Investors’ concerns over aggressive interest rate increases by the Federal Reserve to tame multi-decade high inflation without triggering an economic slowdown have caused a massive tech sell-off lately, making many high-quality stocks now trade at attractive valuations. The tech-heavy Nasdaq Composite has posted seven consecutive losing weeks and declined 28.8% year-to-date.
However, the continuing digital transformation and increasing use of cloud computing, artificial intelligence (AI), and the internet of things (IoT) position the industry well to rebound soon. So, while many tech stocks have not yet hit bottom, some high-quality stocks look attractive at their current price levels.
The shares of fundamentally solid tech companies Dell Technologies Inc. (DELL), Fujitsu Limited (FJTSY), and Amkor Technology, Inc. (AMKR) have declined lately but hold substantial upside potential. So, we think it could be wise to scoop up these stocks now because they are currently trading at discounts to their peers. In addition, each of them has an overall Strong Buy or Buy rating in our proprietary POWR Ratings system.
Dell Technologies Inc. (DELL)
One of the world’s leading technology companies, DELL designs, develops, manufactures, markets, sells, and supports Information technology solutions, products, and services worldwide. It operates through two segments: Client Solutions and Enterprise Solutions Group. The Round Rock, Tex., company has a collaboration with Owl Cyber Defense Solutions, LLC.
On May 3, 2022, DELL announced that it was enhancing its software across its industry-leading storage portfolio, driving increased intelligence, automation, cyber resiliency, and multi-cloud flexibility. This could lead to increasing demand for its solution.
DELL’s revenues increased 16% year-over-year to $27.99 billion for its fiscal fourth quarter, ended Dec. 31, 2021. The company’s adjusted EBITDA has grown 3% year-over-year to $2.69 billion, while its non-GAAP net income came in at $1.39 billion, representing a 2% year-over-year increase.
In terms of forward P/S, DELL’s 0.31x is 88.7% lower than the 2.75x industry average. The stock’s 0.47x forward EV/S is 82.9% lower than the 2.76x industry average.
For its fiscal year 2023, analysts expect DELL’s EPS and revenue to increase 6.3% and 3%, respectively, year-over-year to $6.61 and $104.23 billion, respectively. It surpassed the Street’s EPS estimates in three of the trailing four quarters. The stock has declined 8.4% over the past month to close yesterday’s trading session at $43.30.
DELL’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary ratings system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
The stock has an A grade for Value. DELL is ranked #12 out of 44 stocks within the Technology - Hardware industry.
To see DELL’s ratings for Sentiment, Momentum, Growth, Stability, and Quality, click here.
Fujitsu Limited (FJTSY)
Headquartered in Tokyo, Japan, FJTSY operates internationally as an information and communication technology company. It operates through three segments: Technology Solutions, Ubiquitous Solutions, and Device Solutions. The company also provides infrastructure, industry, and business and technology solutions.
On May 18, 2022, FJTSY announced that it had signed a strategic collaboration agreement with Amazon Web Services. Hirohisa Yamaguchi, Executive Vice President, Vice Head of Global Customer Success at FJTSY said, “We’re excited for this chance to deepen our strategic collaboration with AWS, which allows us to offer ever greater support for our customers in finance and retail as we guide them on their DX journeys with offerings from our Hybrid IT portfolio under Fujitsu Uvance.”
The company’s total assets have increased 4.4% year-over-year to ¥3,331.81 billion ($26.19 billion) for the fiscal year ended March 31, 2022. Its separate ordinary income grew 13.7% year-over-year to ¥163.07 billion ($1.28 billion), while its separate net income came in at ¥201.14 billion ($1.58 billion), representing a 27.2% year-over-year rise.
In terms of forward EV/S, FJTSY’s 0.99x is 64.2% lower than the 2.76x industry average. In terms of forward P/Sl, the stock’s 1.01x is 63.4% lower than 2.75x the industry average.
FJTSY’s annual revenue is expected to be $29.56 billion in fiscal 2023, representing a 122% year-over-year rise. The stock has declined 14.4% over the past nine months to close yesterday’s trading session at $30.47.
FJTSY’s POWR Ratings reflect solid prospects. The company has an overall A rating, which translates to Strong Buy in our proprietary ratings system. It has a B grade for Value, Sentiment, and Quality.
Click here to see the additional POWR Ratings for FJTSY (Stability, Momentum, and Growth). FJTSY is ranked #1 out of 81 stocks in the Technology – Services industry.
Amkor Technology, Inc. (AMKR)
AMKR in Tempe, Ariz., provides outsourced semiconductor packaging and test services. It serves primarily integrated device manufacturers, fabless semiconductor companies, original equipment manufacturers, and contract foundries. The company offers turnkey packaging and test services.
On May 17, 2022, AMKR announced that its board of directors had approved a $0.05 per share quarterly cash dividend on its common stock. The dividend will be payable on June 27, 2022, to stockholders of record as of the close of business on June 7, 2022.
AMKR’s net sales increased 20% year-over-year to $1.60 billion for the first quarter ended March 31, 2022. Its EBITDA grew 29.6% year-over-year to $363 million, while its net income rose 42.5% year-over-year to $171 million. The company’s EPS surged 40.8% year-over-year to $0.69.
In terms of forward P/S ratio, AMKR’s 0.70x is 74.7% lower than the 2.75x industry average. In terms of forward P/CF, the stock’s 4.33x is 73.9% lower than the 16.58x industry average.
For the quarter ending Sept. 30, 2022, analysts expect AMKR’s EPS and revenue to increase 13.5% and 7.5%, respectively, year-over-year It surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock declined 2.8% in price over the past month to close yesterday’s trading session at $19.07.
It is no surprise that AMKR has an overall B rating, which equates to Buy in our POWR Ratings system. The stock has an A grade for Value and a B grade for Sentiment.
Click here to see AMKR’s rating for Momentum, Growth, Stability, and Quality as well. AMKR is ranked #25 of 95 in the B-rated Semiconductor & Wireless Chip industry.
Click here to checkout our Semiconductor Industry Report for 2022
DELL shares were trading at $44.10 per share on Thursday afternoon, up $0.80 (+1.85%). Year-to-date, DELL has declined -20.94%, versus a -14.50% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
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