The technology industry is growing significantly due to advancements and digital transformation across industries. So, investors could buy tech stocks, Accenture plc (ACN), Spirent Communications plc (SPMYY), and RADCOM Ltd. (RDCM) for 2024 success.
The IT Services market in the United States has been experiencing significant growth in recent years, driven by various factors such as increasing demand for cloud computing, innovations and the need for digital transformation. Customers are increasingly looking for IT services that can help them optimize their business processes, reduce costs, and improve their overall efficiency.
Moreover, the surge in remote work has intensified the reliance on IT infrastructure and cybersecurity solutions, prompting organizations to invest in hardware upgrades that support seamless connectivity and robust security measures. As a result, the IT hardware industry is expected to grow from $121.32 billion this year to $177.11 billion by 2028, at a CAGR of 7.9%.
The IT industry is experiencing constant development, and new trends are emerging, making it one of the most significantly growing markets. Businesses use IT services for various purposes, from standard chores like handling employee records to complex corporate processes like supply chain and operations management. The global IT services market is expected to grow at a CAGR of 9.7% until 2030.
Considering these conducive trends, let's take a look at the fundamentals of the three best tech stocks.
Accenture plc (ACN)
Based in Dublin, Ireland, ACN is a professional services company that provides strategy and consulting, industry X, song, and technology and operation services. The company offers various services, including application services, intelligent automation, application management, software engineering, strategy and consulting, data and analytics, metaverse, and sustainability services.
On February 1, 2024, ACN had made a strategic investment through Accenture Ventures, in Tenchi Security, a third-party cyber risk management company. ACN would leverage Tenchi’s SaaS platform as a new component of its managed security services offering to help organizations reduce cyber risks across their supply chain.
On January 17, 2024, ACN had acquired Impendi, a sourcing and procurement services provider with a focus on private equity clients, expanding a critical capability to ACN’s growing offerings for this industry.
ACN’s trailing-12-month EBIT margin of 15.85% is 238.3% higher than the 4.69% industry average. Its trailing-12-month levered FCF of 13.65% is 62.5% higher than the industry average of 8.40%.
In the first quarter, which ended on November 30, 2023, ACN’s revenues increased 3% year-over-year to $16.22 billion. The company’s net income and EPS increased 1% and marginally year-over-year to $2.01 billion and $3.14 respectively.
The consensus revenue came in at $15.90 billion for the fiscal second quarter ended February 2024 represents a marginal increase year-over-year. Its EPS is expected to increase 12.1% year-over-year to $2.68 for the same quarter. Moreover, ACN topped the consensus EPS and revenue estimates in three of the trailing four quarters, which is impressive.
ACN’s shares have gained 37.3% over the past nine months to close the last trading session at $364.70.
ACN’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating 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.
ACN has an A grade for Quality and a B in Sentiment and Stability. It is ranked #3 out of 9 stocks in the A-rated Outsourcing - Tech Services industry.
Click here to see the additional POWR Ratings for ACN (Momentum, Growth, and Value).
Spirent Communications plc (SPMYY)
SPMYY offers automated test and assurance solutions in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. The company operates in Lifecycle Service Assurance and Networks & Security segments.
On December 6, 2023, SPMYY announced a strategic partnership with Anritsu to enable the automotive industry to more efficiently meet the unique testing requirements presented by cellular vehicle-to-everything (C-V2X) and autonomous driving technologies.
The collaboration establishes a complete C-V2X and automotive 5G testing portfolio with a unified framework that delivers unparalleled versatility and adaptability to verify designs incorporating autonomous driving technologies.
SPMYY’s trailing-12-month levered FCF margin of 19.63% is 133.7% higher than the industry average of 8.40%. Its trailing-12-month gross profit margin of 71.92% is 46.3% higher than the industry average of 49.17%.
For the six months that ended June 30, 2023, SPMYY’s adjusted revenue registered at $223.90 million. Its adjusted profit before tax and adjusted EPS amounted to $14.80 million and $2.10, respectively. Moreover, cash inflow from investing activities came in at $600 thousand, compared to a cash outflow of $3.60 million in the prior year’s period.
Street expects revenue for the fiscal year ended December 2023 to be $480.32 million.
Shares of SPMYY has gained 21.4% over the past three months to close the last trading session at $5.90.
SPMYY’s POWR Ratings reflect its positive outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
The stock has an A grade for Quality and Stability and a B in Value. The stock is ranked #2 out of 43 stocks in the Technology - Hardware industry.
Beyond what is stated above, we’ve also rated for Growth, Sentiment, and Momentum. Get all SPMYY ratings here.
RADCOM Ltd. (RDCM)
Headquartered in Tel Aviv, Israel, RDCM provides 5G-ready cloud-native network intelligence and service assurance solutions for telecom operators or communication service providers (CSPs). It offers RADCOM ACE, RADCOM Network Visibility, and RADCOM Network Insights. It also provides solutions for mobile and fixed networks.
On January 16, RDCM announced NetTalk – Generative AI (GenAI) applications that are part of its RADCOM ACE portfolio, offering operators to adopt the power of Generative AI and trusted data to manage their network operations in a faster and cost-effective manner.
These innovative applications of RDCM will contribute to an improved customer experience by enhancing engineering team productivity, optimizing 5G network quality, and lowering costs.
In terms of the trailing-12-month gross profit margin, RDCM’s 73.31% is 49.1% higher than the 49.17% industry average. Likewise, its 7.20% trailing-12-month net income margin is 278.7% higher than the 1.90% industry average.
For the fourth quarter that ended December 31, 2023, RDCM’s revenue grew 9.8% year-over-year to $14.01 million. Its non-GAAP net income increased 191.4% year-over-year to $3.85 million. The company’s net income per share increased 177.8% year-over-year to $0.25.
Analysts expect RDCM’s revenue to increase 11.4% year-over-year to $13.36 million for the quarter ending March 2024. Its EPS is expected to increase 150% year-over-year to $0.10 for the same quarter. Moreover, ACN topped the consensus revenue estimates in each of the trailing four quarters.
The stock gained 29.1% over the past three months to close the last trading session at $9.90.
RDCM’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.
The stock has an A grade for Growth and Sentiment and a B in Stability. It is ranked #6 in the 77-stock in the Technology - Services industry.
To access RDCM’s additional ratings for Value, Quality, and Momentum, Click here.
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ACN shares were trading at $368.97 per share on Wednesday afternoon, up $4.27 (+1.17%). Year-to-date, ACN has gained 5.53%, versus a 4.63% 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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