The technology sector continues to thrive thanks to constant innovation and development. Emerging technologies such as artificial intelligence (AI), machine learning (ML), cloud computing, and Internet of Things (IoT) are expected to drive the industry’s growth in the long term.
The increasing acceptance of these cutting-edge technologies is changing the industry landscape and ensuring a favorable environment for businesses in this sector. Therefore, investors should consider investing in high-quality tech stocks such as HP Inc. (HPQ), Box, Inc. (BOX), and LiveRamp Holdings, Inc. (RAMP) to take advantage of industry tailwinds. I can.
Before we dig deeper into the fundamentals of these stocks, let’s discuss what’s shaping the industry outlook.
The technology industry is in the spotlight due to digital transformation efforts and increased investment in implementing advanced technologies. Gartner predicts that global IT spending will reach $5.1 trillion in 2024, an 8% year-on-year increase. Increased investment in cloud computing, generative AI development, and digital transformation initiatives will drive growth.
As the technology industry evolves, there is a growing demand for advanced technology hardware to support remote work and an increase in cybersecurity services. As software advances, the need for advanced hardware becomes essential. There is a strong demand for advanced hardware to meet complex processing and data storage requirements.
The IT hardware market is expected to grow at a CAGR of 7.9% to reach $177.11 billion. Furthermore, as companies promote digital transformation, demand for IT services to introduce and optimize digital products, services, cloud services, etc. is expected to increase. The global IT services market is expected to reach $1.36 trillion in revenue this year and grow at a CAGR of 6.8% to reach $1.77 trillion by 2028.
Investors’ interest in tech stocks is evidenced by the 50.5% return for the Technology Select Sector SPDR ETF (XLK) over the past year.
Given these positive trends, let’s take a deeper dive into the fundamentals of these hot tech stocks.
HP Co., Ltd. (HPQ)
HP provides personal computing and other digital access devices, imaging and printing products, and related technologies, solutions and services worldwide. The company operates through three segments: Personal Systems, Printing, and Corporate Investments. We serve individual consumers, small businesses, and large corporations.
On November 7, HPQ announced that it has partnered with Indo-MIM Private Limited to advance metal additive manufacturing and expand its applications in various industries. INDO-MIM has invested in three HP Metal Jet S100 printers as part of a collaboration to advance additive manufacturing globally.
said Savi Baveja, President and Chief Incubation Officer of Personalization and 3D Printing at HPQ. He is excited to work with INDO-MIM to advance new metal applications, expand material possibilities, and improve precision and productivity. ”
“We share a common purpose to accelerate innovation, grow adoption, and scale breakthrough applications,” he added.
Two of the three presses will be based in Bangalore, India, with a Texas-based company focused on developing materials and applications to serve customers in the Middle East, India and other Asia-Pacific regions. The third unit will expand its production capacity with customers in North America.
In terms of non-GAAP forward P/E, HPQ’s 8.68x is 63% lower than the industry average of 23.46x. The company’s future EV/Sales ratio of 0.68x is 76.5% lower than the industry average of 2.89x. Similarly, the company’s forward EV/EBIT of 8.04x is 60% lower than the industry average of 20.09x.
For the fourth quarter of the fiscal year ended October 31, 2023, HPQ’s total net revenues amounted to $13.82 billion. The company’s non-GAAP net income increased 8.4% year over year to $902 million. Non-GAAP operating income increased 11.3% year over year to $1.25 billion. His non-GAAP net income per share was $0.90, an increase of 9.8% from the prior year period.
HPQ’s revenue for the quarter ending April 30, 2024 is expected to be $13.17 billion, up 2% year over year. EPS for the quarter ending January 31, 2024 is expected to be $0.81, up 8.4% from the year-ago period. He beat consensus EPS estimates in three of the trailing four quarters, which is impressive. Shares have increased 14.4% over the past three months, closing at $29.90.
HPQ’s POWR Rating reflects its solid outlook. According to our unique rating system, the overall rating is “A”, which is equivalent to “Strong Buy”. POWR Ratings evaluates stocks by 118 different factors, each with its own weighting.
HPQ has an A grade for value and momentum and a B grade for growth. Ranked #2 out of 35 stocks in the B-rated Technology – Hardware industry. In addition to the POWR ratings above, you can access HPQ’s additional ratings for Stability, Sentiment, and Quality ratings here.
Box Co., Ltd. (box)
BOX provides a cloud content management platform that enables organizations of all sizes to manage and share content from anywhere and on any device. The company’s Software-as-a-Service platform allows users to perform a variety of services both internally and with external parties. It also offers his web, mobile, and desktop applications for managing cloud content on the platform for custom applications.
On December 14, 2023, BOX announced new consulting services to help customers safely and securely implement AI content strategies across their organizations. These services are available through Box Consulting and provide customized workshops, implementation roadmaps, and managed deployments to help organizations securely implement their AI content strategies.
John Herstein, Chief Customer Officer at Box, said: “The combination of the potential of AI and the value of a company’s unique business content can be transformative, but the steps that can be taken to take full advantage of the power of this new technology are not always clear. ”
“These new services combine Box Consulting’s deep enterprise content expertise with access to Box’s groundbreaking AI technology and the experts who built it. A robust AI content strategy with Box Consulting. By doing so, organizations can unlock the value of unstructured data and realize the power of AI faster,” he added.
In terms of non-GAAP forward PEG, BOX’s 0.87x is 57.2% lower than the industry average of 2.04x. The company’s forward EV/EBITDA of 13.56x is 9.9% lower than the industry average of 15.05x.
BOX’s revenue for the fiscal third quarter ended October 31, 2023 was $261.54 million, an increase of 4.6% from the same period last year. Non-GAAP operating income increased 7.8% year over year to $64.63 million.
The company’s non-GAAP net income attributable to common stockholders increased 14.1% year over year to $53.23 million. Also, his non-GAAP EPS was $0.36, up 16.1% year-over-year.
Analysts expect BOX’s revenue and EPS for the quarter ending January 31, 2023 to be $262.81 million and $0.39, up 2.5% and 4.2% year-over-year, respectively. He beat Street EPS estimates in three of the subsequent four quarters. Shares rose 2.2% over the past three months, closing at $24.89.
BOX’s solid outlook is reflected in its POWR rating. The overall rating is B, which is equivalent to a “buy” according to our own rating system.
We have an A grade for quality and a B grade for growth and value. Ranked #6 out of 75 stocks in the Technology & Services industry. Click here to see additional box ratings for Momentum, Stability, and Sentiment.
LiveRamp Holdings Co., Ltd. (lamp)
RAMP operates a global data collaboration platform. The company operates the LiveRamp data collaboration platform, which enables organizations to integrate customer and prospect data to build a single view of the customer in a way that protects consumer privacy. Its platform supports a variety of human-based marketing solutions, including data collaboration, activation, measurement and analytics, identity, and data marketplaces.
In terms of future EV/EBIT, RAMP’s 18.79x is 6.5% lower than the industry average of 20.09x. The forward price/book of 2.51x is 38.1% lower than his industry average of 4.06x.
RAMP’s revenue for the fiscal second quarter ended September 30, 2023 was $159.87 million, an increase of 8.7% from the same period last year. The company’s non-GAAP net income from continuing operations increased 96% year over year to $29.13 million. Adjusted EBITDA increased 77.7% year over year to $32.38 million.
Additionally, non-GAAP EPS from continuing operations was $0.43, an increase of 95.5% from the prior year period.
Street expects RAMP’s revenue and EPS to be $165.37 million and $0.35 for the quarter ending December 31, 2023, up 4.3% and 25.3% from the year-ago period, respectively. The company has an impressive and surprising history of beating consensus EPS estimates in each of his subsequent four quarters. Shares have increased 58% over the past nine months, closing at $35.40.
It’s no surprise that RAMP has an overall rating of A. This translates to a strong buy in the POWR rating system.
It has a B rating for Growth, Value, Sentiment, and Quality. Ranked 2nd in the industry. In addition to the above, we also evaluated his RAMP momentum and stability. Get all RAMP ratings here.
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HPQ stock was trading at $29.89 per share Thursday afternoon, down $0.01 (-0.03%). Year-to-date, HPQ has declined -0.66%, while the benchmark S&P 500 index has gained -1.17% during the same period.
About the author: Dipanjan Vanture
Dipanjan has been interested in the stock market since his elementary school days. This earned him a master’s degree in finance and accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a keen interest in reading and analyzing emerging trends in financial markets. more…
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