The global technology industry is expected to thrive in 2024, fueled by an upturn in revenue and earnings growth, sustained demand for digital transformation, and reasonable valuations, particularly in software and internet services.
Therefore, investors could consider investing in top tech stocks Panasonic Holdings Corporation (PCRFY), Nomura Research Institute, Ltd. (NRILY), and Brother Industries, Ltd. (BRTHY).
The Consumer Technology Association (CTA) forecasts a 2.8% year-over-year growth in retail revenues for the U.S. consumer technology industry in 2024, reaching $512 billion, driven by lower prices of tech products due to industry innovation and efficiency gains.
Rising spending is propelled by a 6% increase in audio streaming, 4% in video streaming, and significant contributions from the gaming sector with product refreshes and AI integration.
Outside of the United States, the Japanese tech market offers a lucrative investment spot as home to a significantly large Information Technology (IT) industry. The pandemic has also expedited a boost in automation and an openness toward outsourcing in the country. In 2024, the global IT services market projects revenue to reach $1.36 billion, and it is expected to grow at a CAGR of 6.8% to reach $1.77 billion by 2028.
The swift pace of technological advancement is driving an ongoing need for faster and more sophisticated electrical goods. The development of cutting-edge electronic products is anticipated to be propelled by digital innovations such as AI, Internet of Things (IoT), AR/VR, and 5G communication.
In addition, the global Device as a Service (DaaS) market is on the rise, driven by the demand for subscription models and increased cloud adoption, further boosted by the impact of the pandemic, which accelerated digital transformation and remote work trends.
The global device-as-a-service market is anticipated to expand at a CAGR of 29.1% from 2023 to 2030.
Considering these conducive trends, let’s examine the fundamentals of the three tech stock picks.
Panasonic Holdings Corporation (PCRFY)
Headquartered in Kadoma, Japan, PCRFY is a global electronics company known for developing and selling a wide range of products, from household appliances to automotive technologies. Its operations span lifestyle, automotive, connect, industry, and energy segments.
On January 9, 2024, PCRFY announced a collaboration with Amazon.com, Inc. (AMZN) to incorporate Fire TV into its smart TVs from 2024, offering users a personalized and seamless viewing experience. The collaboration aims to enhance image and sound quality while providing connectivity across devices.
New products with Fire TV as the operating system will prioritize enhancing the experiential value of smart TVs.
PCRFY’s trailing-12-month ROTA of 4.89% is 22.5% higher than the industry average of 4%. Its 4.82% trailing-12-month CAPEX/Sales is 58.7% higher than the 3.04% industry average.
In the second quarter that ended September 30, 2023, PCRFY generated net sales of ¥2.09 trillion ($14.36 billion). The company's gross profit and net profit grew 8.2% and 44.2% year-over-year to ¥606.71 billion ($4.17 billion) and ¥91.47 billion ($628.37 million), respectively. Moreover, its EPS attributable to PCRFY stockholders rose 49.7% from the previous-year quarter to ¥37.45.
PCRFY’s revenue and EPS are expected to grow significantly and 45.2% year-over-year to $57.60 billion and $1.22, respectively, for the fiscal year ending March 2024. The company surpassed the revenue and EPS estimates in three of the trailing four quarters, which is impressive.
PCRFY’s shares have gained 13.7% over the past year to close the last trading session at $9.77.
PCRFY’s POWR Ratings reflect its optimistic prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
PCRFY has an A grade for Value and a B for Momentum and Stability. Within the B-rated Technology - Hardware industry, it is ranked #4 among 36 stocks.
In addition to the POWR Ratings stated above, one can access PCRFY’s additional Growth, Sentiment, and Quality ratings here.
Nomura Research Institute, Ltd. (NRILY)
Based in Tokyo, Japan, NRILY offers consulting, financial IT solutions, and industrial IT solutions globally, serving enterprises and government agencies across diverse sectors. The company specializes in management consulting, financial technology solutions, and IT platform services.
On December 18, 2023, NRILY launched "AI Red Team," a security assessment service for systems employing generative AI, particularly Large Language Models. The service simulates attacks to identify and address vulnerabilities in AI systems, offering a thorough two-stage assessment.
Additionally, the company plans to launch the "AI Blue Team" service for continuous security monitoring of generative AI applications in April 2024.
NRILY’s trailing-12-month EBIT margin of 15.68% is 218.8% higher than the industry average of 4.92%. Its 22.22% trailing-12-month EBITDA margin is 136.1% higher than the 9.42% industry average.
During the six months, which ended September 30, 2023, NRILY’s revenue increased 6.8% year-over-year to ¥362.07 billion ($2.49 billion). The company reported gross profit and operating profit of ¥128.37 billion ($881.93 million) and ¥58.87 billion ($404.40 million), up 9.3% and 6.5% from the prior-year quarter, respectively. Moreover, its EPS grew 5.7% from the previous-year quarter to ¥64.09.
For the fiscal year ending March 31, 2024, the company expects its revenue and operating profit to grow 6.2% and 7.3% from the previous fiscal year to ¥735 billion ($5.05 billion) and ¥120 billion ($824.40 million), respectively.
Analysts expect NRILY’s revenue to grow 54.2% year-over-year to $5.06 billion for the fiscal year ending March 2024.
The stock has gained 27.6% over the past nine months to close the last trading session at $30.48.
NRILY’s positive fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
It has an A grade for Stability and a B for Quality. Within the A-rated Outsourcing - Tech Services industry, it is ranked #5 of nine stocks.
To see NRILY’s additional POWR Ratings for Growth, Value, Momentum, and Sentiment, click here.
Brother Industries, Ltd. (BRTHY)
Headquartered in Nagoya, Japan, BRTHY manufactures and sells communication and printing equipment globally, encompassing segments like inkjet printers; industrial sewing machines; and online karaoke systems. Its products cater to a wide range of markets and regions.
BRTHY’s trailing-12-month EBIT margin of 7.70% is 56.5% higher than the industry average of 4.92%. Its 4.61% trailing-12-month net income margin is 95.5% higher than the 2.36% industry average.
On June 8, 2023, BRTHY paid an interim dividend of ¥34 per common share. The company pays $0.94 annually, which translates to a yield of 2.95% on the prevailing price level. Its four-year average dividend yield is 3.05%. Moreover, the company boasts a 33-year record for consecutive years of dividend payments.
In the second quarter, which ended September 30, 2023, BRTHY’s revenue rose 1.2% from the previous-year quarter to ¥199,23 billion ($1.36 billion). The company's gross profit and operating profit increased 14.9% and 42.2%, respectively, year-over-year to ¥85.64 billion ($588.34 million) and ¥17.70 billion ($121.61 million). Moreover, it reported an EPS of ¥49.39.
For the fiscal year ending March 31, 2024, the company expects its revenue and operating profit to grow marginally and 26.4% year-over-year to ¥820 billion ($5.63 billion) and ¥70 billion ($480.90 million), respectively.
Street expects BRTHY’s revenue to grow 68.8% year-over-year to $5.78 billion for the fiscal year ending March 2024.
BRTHY’s shares have gained 15.5% over the past six months to close the last trading session at $31.99.
BRTHY’s POWR Ratings reflect a robust outlook. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
The stock has an A grade for Value and a B for Momentum, Stability, and Quality. Within the B-rated Technology - Electronics industry, it is ranked first among 41 stocks.
Click here for BRTHY’s additional Growth and Sentiment ratings.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
PCRFY shares were trading at $9.55 per share on Tuesday afternoon, down $0.22 (-2.25%). Year-to-date, PCRFY has declined -2.95%, versus a -0.22% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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