Despite economic challenges in recent years, the tech industry has not only survived but thrived, fueled by continuous innovations such as Artificial Intelligence (AI), Machine Learning (ML), cloud computing, and the Internet of Things (IoT). The growing adoption of these cutting-edge technologies is reshaping the industry's landscape, ensuring a fertile ground for companies operating in this space.
Given the resilient nature of the industry, it could be an opportune time to own the shares of three fundamentally sound tech stocks: Panasonic Holdings Corporation (PCRFY), LiveRamp Holdings, Inc. (RAMP), and Materialise NV (MTLS). These stocks are A-rated (Strong Buy) in our proprietary POWR Ratings system.
The growing reliance of businesses on technology has created a lucrative market for IT service providers, with the pandemic playing a positive role. The sudden shift to remote work spurred robust demand for IT solutions, driving increased tools and infrastructure needs.
Backed by the widespread embrace of cloud computing and digital technologies, a significant demand for cybersecurity solutions, and a strong focus on innovation and automation, the global IT services market is projected to exhibit a robust CAGR of 9.7% from 2023 to 2030.
Moreover, the latest forecast from Gartner, Inc. indicates that worldwide IT spending will reach $5.10 trillion in 2024, marking an 8% increase from 2023. While the impact of generative AI on IT spending remains limited, the broader investment in AI is playing a crucial role in driving the overall growth of IT expenditures.
Additionally, as businesses and organizations progressively implement digital transformation strategies, they demand resilient and scalable hardware infrastructure crucial for handling the expanding amounts of data, maintaining seamless connectivity, and supporting their software applications.
The IT hardware market is projected to expand from $121.32 billion in 2023 to $177.11 billion by 2028, growing at a 7.9% CAGR from 2023 to 2028.
Meanwhile, the global 3D printing market is projected to achieve a value of $105.99 billion by 2030, demonstrating an impressive CAGR of 24.9% from 2023 to 2030. The significant increase in digitization, coupled with the widespread adoption of advanced technologies such as Industry 4.0, smart factories, robotics, and machine learning, is expected to drive the demand for online 3D printing.
In light of such favorable trends, let’s delve deeper into the fundamentals of the featured tech stocks in detail:
Panasonic Holdings Corporation (PCRFY)
Headquartered in Kadoma, Japan, PCRFY researches, develops, manufactures, sells, and services various electrical and electronic products worldwide. It operates through five segments: Lifestyle; Automotive; Connect; Industry; and Energy.
On December 12, Panasonic Energy Co., Ltd, a PCRFY subsidiary, entered into an agreement to acquire next-generation nano-composite silicon anode material for Electric Vehicle (EV) lithium-ion batteries from Sila Nanotechnologies Inc. The high-performance Titan SiliconTM supplied by Sila surpasses traditional silicon, providing greater capacity and addressing the expansion challenge during charging.
By leveraging this acquisition, PCRFY aims to enhance its battery performance by replacing more graphite in the anode material with silicon, ultimately improving energy density, EV performance, range, and reducing charging times.
In the same month, PCRFY revealed the commencement of operations for a new facility within Panasonic Appliances Air-Conditioning R&D Malaysia Sdn. Bhd. The recently constructed building, under the Heating & Ventilation A/C Company, features cutting-edge facilities, notably the company's inaugural multi-purpose laboratory for simultaneous testing of water heaters and air conditioning equipment.
This facility is aimed at accelerating the development of air conditioning equipment for the global market, particularly in ASEAN and Europe, and reducing lead times to meet local needs.
For the six-month period, which ended September 30, 2023, PCRFY’s net sales increased 1.4% year-over-year to ¥4.12 trillion ($28.97 billion), while its operating profit improved 28.8% from the year-ago value to ¥192.84 billion ($1.36 billion).
The company’s attributable net profit grew 168.7% from the prior-year period to ¥288.38 billion ($2.03 billion). Meanwhile, its EPS came in at ¥123.51, representing an increase of 168.7% year-over-year.
Analysts predict PCRFY’s EPS for the third quarter (ending December 2023) to increase 22.3% year-over-year to $0.23, while its revenue for the same period is expected to be $14.30 billion. Moreover, the company topped its EPS and revenue estimates in three of the trailing four quarters, which is impressive.
The stock has gained 14%year-to-date to close the last trading session at $9.52.
PCRFY’s POWR Ratings reflect this robust outlook. The stock has an overall A rating, translating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Value and a B for Momentum and Stability. In the 36-stock A-rated Technology - Hardware industry, it is ranked #2. Click here to see PCRFY ratings for Growth, Sentiment, and Quality.
LiveRamp Holdings, Inc. (RAMP)
RAMP operates a LiveRamp Data Collaboration platform that enables an organization to unify customer and prospect data to build a single view of the customer in a way that protects consumer privacy. Its platform supports various people-based marketing solutions, including data collaboration, activation, measurement and analytics, identity, and data marketplace.
On October 17, RAMP unveiled a partner solution for AWS Entity Resolution by Amazon Web Services (AWS). RAMP’s advanced identity resolution capabilities now encompass additional identifier types seamlessly integrated into AWS Entity Resolution.
This empowers marketers, publishers, tech platforms, and agencies to elevate data interoperability in the cloud for enhanced marketing and advertising outcomes, facilitated by RAMP’s robust identifier, RampID™.
In the same month, RAMP and Yahoo extended their partnership to boost addressability and broaden reach in the advertising ecosystem. Publishers utilizing RAMP’s Authenticated Traffic Solution (ATS) can now integrate the cookieless identity solution, Yahoo ConnectID, to access additional addressable demand.
In addition, this collaboration enables brands using the Yahoo DSP to expand their reach through Yahoo ConnectID, leveraging RampID and the increased scale of RAMP’s Authenticated Traffic Solution.
For the fiscal 2024 second quarter, which ended September 30, 2023, RAMP’s revenues increased 8.7% year-over-year to $159.87 million. The company’s non-GAAP net earnings grew 96% and 95.5% from the prior-year quarter to $29.13 million and $0.43 per share, respectively. In addition, its adjusted EBITDA rose 77.7% from the year-ago value to $32.38 million.
The consensus revenue estimate of $165.37 million for the fiscal third quarter (ending December 2023) reflects a 4.3% rise year-over-year. Meanwhile, the consensus EPS estimate of $0.35 for the same quarter indicates a 25.3% increase year-over-year.
Moreover, the company has an excellent earnings surprise history, surpassing the EPS estimates in each of the trailing four quarters.
RAMP’s shares have surged 67.9% over the past nine months and 54.1% over the past year to close the last trading session at $35.05.
RAMP’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It has a B grade for Growth, Value, and Quality. Within the 76-stock Technology - Services industry, it is ranked #4. Click here to see the other ratings of RAMP for Momentum, Stability, and Sentiment.
Materialise NV (MTLS)
Headquartered in Leuven, Belgium, MTLS provides additive manufacturing, medical software, and 3D printing services in the Americas, Europe, Africa, and the Asia-Pacific. The company operates through three segments: Materialise Software; Materialise Medical; and Materialise Manufacturing.
On November 8, MTLS and Nikon SLM announced a collaborative initiative to develop the next generation of MTLS Build Processors (BPs) specifically designed for Nikon SLM Solutions printers. These BPs will seamlessly integrate with the MTLS’ CO-AM platform.
As the manufacturing industry increasingly adopts metal Additive Manufacturing (AM) for end-use components, the demand for improved part quality, cost competitiveness, and rapid production is critical. This partnership aims to provide manufacturers with the appropriate machinery and the flexibility to tailor their 3D printing processes accordingly.
In the same month, MTLS formed a strategic partnership with HP Inc. (HPQ), a global technology leader known for solutions in personal computing, printing, and 3D printing. The collaboration aims to integrate HPQ's Multi Jet Fusion and Metal Jet AM technology into the MTLS’ CO-AM software platform.
This integration will empower manufacturing companies to enhance the efficiency and quality of their 3D printing processes, aligning with industrial standards. The goal is to enable volume production of end parts using 3D printing technology.
In the fiscal third quarter that ended September 30, 2023, MTLS’ revenue increased 3.2% year-over-year to €60.13 million ($63.70 million), while its gross profit rose 5.2% from the prior-year quarter to €33.70 million ($35.70 million).
The company’s net profit for the period improved 184% from the year-ago value to €4.01 million ($4.25 million). Also, its adjusted EBITDA came in at €7.86 million ($8.57 million), up 54.9% from the prior-year quarter.
Street expects MTLS’ revenue for the fiscal fourth quarter (ending December 2023) to increase 4.9% year-over-year to $70.63 million, while its EPS for the same quarter is expected to come in at $0.06. Furthermore, the company’s EPS is projected to improve by 63.1% per annum over the next five years.
Over the past three months, MTLS’ shares have gained 9.9% to close the last trading session at $6.47.
It’s no surprise that MTLS has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. It has an A grade for Growth, Value, and Sentiment. Out of five stocks in the Technology - 3D Printing industry, it is ranked first.
In addition to the POWR Ratings we’ve stated above, we also have MTLS ratings for Momentum, Stability, and Quality. Get all MTLS ratings here.
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PCRFY shares were trading at $9.61 per share on Monday afternoon, up $0.09 (+0.89%). Year-to-date, PCRFY has gained 17.02%, versus a 24.79% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Mukherjee
Anushka's ultimate aim is to equip investors with essential knowledge that empowers them to make well-informed investment choices and attain sustained financial prosperity in the long run.
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