The tech industry is thriving amid swift changes and digitalization across various sectors. Moreover, the rising IT spending is creating fresh opportunities for companies within the sector. Thus, investors could consider buying fundamentally sound tech stocks, TD SYNNEX Corporation (SNX), AvePoint, Inc. (AVPT), and Benchmark Electronics, Inc. (BHE), for a bullish June.
There are multiple factors that are propelling the growth of Information Technology (IT) currently like businesses increasingly digitizing, advancements in cybersecurity, and online commerce evolving rapidly. As a result, the IT market is expected to grow to $12.42 trillion in 2028 at a CAGR of 8.3%.
Moreover, according to the latest forecast by Gartner, Inc., worldwide IT spending is expected to increase 8% year-over-year to reach a staggering $5.06 trillion in 2024. This growth, surpassing the earlier projected growth of 6.8% for the quarter, positions tech spending to surpass $8 trillion well before the decade’s end.
The increasing preference for cloud-based software and the growing emphasis on automating business operations are continually boosting the global demand for IT services. Cloud-based IT services have been experiencing rapid growth among SMEs since 2022 and are expected to capture more than 80% market share by 2025.
Furthermore, tech stocks are in demand, as is evident in the strong performance of the Vanguard Information Tech ETF (VGT), which has returned a staggering 38.5% over the past year.
Given these favorable industry trends, let us dive deep into the fundamentals of the top tech stocks:
TD SYNNEX Corporation (SNX)
SNX operates as a distributor and solutions aggregator for the IT ecosystem. The company offers personal computing devices and peripherals, mobile phones and accessories, printers, supplies, and endpoint technology software; and data center technologies.
On May 21, SNX launched MSP Evolve, an aggregation of its resources and tools specifically designed to optimize operational excellence and accelerate business growth for the unique needs of Managed Service Providers (MSPs). The program will initially be available for North American MSPs.
Also, on April 16, SNX launched a High-Growth Technology Center of Excellence (CoE) to accelerate its partners’ ability to tackle increasingly complex digital transformation initiatives. The CoE facilitates AI incorporation into a number of key areas that should help its partners and raise the company’s popularity.
SNX’s trailing-12-month ROCE of 7.72% is 99.4% higher than the 3.87% industry average. Its trailing-12-month ROTC of 6.51% is 155.7% higher than the 2.55% industry average. Likewise, the stock’s trailing-12-month ROTA of 2.27% is 45.6% higher than the 1.56% industry average.
For the first quarter that ended February 29, 2024, SNX’s revenue was reported at $13.98 billion. Its non-GAAP gross profit came in at $1.01 billion. Likewise, its non-GAAP net earnings came in at $266.20 million. Also, its non-GAAP EPS increased 2% year-over-year to $2.99. In addition, as of February 29, 2024, its total liabilities stood at $19.70 billion, compared to $21.23 billion as of November 30, 2023.
Street expects SNX to post a $14.08 billion revenue for the second quarter (ending May 2024), representing a marginal year-over-year increase. The company’s EPS is expected to increase 15.9% year-over-year to $2.82 for the same quarter. Moreover, it surpassed consensus EPS estimates in three of the trailing four quarters, which is impressive.
Shares of SNX have gained 47.5% over the past year to close the last trading session at $130.25.
SNX’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.
SNX has a B grade for Value, Growth, and Sentiment. It is ranked #11 among 78 stocks in the Technology - Services industry.
Click here to access the additional SNX ratings (Momentum, Stability, and Quality).
AvePoint, Inc. (AVPT)
AVPT provides a cloud-native data management software platform in North America, Europe, the Middle East, Africa, and Asia Pacific. The company also offers software-as-a-service solutions and productivity applications, as well as modularity and cloud services architecture.
On April 9, AVPT launched its new analytics capabilities in its tyGraph solution, which is specific to Copilot for Microsoft 365. These capabilities allow organizations to measure and optimize their Copilot for Microsoft 365 usage and impact. This should benefit the company through helping organizations realizing the full potential of their AI investments.
On February 21, AVPT announced the addition of three new products to its FedRAMP authorization as a software-as-a-service (SaaS) company as a part of the AVPT Confidence Platform’s Modernization Suite. These products enable organizations to remove barriers to workplace innovation by unifying data, optimizing business processes, and improving the employee experience.
AVPT’s trailing-12-month gross profit margin of 72.10% is 45.3% higher than the 49.64% industry average. Its trailing-12-month levered FCF margin of 16.39% is 65.8% higher than the 9.88% industry average.
For the first quarter ended March 31, 2024, AVPT’s total revenue increased 25.1% year-over-year to $74.53 million. Its non-GAAP gross profit grew 29.6% from the year-ago value to $55.20 million. The company’s non-GAAP operating income came in at $6.61 million, against a non-GAAP operating loss of $329 thousand during the prior year’s quarter.
For the second quarter of 2024, the company expects total revenues of $73.80 million to $75.80 million, indicating a 15% year-over-year growth at the midpoint and non-GAAP operating income of $3.60 million to $4.60 million.
AVPT raised its full-year 2024 outlook. For the full year, AVPT expects total revenues in the range of $314.30 million to $320.30 million and non-GAAP operating income between $30 million and $32 million.
Analysts expect AVPT’s revenue for the third quarter (ending September 2024) to increase 13.6% year-over-year to $82.68 million, while its EPS is expected to grow 69.5% year-over-year to $0.05, respectively. Further, the company has surpassed the consensus revenue estimates in all of the trailing four quarters.
AVPT’s stock has soared 50.2% over the past year to close the last trading session at $9.16.
AVPT’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to a Buy in our proprietary rating system.
The stock has a B grade for Quality, Growth, and Sentiment. AVPT is ranked #10 in the Technology - Services industry.
Beyond what is stated above, we’ve also rated AVPT for Value, Stability, and Momentum. Get all AVPT ratings here.
Benchmark Electronics, Inc. (BHE)
BHE offers product design, engineering services, technology solutions, and manufacturing services in the Americas, Asia, and Europe. The company provides engineering services and technology solutions, custom testing and technology solutions; and automation equipment design and build services.
BHE’s trailing-12-month ROCE of 6.22% is 60.8% higher than the industry average of 3.87%. Likewise, the stock’s trailing-12-month ROTC of 4.99% is 95.9% higher than the industry average of 2.55%. BHE’s trailing-12-month ROTA of 2.98% is 90.9% higher than the industry average of 1.56%.
During the first quarter that ended March 31, 2024, BHE’s sales were reported at $675.58 million. Its non-GAAP gross profit increased 5.4% over the prior-year quarter to $67.83 million. The company’s non-GAAP net income and non-GAAP EPS grew 8.3% and 7.8% year-over-year to $20.19 million and $0.55, respectively.
For the second quarter of 2024, the company anticipates revenue in the range of $615 million to $655 million. Additionally, it projects non-GAAP EPS to fall between $0.48 and $0.54.
Street expects BHE’s EPS and revenue for the year ending December 2025 to expand 17.5% and 6.5% year-over-year to $2.53 and $2.79 billion, respectively. In addition, the company surpassed the consensus EPS estimates in each of the trailing four quarters.
Shares of BHE have surged 72.7% over the past nine months to close the last trading session at $43.49.
BHE’s POWR Ratings reflect bright prospects. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
BHE has an A grade for Momentum and a B for Sentiment. It is ranked #8 out of 43 stocks in the Technology - Electronics industry.
In addition to the POWR Ratings highlighted above, one can access BHE’s ratings for Growth, Value, Stability, and Quality, here.
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SNX shares were trading at $130.25 per share on Monday afternoon, up $1.65 (+1.28%). Year-to-date, SNX has gained 21.93%, versus a 11.73% 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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