Technology has always been a driver of change and innovation. The industry is evolving as technology companies strive to innovate, race to be first to market, and compete for market share.
As the industry shows potential, fundamentally strong tech stocks Indra Sistemas, S.A. (ISMAY), PC Connection, Inc. (CNXN), and ON24, Inc. (ONTF) might be solid buys.
With the rapid adoption of blockchain technology across various industries, ChatGPT has the potential to play a significant role in the education and training of future developers. In addition, its ability to simplify complex concepts and provide actionable insights will be invaluable for those just starting to explore this exciting and rapidly evolving technology.
Also, digital marketplaces are becoming commonplace for tech purchases as buyers, increasingly non-tech ones, are looking for composable and easily consumable solutions.
By 2026, Gartner expects all major cloud platforms and enterprise application providers will offer business component marketplaces to enable customers’ composable strategies, differentiating by quality, convenience, and security.
Gartner predicts spending to reach $4.5 trillion in 2023, a 2.4% rise from previous years.
John-David Lovelock, Distinguished VP Analyst at Gartner, said, “Consumers and enterprises are facing very different economic realities. While inflation is devastating consumer markets, contributing to layoffs at B2C companies, enterprises continue to increase spending on digital business initiatives despite the world economic slowdown.”
Let’s discuss the stocks mentioned above in detail:
Indra Sistemas, S.A. (ISMAY)
Based in Alcobendas, Spain, ISMAY operates as a technology and consulting company worldwide. It designs, develops, produces, integrates, operates, maintains, repairs, and markets systems, solutions, and services based on the use of information technologies; computing, electronics, and communications.
Its trailing-12-month asset turnover ratio of 0.88x is 43.9% higher than the 0.61x industry average. Its trailing-12-month net income margin of 86.6% is 2.39% higher than the 55.84% industry average.
ISMAY pays a $0.08 per share dividend annually, which translates to a 1.07% yield on the current price. The company has a four-year average dividend yield of 0.21%.
During the fiscal first quarter ended March 31, 2023, ISMAY’s revenues increased 7.8% year-over-year to €917 million ($994.83 million). Net profit increased 12.8% year-over-year to €44 million ($47.73 million), while its EPS increased 13.6% year-over-year to €0.25.
ISMAY’s revenue is expected to increase 11.6% year-over-year to $1.09 billion for the fiscal second quarter ending June 2023. Also, it has surpassed revenue estimates in each of the trailing four quarters, which is impressive.
Shares of ISMAY have gained 14.2% intra-day to close the last trading session at $7.
ISMAY’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has a B grade for Value and Stability. It is ranked #22 out of 80 stocks in the Technology - Services industry.
Beyond what is stated above, we’ve also rated ISMAY for Sentiment, Quality, Growth, and Momentum. Get all ISMAY ratings here.
PC Connection, Inc. (CNXN)
CNXN provides various information technology (IT) solutions worldwide. The company operates through three segments: Business Solutions; Enterprise Solutions; and Public Sector Solutions.
Its trailing-12-month asset turnover ratio of 2.76x is 351.3% higher than the 0.61x industry average. Its trailing-12-month net income margin of 2.66% is 11.6% higher than the 2.39% industry average.
On May 4, CNXN announced a quarterly dividend of $0.08 per share of common stock payable on June 2.
CNXN pays a $0.32 per share dividend annually, which translates to a 0.76% yield on the current price. The company has a four-year average dividend yield of 1.14%.
CNXN’s net sales rose 8% year-over-year to $3.12 billion in the fiscal year that ended December 31, 2022. Net income increased 27.6% year-over-year to $89.22 million. Earnings per share increased 27.2% year-over-year to $3.37.
Street expects CNXN’s revenue for the fiscal second quarter ending June 2023 to be $787.88 million. Its EPS is expected to be $0.69 for the same quarter.
The stock has gained 1.4% over the past three months to close the last trading session at $42.12.
CNXN’s robust prospects are reflected in its POWR Ratings. The stock has an overall B rating, equating to a Buy in our proprietary rating system.
CNXN has a B grade for Quality, Stability, and Momentum. It is ranked #19 in the same industry.
Click here to see the additional POWR Ratings for CNXN (Growth, Value, and Sentiment).
ON24, Inc. (ONTF)
ONTF provides a cloud-based digital engagement platform that enables businesses to convert customer engagement into revenue through interactive webinar, virtual event, and multimedia content experiences worldwide.
Its trailing-12-month levered FCF margin of 9.12% is 30.1% higher than the 7.01% industry average. Its trailing-12-month gross profit margin of 71.60% is 45.3% higher than the 49.27% industry average.
ONTF’s total revenue came in at $43.06 million in the first quarter that ended March 31, 2023. Also, non-GAAP operating loss decreased 26.2% year-over-year to $4.18 million. Non-GAAP net loss decreased 69.4% year-over-year to $1.83 million
ONTF’s revenue is expected to come in at $41.45 million for the fiscal second quarter ending June 2023. Also, it has surpassed revenue and EPS estimates in each of the trailing four quarters.
ONTF gained 13.5% over the past six months to close its last trading session at $7.64.
ONTF’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
ONTF also has a B grade for Value and Sentiment. It is ranked #20 in the same industry.
For additional ratings for ONTF’s Growth, Momentum, Stability, and Quality, click here.
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ISMAY shares were trading at $7.00 per share on Monday morning, up $0.87 (+14.19%). Year-to-date, ISMAY has gained 14.19%, versus a 7.78% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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