Due to strong demand, the tech industry is expected to thrive consistently over the long run. So, quality tech stocks Panasonic Holdings Corporation (PCRFY), Canon Inc. (CAJPY), and TransAct Technologies Incorporated (TACT) could be wise additions to your portfolio.
According to the most recent Gartner forecast, worldwide IT spending would hit $4.7 trillion in 2023, a 4.3% increase from 2022.
Also, the digital transformation market is expected to grow at a 24.1% CAGR to $31.4 trillion by 2030. The growing digitization trend, as well as the increasing requirement for effective resource utilization, are likely to fuel market expansion.
Moreover, the global edge AI hardware market will grow to $7.98 billion by 2032. AI demand, IoT edge computing, self-driving cars, and real-time decision-making machines are driving global market expansion.
The information technology market is expected to grow at a 7.9% CAGR until 2027. Investors’ interest in tech stocks is evident from the Technology Select Sector SPDR ETF’s (XLK) 23.9% returns over the past three months.
Take a detailed look at the stocks mentioned above:
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 of 0.55x is 53.9% lower than the industry average of 1.19x. Its forward Price/Sales of 0.48x is 49.2% lower than the industry average of 0.90x.
PCRFY’s trailing-12-month CAPEX/Sales of 3.45% is 6.6% higher than the industry average of 3.24%. Its trailing-12-month asset turnover ratio of 1.04% is 3.8% higher than the industry average of 1%.
During the fiscal year that ended March 31, 2023, PCRFY’s sales increased 113% year-over-year to ¥8.38 trillion ($58 billion). Its operating profit rose 81% from the same quarter last year to ¥288.60 billion ($2 billion). Also, its net profit increased 104% from the year-ago quarter to ¥265.50 billion ($1.84 billion), and EPS grew 4% year-over-year to ¥113.72.
The consensus revenue estimate of $60.90 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 EPS estimates in three of four trailing quarters.
PCRFY’s shares have gained 71.9% over the past nine months to close the last trading session at $12.43.
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 grade for Stability and Sentiment. It is ranked #2 out of 43 stocks in the Technology – Hardware industry. Click here for the additional POWR Ratings for Growth, Momentum, and Quality for PCRFY.
Canon Inc. (CAJPY)
Headquartered in Tokyo, Japan, CAJPY manufactures and sells office multifunction devices, plain paper copying machines, laser and inkjet printers, cameras, diagnostic equipment, and lithography equipment. The company operates through four segments: Printing Business Unit, Imaging Business Unit, Medical Business Unit, and Industrial and Others Business Unit.
CAJPY’s forward EV/Sales of 0.94x is 68.4% lower than the industry average of 2.97x. Its forward Price/Sales of 0.87x is 69.8% lower than the industry average of 2.88x.
CAJPY’s trailing-12-month ROCE of 8.32% is significantly higher than the industry average of 0.63%. Its trailing-12-month ROTA of 4.84% is significantly higher than the industry average of 0.06%.
CAJPY’s net sales for the first quarter ended March 31, 2023, increased 10.4% year-over-year to ¥971.13 billion ($6.72 billion). Its operating profit rose 10.9% over the prior-year quarter to ¥84.48 billion ($584.54 million).
The company’s net income attributable to CAJPY increased 22.7% year-over-year to ¥56.41 billion ($390.32 million). In addition, its EPS came in at ¥55.53, representing an increase of 26.3% year-over-year.
Street expects CAJPY’s revenue for the year ending December 31, 2023, to increase 130% year-over-year to $30.67 billion. Over the past three months, the stock has gained 19.7% to close the last trading session at $26.60.
It’s no surprise that CAJPY has an overall A rating, equating to a Strong Buy in our POWR Ratings system. It has an A grade for Quality and a B for Value. It is ranked #4 in the same industry.
Beyond what is stated above, we’ve also rated CAJPY for Growth, Sentiment, Stability, and Momentum. Get all CAJPY ratings 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 data plotting.
TACT’s forward EV/Sales of 1.09x is 63.5% lower than the industry average of 2.97x. Its forward Price/Sales of 1.11x is 61.3% lower than the industry average of 2.88x.
TACT’s trailing-12-month ROCE of 4.29% is 584.9% higher than the industry average of 0.63%. Its trailing-12-month ROTA of 2.98% is significantly higher than the industry average of 0.06%.
TACT’s net sales for the first quarter ended March 31, 2023, increased 129.5% year-over-year to $22.27 million. The company’s adjusted EBITDA came in at $4.46 million, compared to an adjusted EBITDA loss of $5.12 million in the year-ago quarter.
In addition, its net income came in at $3.14 million, compared to a net loss of $4.35 million in the prior-year quarter. Also, its EPS came in at $0.31, compared to a loss per share of $0.44 in the year-ago quarter.
Analysts expect TACT’s revenue to increase 26.2% year-over-year to $73.39 million for the year ending December 2023. Its EPS is expected to come in at $0.38 for the same period. It surpassed EPS estimates in all four trailing quarters. The stock has gained 127.9% over the past nine months to close the last trading session at $8.59.
TACT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It is ranked first in the same industry. It has an A grade for Sentiment and a B for Growth, Value, and Momentum. To see additional TACT ratings for Stability and Quality, click here.
What To Do Next?
Discover 10 widely held stocks that our proprietary model shows have tremendous downside potential. Please make sure none of these “death trap” stocks are lurking in your portfolio:
PCRFY shares were trading at $12.31 per share on Wednesday morning, down $0.12 (-0.93%). Year-to-date, PCRFY has gained 48.77%, versus a 19.76% 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.
Have You Added These 3 Tech Stocks to Your Portfolio Yet? StockNews.com
