Following a notable setback in the wake of the pandemic, the tech industry skillfully maneuvered through macroeconomic uncertainties and made an impressive comeback, driven by significant advancements in the fields of Artificial Intelligence (AI) and 5G technology. The sector’s impressive performance is evident from the tech-heavy Nasdaq Composite index’s 27.8% year-to-date gains.
Given the promising backdrop, in this article, we explore the fundamentals of three tech stocks, Boxlight Corporation (BOXL), Hewlett Packard Enterprise Company (HPE), and PCTEL, Inc. (PCTI), which could be solid investment candidates for your portfolio.
The technology sector plays a pivotal role in shaping the modern business landscape and driving innovation. Companies are rapidly undergoing digital transformation to modernize their operations, improve efficiency, and remain competitive.
Gartner's projections indicate that this year will witness an anticipated year-over-year increase of 8.8% in spending on IT services and a 2.7% rise in spending on communications services, reaching approximately $1.42 trillion and $1.46 trillion, respectively.
Additionally, the communication and networking industry within the broader technology industry has recently undergone a significant evolution, fueled by the emergence of groundbreaking technologies such as 5G, the Internet of Things (IoT), AI, and cloud computing.
The market size of 5G connections is projected to be around $106.64 billion in 2023, with an anticipated expansion to $990.33 billion by 2028, reflecting a robust CAGR of 56.2% during the forecast period spanning from 2023 to 2028. While global 5G connections are set to exceed 1.90 billion by the year's end.
Furthermore, as the world has become more digitally connected, the demand for communication services continues to grow. Revenue in the global communication services market is anticipated to achieve a CAGR of approximately 2%, leading to a market size of $1.58 trillion by the year 2028.
In light of these encouraging trends and prospects, BOXL, HPE, and PCTI could be wise additions to your portfolio. Let’s delve into these three Technology – Communication/Networking stocks, beginning with number three.
Stock #3: Boxlight Corporation (BOXL)
BOXL develops, sells, and services interactive classroom technology products and solutions for the K-12 education market worldwide. The company’s product portfolio includes interactive and non-interactive projectors and flat panel displays, touch projectors, touchboards, and MimioTeach that could turn any whiteboard interactive.
On June 22, BOXL introduced two new additions to their FrontRow ezRoom product line: PowerLine for ezRoom AV and ezRoom Voice & Alert systems. Additionally, it launched the MyFrontRow app for interactive displays.
FrontRow PowerLine is a cost-effective solution tailored for K-12 classrooms, which ensures a reliable power supply to FrontRow ezRoom classroom audio systems, ensuring uninterrupted audio reinforcement, and can enhance the overall learning experience.
This development reflects BOXL’s commitment to provide innovative solutions for the education sector, making technology integration in classrooms more accessible and efficient.
In the same month, BOXL expanded its educational technology offerings with the introduction of MyBot Recruit, an educational robotics system within the Mimio brand. This innovation elevates the existing MimioSTEM MyBot to a fully assembled educational robotics solution, boasting a user-friendly interface and WiFi connectivity.
The well-rounded design of MyBot Recruit positions it as an ideal out-of-the-box STEM education solution tailored for K-8 students. Additionally, the introduction of MyBot Recruit underscores BOXL’s dedication to enhancing interactive and engaging learning experiences for students.
For the fiscal second quarter, which ended on June 30, 2023, BOXL’s revenues amounted to $47.05 million, while its gross profit increased 5.9% year-over-year to $17.83 million.
The company’s income from operations came in at $2.08 million, up 135.6% from the year-ago value. Also, its total comprehensive income stood at $911 thousand versus a total comprehensive loss of $4.61 million in the same period last year.
Analysts expect BOXL’s EPS for the fiscal third quarter (ending September 2023) to increase 41.7% year-over-year to $0.34, while its revenue for the same period is expected to be $59.74 million. Moreover, the company has an excellent earnings surprise history, surpassing the EPS estimates in each of the trailing four quarters.
Over the past month, the stock has gained 4.5% to close the last trading session at $2.08.
BOXL’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, translating to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Value and Sentiment. In the 52-stock Technology – Communication/Networking industry, it is ranked #11. Click here to see BOXL ratings for Growth, Momentum, Stability, and Quality.
Stock #2: Hewlett Packard Enterprise Company (HPE)
HPE provides solutions that allow customers to capture, analyze, and act upon data seamlessly in the Americas, Europe, the Middle East, Africa, the Asia Pacific, and Japan. It operates in six segments: Compute; HPC & AI; Storage; Intelligent Edge; Financial Services; and Corporate Investments and Other.
On September 12, HPE introduced the Aruba Instant on AP22D, a Wi-Fi 6 access point, and the Aruba Instant On 1960 stackable switch with 2.5GB port capacity. These products are designed to enhance network performance, offering faster speeds, increased capacity, and improved security.
HPE’s goal is to provide small and medium-sized businesses (SMBs) with the tools needed to create a smoother network experience for employees, customers, guests, and Internet of Things (IoT) devices.
On March 20, HPE entered into a definitive agreement to acquire OpsRamp, a company specializing in IT Operations Management (ITOM). OpsRamp provides services for monitoring, observing, automating, and managing IT infrastructure, cloud resources, workloads, and applications in hybrid and multi-cloud environments, including top hyperscale cloud providers.
This acquisition is anticipated to solidify HPE's position in the hybrid cloud arena and expand the reach of the HPE GreenLake platform into the realm of IT Operations Management.
For the fiscal third quarter, which ended on July 31, 2023, HPE’s net revenues increased marginally year-over-year to $7 billion, while its gross profit rose 4.8% from the prior-year quarter to $2.51 billion.
The company’s non-GAAP net earnings amounted to $2.15 billion and $1.63 per share, up 12.7% and 13.2% from the prior-year quarter, respectively. In addition, its free cash flow improved 62.7% from the year-ago value to $955 million.
The consensus revenue estimate of $29.14 billion for the fiscal year ending October 2023 reflects a 2.3% rise year-over-year. The consensus EPS estimate of $2.14 for the same period indicates a 6% year-over-year improvement. Moreover, the company topped its EPS estimates in each of the trailing four quarters.
HPE’s shares have gained 39.6% over the past year to close the last trading session at $16.97.
HPE’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to Buy in our proprietary rating system.
It has a B grade for Value. Within the same industry, it is ranked #8. Click here to see the other ratings of HPE for Growth, Momentum, Stability, Sentiment, and Quality.
Stock #1: PCTEL, Inc. (PCTI)
PCTI provides industrial Internet of Things (IoT) devices, antenna systems, and test and measurement solutions worldwide. The company designs and manufactures precision antennas and industrial IoT devices that are deployed in small cells, enterprise Wi-Fi access points, fleet management, and transit systems and equipment and devices for the industrial IoT.
On August 15, PCTI paid its shareholders a quarterly dividend of $0.06 per share on its common stock. The company’s annual dividend of $0.22 translates to a 5.28% yield on the prevailing prices, while its four-year average dividend yield is 3.97%.
In the same month, PCTI introduced a new 5G FR1 Omnidirectional antenna specially tailored for Industrial IoT applications. As the need for dependable, secure wireless connectivity with broad coverage grows, PCTI’s latest 5G FR1 omnidirectional antenna is engineered to address the demands of modern wireless networks and ensure uninterrupted connectivity even in challenging environments.
In the fiscal second quarter, which ended on June 30, 2023, PCTI’s revenues amounted to $20.58 million, while its operating income grew 152.4% from the year-ago value to $828 thousand. Also, the company’s net income amounted to $999 thousand and $0.05 per share, up 143.1% and 150% from the prior-year quarter, respectively.
For the third quarter (ending September 2023), PCTI’s revenue and EPS are projected to be $20.50 million and $0.06, respectively. Its EPS is forecasted to improve by 10% annually over the next five years. Additionally, the company surpassed its EPS estimates in each of the trailing four quarters, which is impressive.
The stock gained 2.9% over the past month to close the last trading session at $4.17.
It’s no surprise that PCTI has an overall rating of B, which equates to Buy in our proprietary rating system. It has an A grade for Value and Sentiment and a B for Quality. In the same industry, it is ranked first.
In addition to the POWR Ratings we’ve stated above, we also have PCTI’s ratings for Growth, Momentum, and Stability. Get all PCTI ratings here.
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HPE shares were trading at $16.88 per share on Tuesday afternoon, down $0.09 (-0.53%). Year-to-date, HPE has gained 8.22%, versus a 13.07% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Mukherjee
Anushka's ultimate aim is to equip investors with essential knowledge that empowers them to make well-informed investment choices and attain sustained financial prosperity in the long run.
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