2 Tech Stocks Trading Near 52-Week Highs That Can Still Surge Even Higher

An increasing dependence on cloud-based services, data and analytics capabilities, and the 5G rollout is accelerating the technology market’s growth. The continuing adoption of advanced technologies for hybrid working, the expansion of data centers, and business automation should keep the industry’s products, services, and solutions in demand. Furthermore,  according to a Forrester report, the U.S. tech spending is expected to grow by 6% in 2021 and 6.8% in 2022.

Investors’ interest in the technology industry is evidenced by the iShares Global Tech ETF’s (IXN) 16.7% returns over the past six months versus the SPDR S&P 500 ETF Trust’s (SPY) 11.1% gains.

Therefore, we think it could be wise to bet on fundamentally sound tech stocks SS&C Technologies Holdings, Inc. (SSNC) and Diodes Incorporated (DIOD). The shares of both companies are trading near their 52-week highs, but we think they still have plenty of upside to deliver.

SS&C Technologies Holdings, Inc. (SSNC)

SSNC is a hedge fund, private equity administrator, and mutual fund transfer agency. The Windsor, Conn.-based company owns and operates securities accounting, front-to-back-office operations, regulatory reporting, and healthcare information processes. Its products and services also allow professionals in the financial services and healthcare industries to automate complex business processes.

This month, Trustees Executors Limited chose SS&C Aloha, a new investment operations platform of SSNC, for a new managed-money account joint venture, Flint Wealth. SSNC, with its integrated platforms, should form the digital backbone of Flint Wealth and reduce the risk of Flint Wealth’s business partners and elevate the customer experience.

SSNC’s total revenues for the third quarter, ended September 30, 2021, increased 9.7% year-over-year to $1.26 billion. The company’s gross profit grew 19.1% from its  year-ago value to $624 million. Its operating income rose 32.3% from the prior-year quarter to $340.1 million. And the  company’s net income increased 15.9% year-over-year to $184.7 million.

Analysts expect SSNC’s revenue for its fiscal year 2021 to be $5.02 billion, representing 7.3% year-over-year growth. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. SSNC’s EPS is expected to increase 15.6% in the current year and 5.6% next year.

The stock has gained 15.2% in price over the past nine months and 22.7% over the past year. Also, closing yesterday’s trading session at $79.18, the stock is currently trading slightly below its 52-week high of $79.72, which it hit on October 29, 2021.

SSNC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

Also, the stock has an A grade for Momentum, and a B grade for Stability and Sentiment. We’ve also graded SSNC for Growth, Value, and Quality. Click here to access all of the SSNC’s ratings. SSNC is ranked #1 of 58 stocks in the Software – Business industry.

Click here to check out our Software Industry Report for 2021

Diodes Incorporated (DIOD)

Incorporated in 1959, DIOD is a global manufacturer and supplier of application-specific products within the broad discrete, logic, analog, and mixed-signal semiconductor markets. The Plano, Tex.-based company serves the consumer electronics, computing, communications, industrial and automotive markets. DIOD offers various integrity solutions for high-speed signals, including rectifiers; transistors; MOSFETs; GPP bridges; GPP rectifiers; protection devices; function-specific arrays; single gate logic; amplifiers, and comparators, and other products.

This month, DIOD launched a 130W USB Type-C power delivery (PD) 3.0 adapter evaluation and development kit. The new solution uses SuperGaN FETs from Transphorm, Inc., a global supplier of gallium nitride (GaN) power conversion products. The solution should deliver low standby power, higher efficiency, unprecedented thermal performance, and optimal system bill-of-materials (BOM) cost to consumers.

During the third quarter,  ended September 30, 2021, DIOD’s net sales increased 52.3% year-over-year to $471.42 million. The company’s gross profit grew 63.1% from its year-ago value to $181.23 million. Its operating income rose 104.1% from the prior-year quarter to $77.25 million. Also, the company’s net income increased 158.5% year-over-year to $70.8 million.

DIOD revenue is expected to increase 46.5% year-over-year to $1.8 billion in its  fiscal year 2021. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. DIOD’s EPS is estimated to increase 114.9% in the current year and 13.7% next year.

The company’s stock has surged 45.8% in price over the past six months and 71.3% over the past year to close yesterday’s trading session at $108.71. Also, DIOD is currently trading 2.4% below its 52-week high of $111.35, which it hit on November 8, 2021.

DIOD’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. Also, the stock has a B grade for Sentiment, Growth, and Momentum.

In addition to the POWR Rating grades I have just highlighted, one can see DIOD’s ratings for Stability, Quality, and Value here. DIOD is ranked #2 of 102 stocks in the A-rated Semiconductor & Wireless Chip industry.

Click here to checkout our Semiconductor Industry Report for 2021

SSNC shares were trading at $79.04 per share on Wednesday morning, down $0.14 (-0.18%). Year-to-date, SSNC has gained 9.37%, versus a 26.15% rise in the benchmark S&P 500 index during the same period.

Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.

More...