. “The acquisition deepens our life sciences and industrial presence and brings Videology’s solid performance reputation to inTEST,” commented Nick Grant, Jr., inTEST President, and CEO.
INTT’s net revenue increased 46.4% year-over-year to $21.14 million in the fiscal third quarter ended September 30. Its adjusted net earnings stood at 2.48 million, up 230.7% from the prior-year quarter. Its adjusted EBITDA increased 241.2% year-over-year to $3.39 million. Also, its adjusted EPS increased 228.6% from its year-ago value to $0.23.
Analysts expect the company’s revenue to increase 57.1% year-over-year to $84.53 million for the fiscal period ended December 2021. The consensus EPS estimate of $0.85 indicates a rise of 2,733.3% year-over-year. Also, INTT surpassed the consensus EPS estimate in three of the trailing four quarters.
Over the past year, the stock has gained 35.9% to close its last trading session at $10.45.
INTT’s POWR Ratings reflect its solid fundamentals. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. INTT is rated an A in Value and a B in Growth, Momentum, and Quality. In the A-rated Semiconductor and Wireless Chip industry, it is ranked #5 out of the 100 stocks. Get INTT’s Stability and Sentiment ratings here.
Travelzoo (TZOO)
TZOO operates as an Internet media company, providing travel, entertainment, and local deals from travel and entertainment companies worldwide. The company’s publications and products include Travelzoo Website; Travelzoo iPhone and Android apps; Travelzoo Top 20 email newsletter; and Newsflash email alert service.
In December, TZOO Brand of the Year award in the U.K. The company also received a special recognition award, Consumer Champion, and Best for Travel Deals award for the sixth consecutive time. These recognitions reflect the company’s dominance in the industry.
TZOO’s revenues increased 13.8% year-over-year to $15.69 million in the fiscal third quarter ended September 30. Its gross profit improved 16.9% year-over-year to $12.70 million, while its net income grew 330.9% from the year-ago value of $2.83 million. Its EPS increased 283.3% from its year-ago value to $0.22.
The consensus revenue estimate of $18.47 million for the fiscal fourth quarter ended December 2021 indicates an increase of 48% year-over-year. The EPS estimate of $0.20 indicates a rise of 227.8% year-over-year in the same period. LQDT has also topped the consensus EPS estimates in three of the trailing four quarters.
TZOO shares have gained 4.4% over the past five days and 3.4% intraday to close its last trading session at $9.05.
TZOO has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The stock is rated an A in Quality and a B in Growth, Value, and Sentiment. It is ranked #1 of 76 stocks in the Internet industry. To get TZOO’s Momentum and Stability ratings, click here.
CLS shares were trading at $12.21 per share on Monday afternoon, down $0.27 (-2.16%). Year-to-date, CLS has gained 9.70%, versus a -5.61% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
4 Under-the-Radar Tech Stocks to Buy for February StockNews.com
