The technology sector has seen significant growth driven by the pandemic-induced digital transformation across industries and increased demand for cloud-based solutions. Looking to 2022 and beyond, the sector is should be supported by the growing adoption of cloud and service-based computing and the popularity of a hybrid workforce.
The tech industry is expected to overtake $5.30 trillion in 2022growing 5% to 6% year-on-year. In addition, an American study statewide budgets shows heavy spending on technology over the next few years. The budgets contain funding allocations for several types of technology.
Although the technology sector has faced a sell-off this year, it appears to be regaining investor confidence, as evidenced by the results of the Technology Select Sector SPDR Fund (XLK) 15.7% returns over the past month, outpacing the broader SPDR S&P 500 ETF Trust (TO SPY) Gain of 8.6%.
Against this backdrop, fundamentally strong technology stocks Information Services Group, Inc. (III), Celestica Inc. (CLS), computer working group, incorporated (CTM) and Extreme Networks, Inc. (OUTSIDE) strength be ideal investments now. These shares are currently trading below $15.
Information Services Group, Inc. (II)
III is a research and technology consulting company operating in the Americas, Europe and Asia-Pacific. The Company’s offerings include digital transformation services, sourcing consulting, market intelligence, technology research and analytics services.
In June, III announced that it had secured a three-year, $10 million deal from the Italian government to help manage and oversee the government’s digital transformation program. “This is a significant win for ISG, underscoring our strong track record of supporting our customers’ digital modernization efforts,” said Michael P. Connors, President and CEO of III.
III’s revenue increased 9% year-over-year to $72.56 million in the first quarter ended March 31. Its operating profit rose 54.2% from the previous year’s value to $7.73 million, while its adjusted net profit improved 16.8% year-on-year. year at $6.38 million. The company’s adjusted EPS was up 20% from its value a year ago at $0.12.
The consensus revenue estimate of $317.44 million for fiscal year 2023 indicates a 7.3% year-over-year increase. The consensus EPS estimate for the same year of $0.49 reflects a 15.3% year-over-year rise. Additionally, III has an impressive surprise earnings history, as it has exceeded consensus EPS estimates in each of the past four quarters.
The stock has gained 27.9% over the past year and 18.6% over the past three months to close its last trading session at $7.39.
III POWR Rankings reflect this promising prospect. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. POWR ratings rate stocks on 118 different factors, each with its own weighting.
III is rated B in value, feeling and quality. Within the Technology – Services industry, it is ranked #4 out of 81 stocks. To see additional POWR ratings for Growth, Momentum, and Stability for III, Click here.
Celestica Inc. (CLS)
CLS, headquartered in Toronto, Canada, offers hardware platform and supply chain solutions. It operates through two major segments, Advanced Technology Solutions; and connectivity and cloud solutions. The company serves the aerospace, defense, industrial, energy and health technology sectors.
On August 2, CLS llaunched its new generation of flash and storage bays. Products should provide flexibility and custom options for on-premises or public cloud applications and should support the company’s income.
CLS revenue increased 20.9% year over year to $1.72 billion in the second quarter ended June 30. Non-IFRS Adjusted Gross Margin improved 30% from the prior year period to $155.20 million. Adjusted non-IFRS net earnings improved 43% from the same period last year to $54.20 million, while Non-IFRS adjusted EPS rose 46.7% from its value a year ago at $0.44.
The consensus revenue estimate of $1.73 billion for the third fiscal quarter (ending September 2022) reflects a 17.9% year-over-year increase. The consensus EPS estimate for the same period of $0.45 indicates a 27.5% year-over-year improvement. The company has exceeded consensus EPS estimates in each of the past four quarters, which is impressive.
The stock has gained 25.8% over the past year to close its last trading session at $10.96. The stock has gained 13.8% over the past month.
CLS has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The stock is rated B in growth, value and sentiment. Within the Technology – Services industry, it is ranked #2.
To see additional POWR ratings for Momentum, Stability, and Quality for CLS, Click here.
Computer Working Group, Incorporated (GTC)
CTG provides information and technology services in North America, South America, Western Europe and India. The Company operates through three segments, North America IT Solutions and Services; European IT solutions and services; and non-strategic technology services.
In the second quarter ended June 30, CTG Non-GAAP operating profit grew 16.8% year-on-year to $6.92 million, while its non-GAAP net income was $3.46 million, up 15.4% year-on-year . The company’s non-GAAP EPS improved 15.4% from the prior year period to $0.15.
Analysts expect CTG’s revenue for the third quarter ending September 2022 to be $84.50 million. The company’s EPS is expected to increase 15.4% from the prior year period to $0.15 for the same quarter. The company has exceeded consensus EPS estimates in three of the past four quarters.
CTG has gained 2.4% over the past month and 1.8% over the past year to close its latest trading session at $8.59.
It’s no surprise that CTG has an overall A rating, which translates to a strong buy in our POWR rating system. The stock has an A rating for value and a B for stability, sentiment and quality. It is ranked #3 in the Technology – Services industry.
Beyond what we’ve stated above, we’ve also assigned CTG ratings for growth and momentum. Get all CTG ratings here.
Extreme Networks, Inc. (EXT)
EXTR operates as a software-driven networking solutions provider that designs, develops and manufactures wired and wireless network infrastructure equipment and develops software for network management.
In June, the company introduced a suite of new solutions, expanding its ExtremeCloud portfolio to include new SD-WANs and AIOps with digital twin capabilities. The new suite of solutions could add to the company’s revenue.
In May, the company announced an increase in its share buyback authorization of $200 million over a three-year period beginning July 1. This should improve EXTR’s shareholder returns.
During the fourth fiscal quarter ended June 30, EXTR’s total net income was $278.20 million, up 0.4% year over year. The company’s non-GAAP total free movement of capital increased by 14.6% over the prior year period to $59.82 million. The company’s non-GAAP EPS was $0.15.
Street expects EXTR’s revenue for fiscal year 2023 (ending June 2023) to be $1.23 billion, a 10.6% year-over-year increase. other. For the same year, Street expects EPS to improve 26.8% from a year earlier at $0.98. EXTR has exceeded consensus EPS estimates in each of the past four quarters, which is impressive.
EXTR has gained 25.9% over the past year and 53.1% over the past month to close its latest trading session at $13.70.
It’s no surprise that EXTR has an overall A rating, which translates to a strong buy in our POWR rating system. The stock has a B rating for growth, value and quality. It is ranked #1 out of the 55 stocks in the Technology – Communication/Networking industry.
Beyond what we’ve stated above, we’ve also given EXTR ratings for Momentum, Stability, and Sentiment. Get all EXTR odds here.
III shares were trading at $7.64 per share on Friday afternoon, up $0.25 (+3.38%). Year-to-date, the III has gained 1.30%, versus a -12.59% rise in the benchmark S&P 500 over the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and her passion for writing made Kritika an analyst and financial journalist. She earned her Bachelor of Commerce degree and is currently pursuing the CFA program. With its fundamental approach, it aims to help investors identify untapped investment opportunities. After…