Despite the challenges the technology industry has faced over the past year, including decades of high inflation, aggressive interest rate hikes by the Federal Reserve, and significant layoffs, the industry remains booming due to increased demand for technology hardware solutions. It shows.
So Astronova (ALOT), a fundamentally strong tech stock, could be a solid buy. However, I think investors can also wait for a better entry point in Cricut, Inc. (CRCT) and avoid Western Digital Corporation (WDC).
The tech-heavy Nasdaq Composite Index has soared 40.4% over the past year, supported by ongoing innovation, increased demand for digital solutions due to accelerating digital transformation, and widespread adoption of remote work. reflects the strong performance of
Furthermore, the technology industry has constantly evolved to meet the growing demand for innovative and original solutions. The important role of the technology industry in various sectors such as business, healthcare, education, finance, entertainment, government, etc. is contributing to the growing demand in the IT hardware sector.
Additionally, the global IT hardware market is driven by the increasing digitalization of the public sector. Governments around the world are adopting digital technologies to improve service delivery, increase efficiency, and provide citizen-centric solutions.
The IT hardware market is estimated to reach $130.86 billion this year and is further expected to grow at a CAGR of 7.9% to reach $191.03 billion by 2029.
Furthermore, Gartner forecasts that global IT spending is expected to reach $5.1 trillion in 2024, an 8% increase from the previous year. Although the impact of generative AI on IT spending is currently limited, significant investment in AI is playing a key role in the growth of overall IT spending.
However, the IT hardware market is facing challenges due to growing concerns about e-waste, which includes discarded or used electronic equipment containing IT hardware components. Additionally, high inflation and interest rates further impact the industry.
With these trends in mind, let’s take a look at the fundamentals of three Technology – Hardware stocks.
Stocks to buy:
Astronova Co., Ltd. (a lot)
ALOT designs, develops, manufactures and markets specialty printers and data acquisition and analysis systems, including hardware and software. These systems incorporate advanced technology to collect, store, analyze, and display data in multiple formats. The company operates in two segments: Product ID (PI). and Test & Measurement (T&M).
ALOT’s EBIT margin for the trailing twelve months was 6.96%, which was 40.9% higher than the industry average of 4.94%. The company’s leveraged FCF margin for the trailing twelve months was 18.65%, which is 115.6% higher than the industry average of 8.65%.
For the third quarter of fiscal 2024 ended October 28, 2023, ALOT’s net revenue was $37.55 million and gross profit was $14.78 million, an increase of 18.4% year over year. Additionally, the company’s non-GAAP net income and non-GAAP EPS were $2.75 million and $0.37, respectively, an increase of 231.9% and 825% year-over-year. Additionally, non-GAAP operating income increased 123.8% year over year to $4.62 million.
ALOT stock has increased 30.9% over the past three months, closing at $17.02.
ALOT’s POWR Rating reflects this promising outlook. The stock has an overall rating of A, which equates to a “Strong Buy” according to our proprietary rating system. POWR ratings are calculated by considering 118 different factors, each of which is optimally weighted.
It has a B rating for Growth, Value, Stability, and Sentiment. A-rated Technology – The company ranks #1 out of 37 stocks in the Hardware industry.
In addition to the POWR ratings above, you can also access ALOT’s momentum and quality ratings here.
Notable stocks:
Cricut Co., Ltd. (CRCT)
CRCT is dedicated to the design and marketing of a creativity platform that enables users to turn ideas into professional, handcrafted products. The company operates in three segments: Connected Machines; subscriptions; and accessories and materials.
CRCT’s trailing 12-month leveraged FCF margin of 37.30% is 595.2% higher than the industry average of 5.37%. However, its trailing 12-month ROCE was 8.39%, which is 26.4% lower than the industry average of 11.40%.
CRCT’s total revenue decreased 1.2% year over year to $174.91 million. However, total operating expenses decreased by 9.6% year-on-year to $58.25 million. Net income increased 38.4% year over year and 33.3% to $17.23 million, or $0.08 per share.
The Street expects CRCT’s EPS for the fourth quarter of the fiscal year ending December 2023 to be $0.06, up 16.4% year-over-year, but sales for the quarter are expected to decline 9.5% year-over-year to $254.11 million. likely to be in dollars.
Shares fell slightly during the day to close at $6.44.
CRCT’s mixed fundamentals are reflected in the POWR Rating. The stock has an overall rating of C, which equates to Neutral according to our proprietary rating system.
The rating for growth potential and momentum is C. It ranks 19th in the industry.
Click here to see additional value, stability, and sentiment ratings for CRCT.
Inventory to sell:
Western Digital Co., Ltd. (WDC)
WDC develops, manufactures and markets data storage devices and solutions internationally. Provides client devices such as hard disk drives and solid state drives for computing devices. We also offer data center devices and solutions consisting of enterprise helium hard drives and enterprise SSDs.
WDC’s trailing twelve month gross margin was 8.87%, which was 82% lower than the industry average of 49.14%. The leveraged FCF margin for the past 12 months was -3.84%, which is significantly lower than the industry average of 8.65%.
WDC’s non-GAAP revenue decreased 26.4% year-over-year to $2.75 billion for the fiscal first quarter ended September 29, 2023. The company’s non-GAAP operating loss was $443 million. Non-GAAP net loss was $554 million, or $1.76 per share.
Analysts expect WDC’s EPS for the second quarter of the fiscal year ending December 2023 to be -$1.15, down 173.1% year-on-year. Revenue for the quarter is expected to be $2.99 billion, down 3.7% year over year.
The stock price fell 1.6% over the past five days, closing at $50.19.
WDC’s bleak outlook is reflected in its POWR rating. The stock has an overall rating of D, which equates to a Sell according to our proprietary rating system.
WDC has a D rating for Growth, Value, Stability, Quality, and Sentiment. In the same industry, WDC ranks 33rd.
In addition to the above, we also evaluated the stock’s momentum. Access all his WDC ratings here.
What’s next?
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CRCT stock was trading down $0.00, or 0.00%, at $6.44 per share on Tuesday morning. Year-to-date, CRCT has fallen -2.28%. In comparison, the benchmark S&P 500 index rose -0.32% during the same period.
About the author: Kritika Sarma
An interest in risky financial products and a passion for writing led Kritika to become an analyst and financial journalist. She earned a Bachelor’s degree in Commerce and is currently enrolled in the CFA program. She aims to help investors identify untapped investment opportunities with her fundamental approach. more…
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