The past couple of months have been challenging for the tech industry due to the Fed's hawkish stance and sky-high inflation rates. Furthermore, an escalating war between Russia and Ukraine has aggravated the market’s volatility, causing the tech-centric Nasdaq Composite index to enter bear market territory, registering an 11.2% decline year-to-date. Amid these macro headwinds, there were massive selloffs in the tech sector.
But following the selloffs, numerous attractive buy-the-dip opportunities have been presented to investors. With increasing digitalization and tech dependence, fundamentally strong tech companies have great growth prospects over the long term. The shares of many companies in the sector are well-positioned to rebound in the near term, thanks to the sustained demand for tech products and solutions.
Given these factors, we think it could be profitable to invest in the quality tech stocks like Telefonaktiebolaget LM Ericsson (publ) (ERIC), Seagate Technology Holdings plc (STX), and NICE Ltd. (NICE) at bargain prices. These stocks are Buy rated in our POWR Ratings system.
Telefonaktiebolaget LM Ericsson (publ) (ERIC)
ERIC provides communication infrastructure, services, and software solutions to the telecom and other sectors in North America, Europe, the Middle East, Oceania, India, North Asia, and internationally. It is headquartered in Stockholm, Sweden. The company operates through four segments: Networks; Digital Services; Managed Services; and Emerging Business and Other.
On February 16, 2022, ERIC launched IoT Accelerator Connect, which delivers a secure cellular IoT platform that empowers communications service providers (CSPs) and enterprises worldwide. The launch will deliver this capability to enterprises and development projects. It is expected to expand the company’s customer reach and boost revenues.
In its fiscal year 2021 fourth quarter, ended Dec. 31, 2021, ERIC's net sales increased 3% year-over-year to SEK 71.30 billion ($7.57 billion). The company's EBIT grew 8.2% year-over-year to SEK 11.90 billion ($1.26 billion). ERIC’s net income increased 40.3% from the prior-year period to SEK 10.10 billion (1.07 billion). And ERIC's earnings per share grew 33.6% year-over-year to SEK 3.02.
The $0.13 consensus EPS estimate for its fiscal 2022 first quarter, ending March 31, 2022, represents 8.7% year-over-year growth.
Shares of ERIC have declined 16.7% year-to-date and 13.6% over the past three months. ERIC closed Friday's trading session at $9.05.
ERIC's POWR Ratings reflect this strong outlook. The stock has an overall rating of B, which translates to Buy in our POWR Ratings system.
It has a grade of A for Value, and a B grade for Sentiment and Quality. It is ranked #4 of 54 stocks in the Technology - Communication/Networking industry. Click here to see ERIC’s POWR Ratings for Momentum, Growth, and Stability.
Seagate Technology Holdings plc (STX)
STX offers data storage and infrastructure solutions in Singapore, the U.S., the Netherlands, and internationally. The company is based in Dublin, Ireland. It provides hard disk and solid-state drives, storage subsystems, and enterprise data solutions. In addition, STX offers external storage solutions under the Seagate Ultra Touch, One Touch, and expanded product lines. It sells its products to OEMs, distributors, and retailers.
Last week, STX and ROVE, a systems integrator, announced a collaboration to provide Lyve™ Mobile and Lyve™ Cloud to solve mass data storage complexities and drive value for enterprises. This partnership might accelerate business growth for STX and boost the revenue streams.
In February, STX launched its cloud storage-as-a-service platform, Lyve™ Cloud, for businesses in Singapore. Lyve™ Cloud is known for its flexibility and cost predictability and is trusted by partners and customers. This launch might allow the company to expand its storage offerings in the Asia-Pacific region and boost profits.
STX's revenue increased 18.8% year-over-year to $3.12 billion in its fiscal year 2022 second quarter, ended Dec. 31, 2021. Its gross profit increased 36.1% year-over-year to $958 million. STX’s income from operations improved 61.3% year-over-year to $621 million. Its STX’s net income grew 68.1% year-over-year to $543 million. The company’s earnings per share rose 86.8% year-over-year to $2.41.
Analysts expect STX's revenue for its fiscal year 2022 third-quarter, ending March 31, 2022, to come in at $2.87 billion, representing a 5.2% rise year-over-year. The Street expects the company's EPS for the current quarter to come in at $1.98, representing a 34.1% increase year-over-year. STX has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of all the trailing four quarters.
STX stock has declined 17.1% in value year-to-date and 13.8% over the past month and closed Friday's trading session at $93.62.
STX's strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. It has a grade of B for Quality. Within the Technology - Hardware industry, it is ranked #16 of 46 stocks.
To see additional component grades of POWR Ratings (Stability, Growth, Value, Momentum, and Sentiment) for STX, click here.
NICE Ltd. (NICE)
NICE provides enterprise software solutions worldwide and is based in Ra’anana, Israel. The company operates in two segments: Customer Engagement; and Financial Crime and Compliance. NICE offers CXone, a cloud-native open platform, and a digital-first omnichannel customer engagement platform. In addition, it provides AI-driven smarter processes, agile workforce engagement, professional services, and customer experience management solutions.
This month, NICE launched its next-generation NICE NTR-X solution for compliance recording capture of communications via Zoom. NICE’s NTR-X offers a consolidated, centralized approach to manage recording estates and footprints and its built-in compliance assurance capabilities help reduce compliance risk. This is expected to accelerate innovation and boost the company’s revenues.
In the fiscal year 2021 fourth quarter, ended Dec. 31, 2021, NICE's revenue increased 17.6% year-over-year to $515.47 million. The company's cloud revenue grew 28.1% year-over-year to $285.20 million. Its gross profit rose 18.9% year-over-year to $376.39 million. NICE’s operating income increased 10.5% from the prior-year period to $146 million. Its net income rose 9.1% year-over-year to $116.66 million. NICE's earnings per share grew 7.5% year-over-year to $1.73.
The $510.81 million consensus revenue estimate for its fiscal year 2022 first quarter ending March 2022 represents an 11.8% year-over-year growth from the same period in 2021. The $1.71 consensus EPS estimate for the current quarter represents an 11% year-over-year rise from the year-ago period. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of all the trailing four quarters.
NICE shares have declined 27.4% in price year-to-date and 23.2% over the past three months. It closed Friday's trading session at $220.36.
NICE has an overall rating of B, which translates to Buy in our POWR Ratings system. The stock has a B grade for Quality, Growth, and Stability. It is ranked #15 of 163 stocks in the Software - Application industry. Click here to see NICE’s POWR Ratings for Momentum, Sentiment, and Value.
Click here to check out our Software Industry Report for 2022
ERIC shares were trading at $9.07 per share on Monday afternoon, up $0.02 (+0.22%). Year-to-date, ERIC has declined -16.56%, versus a -6.65% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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