Over the past two years, the technology industry has thrived as organizations have moved to digitalize their operations to combat some pandemic-led damages. This has made the technology sector thrive. Technologies like Blockchain, Artificial Intelligence (AI), and Virtual Reality (VR) have gained immense prominence. The U.S tech industry accounts for 35% of the total world market and is expected to grow at a 5% CAGR through 2024.
The stock market has been highly volatile since the beginning of the year. While the S&P 500 has declined 5.6% year-to-date, the CBOE Volatility Index has increased 24% due to ongoing geopolitical tensions, looming interest rate hikes, and surging inflation. Against this backdrop, the tech sector has experienced a selloff. However, given the industry’s solid long-term growth prospects, companies possessing good earnings projections might still deliver solid returns.
Fundamentally sound technology stocks Autodesk, Inc. (ADSK), SMART Global Holdings, Inc. (SGH), Western Digital Corporation (WDC), ChannelAdvisor Corporation (ECOM), and Everspin Technologies, Inc. (MRAM) are down more than 20% in price so far this year. But considering their ability to grow in the future, we think these stocks could be worth adding to one’s portfolio.
Autodesk, Inc. (ADSK)
ADSK is a three-dimensional (3D) design, engineering, and entertainment software and services company with primary product offerings that include AutoCAD Civil 3D, surveying, design, and documentation solution, BIM 360, a cloud-based construction management AutoCAD LT, drafting and detailing software. The company is based in San Rafael, Calif.
Last month, ADSK launched Bridge, a data-sharing capability that gives control to construction teams to share only relevant data with project stakeholders. This new capability ensures data privacy and works efficiency by reducing the need to process manual data. This is expected to be productively beneficial for the company.
Also last month, ADSK announced that it had signed a definitive agreement to acquire The Wild, a cloud-connected, extended reality (XR) platform, to meet the technological advancements required in the field of augmented reality (AR) and virtual reality (VR) within the architecture, engineering, and construction (AEC) industry. This should prove to be strategically beneficial for the company because XR is an imperative business requirement to keep up with the current fast-paced technological field.
ADSK’s total net revenue increased 16.6% from the prior-year quarter to $1.21 billion in its fiscal fourth quarter, ended Jan. 31, 2022. Its gross profit for the quarter came in at $1.10 billion, reflecting a 15.8% increase year-over-year. For the fiscal year ended Jan.31, 2022, its net cash provided by operating activities stood at $1.53 billion, up 6.5% year-over-year.
The $1.34 consensus EPS estimate for its fiscal first quarter ending April 31, 2022, represents a 29.8% improvement year-over-year. The $1.15 billion consensus revenue estimate for the same quarter represents a 16.4% increase from the same period the prior year. It has an impressive earnings surprise history; it has topped the Street’s EPS estimates in each of the trailing four quarters.
ADSK’s shares have gained 2.9% in price over the past month but have slumped 27.2% year-to-date to close the last trading session at $204.77. It is currently trading 40.5% lower than its 52-week high of $344.39.
ADSK’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which translates to Buy in our POWR Rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
ADSK has an A grade in Quality. It is ranked #26 of 158 stocks in the Software - Application industry.
Beyond what is stated above, we have also rated ADSK for Momentum, Stability, Sentiment, Value, and Growth. Get all the ADSK ratings here.
Click here to check out our Software Industry Report for 2022
SMART Global Holdings, Inc. (SGH)
SGH is the designer and manufacturer of specialty solutions for the computing, memory, and light-emitting diode (LED) markets. The Cayman Islands-based company operates through its three segments - Memory Solutions; Intelligent Platform Solutions (IPS); and LED Solutions.
SGH’s IPS business line announced its new umbrella brand Penguin Solutions in April. The new brand identity represents the entire expanse of HPC, AI, and IoT/Edge offerings available under IPS. "Leveraging years of industry experience, our new brand, Penguin Solutions, reflects the combined value we offer to our customers," said Thierry Pellegrino, President of IPS and Penguin Solutions.
Last month, the company introduced the next generation of its DuraFlash™ ME2 family of SATA SSD products. It is available for industrial and commercial temperature grades and implements features for handling power fluctuations and sudden power loss events. This might add to the company’s revenue stream.
SGH’s net sales have increased 47.8% year-over-year to $449.2 million in its fiscal second quarter, ended Feb.28, 2022. Its non-GAAP operating income grew 111% from its year-ago value to $57.40 million, while its non-GAAP net income attributable to SGH improved 117.4% year-over-year to $47.60 million. Its non-GAAP EPS increased 97.7% from its year-ago value to $0.87.
Analysts expect SGH’s revenue for the fiscal third-quarter, ending May 31, 2022, to come in at $455.02 million, indicating an increase of 4% year-over-year. Its EPS is expected to grow 8.5% year-over-year to $0.75 in the same period. The company also surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past six months, the stock has gained 6.5% in price to close yesterday’s trading session at $23.81. However, the stock has slumped 32.9% year-to-date. It is trading 36.1% lower than its 52-week high of $37.25.
It is no surprise that SGH has an overall B rating, which equates to Buy in our POWR Rating system.
SGH has an A grade in Growth and a B in Value and Sentiment. Among the 96 stocks in A-rated Semiconductor & Wireless Chip industry, SGH is ranked #37.
In addition to the POWR Rating grades I have just highlighted, you can see the SGH’s Momentum, Stability, and Quality grades here.
Click here to checkout our Semiconductor Industry Report for 2022
Western Digital Corporation (WDC)
WDC in SanJose, Calif., develops, manufactures, markets, and sells data storage devices and solutions in the United States and internationally. The company’s data storage solutions include Client Devices, Data Center Devices and Solutions, and Client Solutions. The company sells its offerings under the G-Technology, SanDisk, and WD brands to original equipment manufacturers, distributors, and retailers.
On March 30, 2022, WDC and Samsung Electronics Co., agreed to a unique and far-reaching collaboration that is expected to standardize and drive the broad adoption of next-generation data placement, processing, and fabrics (D2PF) storage technologies. This collaboration is expected to facilitate wider adoption of D2PF technologies, such as Zoned storage and create value for customers.
WDC’s revenue increased 22.6% year-over-year to $4.83 billion in its fiscal second quarter, ended Dec. 31, 2021. Its operating income improved 157.1% year-over-year to $882 million, while its net income increased 241.5% from its year-ago value to $724 million. Its EPS stood at $2.30, up 233.3% from the prior-year quarter.
The Street expects WDC’s EPS for its fiscal quarter, ended March 31, 2022, to improve 48.2% year-over-year to $1.51. The $4.36 billion consensus revenue estimate for the same period represents a 5.5% increase year-over-year. The company surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock has gained 2.5% in price over the past month to close the last trading session at $47.76. It has slumped 26.8% year-to-date. It is now trading 38.9% lower than its 52-week high of $78.19.
WDC’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, equating to Buy in our POWR Rating system.
The company has an A grade in Growth and a B in Value. The stock is ranked #9 of 45 in the Technology – Hardware industry.
To get WDC’s ratings for Quality, Momentum, Stability, and Sentiment, click here.
ChannelAdvisor Corporation (ECOM)
ECOM provides Software-as-a-Service (SaaS) solutions that enable brands and retailers to improve their e-commerce solutions, expand to new channels, and grow sales. The Morrisville, N.C., company serves online businesses of brands and retailers and advertising agencies.
In January ECOM made new additions to its list of integrations and is now supporting more than 300 brands and retailers globally to ensure that they can achieve a wider audience and additional sales. This development reflects the company’s expanding business operations to keep pace with the clients’ growing needs.
For the fiscal fourth quarter, ended Dec. 31, 2021, ECOM’s revenue increased 12.7% year-over-year to $45.45 million. Its gross profit grew 11% from its year-ago value to $35.25 million. Its net income for the quarter stood at $33.67 million, reflecting a 450.1% increase year-over-year, while its net income per share was $1.06, up 430% from the prior-year quarter.
ECOM’s revenue for its fiscal third quarter, ending Sept. 30, 2022, is expected to be $46.37 million, indicating an 11.5% year-over-year growth. The company’s EPS is expected to increase 4.3% year-over-year to $0.22 for the same quarter. ECOM also beat the consensus EPS estimates in each of the trailing four quarters.
ECOM’s stock has slumped 37.2% in price year-to-date to close the last trading session at $15.50. The stock is trading 47.3% lower than its 52-week high of $29.42.
The company has an overall B rating, translating to Buy in our proprietary rating system.
ECOM is also rated B in Value, Quality, and Sentiment. In the Software – Application industry, it is ranked #17.
Click here to see additional POWR Ratings for Growth, Momentum, and Stability for ECOM.
Everspin Technologies, Inc. (MRAM)
MRAM in Chandler, Ariz., is engaged in providing magnetoresistive random-access memory (MRAM) solutions to industrial, medical, automotive/transportation, and aerospace markets. The company’s offerings include Toggle MRAM, spin-transfer torque MRAM, and tunnel magnetoresistance sensor products.
MRAM’s total revenue increased 31.2% year-over-year to $55.15 million in its fiscal year ended Dec. 31, 2021. Its gross profit grew 82.8% from its year-ago value to $33.07 million. The company’s net income and comprehensive income increased 151% year-over-year to $4.34 million, while its net income per share came in at $0.22, up 148.9% from the prior year.
The $0.05 consensus EPS estimate for the fiscal second quarter, ending June 30, 2022, reflects a 15.2% year-over-year improvement. The $14.50 million consensus revenue estimate for the same quarter, represents a 22.4% increase from the same period last year. The company also surpassed the consensus EPS estimates in three of the trailing four quarters.
MRAM has gained 39.9% in price over the past year. However, it fell 29.2% year-to-date to close the last trading session at $8. The stock is currently trading 44.3% lower than its 52-week high of $14.36.
MRAM’s POWR Ratings reflect this promising outlook. The company has an overall rating of B, translating to Buy in our proprietary rating system.
MRAM is also rated B in Value and Quality. It is ranked #16 in the Semiconductor & Wireless Chip industry.
To see additional POWR Ratings for Growth, Momentum, Stability, and Sentiment for MRAM, click here.
Click here to checkout our Semiconductor Industry Report for 2022
ADSK shares were trading at $203.07 per share on Friday afternoon, down $1.70 (-0.83%). Year-to-date, ADSK has declined -27.78%, versus a -5.28% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
5 Tech Stocks Down More Than 20% in 2022 That are Great Buys This Month StockNews.com
