Despite macroeconomic volatility, the technology sector is poised to perform well this year, driven by sustained demand. Therefore, investors can consider investing in solid tech stocks like Canon Inc. (CAJPY), TDK Inc. (TTDKY), and Teradata Inc. (TDC) to protect their portfolios. Additionally, these stocks are rated A (Strong Buy) according to our proprietary POWR Rating System.
Businesses are increasingly turning to digital transformation to improve efficiency and reduce operating costs, resulting in consistent demand for cutting-edge technology solutions. Gartner predicts that global IT spending will reach $5 trillion this year, an increase of 6.8% year-on-year.
Moreover, the optimistic outlook for the technology industry is further strengthened by the increasing adoption of cloud technologies, the integration of predictive analytics and business intelligence for operational optimization, the incorporation of AI, and the widespread implementation of IoT. Furthermore, the US IT services market is expected to reach $592.43 billion by 2028 and grow at a CAGR of 6.5%.
Furthermore, the global hardware market is expected to reach $191.03 billion by 2029, growing at a CAGR of 7.9%. The high-tech hardware industry is growing due to the increased demand for hardware components due to emerging technologies such as AI and IoT. The spread of smart devices and the trend toward remote work are also contributing factors.
Moreover, advances in hardware technology and the need for upgraded equipment are further accelerating the growth of this sector.
With these encouraging trends in mind, let’s take a look at the fundamentals of the top three tech stocks.
Canon Inc(cappy)
Headquartered in Tokyo, CAJPY manufactures and sells office multifunction devices (MFDs), laser and inkjet printers, cameras, medical equipment, and lithography equipment worldwide. The company operates its business through its printing division. Imaging Division; Medical Division; Industrial Division; Other Segments.
In terms of net profit margin over the past 12 months, CAJPY’s 6.44% is 174.5% higher than the industry average of 2.35%. Similarly, the company’s trailing-twelve-month His EBIT Margin of 8.93% is 81.4% higher than the industry average of 4.92%. Additionally, the company’s trailing twelve month return on common equity of 8.38% is 642.5% higher than the industry average of 1.13%.
The company pays an annual dividend of $0.93 per share, which translates to a dividend yield of 3.65% at the current stock price. The four-year average yield is 3.89%.
CAJPY’s trailing 12-month EBITDA and net profit margin were 14.69% and 6.33%, which were 66.3% and 229.8% higher than the industry average of 8.83% and 1.92%, respectively.
For the fiscal third quarter ended September 30, 2023, CAJPY’s net sales and operating income increased by 2.9% and 1.5% year over year to $6.83 billion and $550.83 million, respectively. . Furthermore, pre-tax profit amounted to $582.13 million, an increase of 10.4% year-on-year.
Net income attributable to CAJPY and net income attributable to CAJPY shareholders per share were $414.23 million and $0.42, an increase of 14.8% and 18.4%, respectively, from the prior year period.
Analysts expect CAJPY’s revenue to increase 158.6% year-on-year to $29.22 billion in fiscal 2024.
Shares have increased 20.8% over the past year, closing at $26.84. It has risen 15.6% over the past nine months.
CAJPY’s POWR Rating reflects its positive outlook. This stock has an overall rating of ‘A’, which is equivalent to a ‘strong buy’ in our proprietary rating system. POWR ratings are calculated by considering 118 different factors, with each factor weighted to the best degree.
This stock has an A grade for Quality and a B grade for Value, Momentum, and Stability. Ranked #2 out of 36 stocks in the A-rated Technology – Hardware industry.
Click here to see additional POWR ratings on CAJPY Growth and Sentiment.
TDK Corporation (TTDKY)
TTDKY is headquartered in Tokyo and manufactures and sells electronic components around the world. The company operates through the following segments: Passive components. Sensor application products; Magnetic application products; Energy application products; Other segments.
TTDKY’s trailing 12-month ROCE and ROTA were 6.31% and 2.92%, which were 387.7% and 793.3% higher than the industry average of 1.29% and 0.33%.
On January 9, 2024, TTDKY and Goodyear Tire and Rubber Company, one of the world’s largest tire companies, announced a partnership to advance next-generation tire solutions. The goal is to accelerate the development and deployment of integrated, intelligent hardware and software into the tire and vehicle ecosystem.
On January 4, TTDKY subsidiary TDK Ventures, Inc. invested in Singapore technology disruptor Silicon Box. The investment is focused on Silicon Box’s innovative semiconductor chiplet packaging design and manufacturing capabilities that set new standards in performance and scale.
The company pays $0.79, giving it a current market price yield of 1.49%. Over the past three years he has increased his dividends at a CAGR of 10.5%.
For the six months ended September 30, 2023, TTDKY’s net sales reached 1.6 trillion yen (7.14 billion yen). Operating income and net income attributable to owners of the parent company were 85.55 billion yen ($57.59 million) and 54.19 billion yen ($36.48 million), respectively. Also, EPS was 142.64 yen.
Street expects TTDKY’s sales to increase 282.4% year over year to $14.17 billion for the year ending March 2024. EPS for the year is expected to be $2.19.
TTDKY stock has soared 40.2% over the past year and 34.4% over the past three months, closing at $53.03.
TTDKY’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.
The stock has a B rating for Value, Stability, and Sentiment. Technology – Ranked #4 within the hardware industry.
Click here to see additional growth, momentum, and quality ratings for TTDKY.
Teradata Co., Ltd. (T.D.C.)
TDC provides a connected multi-cloud data platform for enterprise analytics. Teradata Vantage is a data platform that enables businesses to leverage data across the enterprise, connecting disparate data sources to drive ecosystem simplification and support customers’ migration to the cloud. We also provide business consulting services and support and maintenance services.
TDC’s trailing twelve month EBIT and EBITDA margins were 7.82% and 14.06%, which were 71.8% and 59.2% higher than the industry average of 4.55% and 8.83%.
TDC’s total revenue for the fiscal third quarter ended September 30, 2023 was $438 million, an increase of 5% compared to the same period last year. Non-GAAP net income was $43 million, an increase of 34.4% from the prior year period. The company’s non-GAAP operating income increased 16.7% year over year to $63 million.
Additionally, non-GAAP EPS was $0.42, an increase of 35.5% year over year.
TDC’s revenue and EPS for the quarter ending December 2023 are expected to be $458.19 million and $0.52, up 1.4% and 47.6% year-over-year, respectively. He beat consensus EPS estimates in three of the trailing four quarters, which is impressive.
Shares have increased 31% over the past year, closing at $47.93.
TDC’s strong fundamentals are reflected in its POWR Rating. The overall rating is A, which equates to a “strong buy” according to our own rating system.
A grade for quality, B grade for growth and value. Ranked #2 out of 76 stocks in the Technology – Services industry.
In addition to the ratings above, you can access TDC’s momentum, stability, and sentiment ratings here.
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CAJPY stock was trading at $26.96 per share Tuesday morning, down $0.02 (-0.07%). Year-to-date, CAJPY has gained 5.31%, while the benchmark S&P 500 index has gained 3.61% 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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