The Power of Big Data: 3 Stocks Riding the Data Analytics Wave

While data has always been a critical driver of business success, integrating advanced technologies with data analytics tools has revolutionized the industry, creating numerous growth opportunities. Therefore, it could be wise to invest in quality data analytics stocks PDF Solutions, Inc. (PDFS), Magic Software Enterprises Ltd. (MGIC), and Absolute Software Corporation (ABST).

Data undoubtedly is one of the most valuable assets for businesses today, with some enterprises building entire business models around data while others capture, store, and analyze massive amounts of it to draw up conclusive patterns, gain insights, predict business outcomes, track consumer behavior, or enhance customer engagement.

Increasing adoption of artificial intelligence (AI), the Internet of Things (IoT), and machine learning technologies drives the industry’s growth. Various industries, including banking, real estate, agriculture, education, telecom, and healthcare, use big data analytics and data science technologies to thrive and reshape how they operate.

Gartner has found that businesses increasingly prefer data-driven decision-making to intuition-based decision-making. By 2026, approximately 65% of B2B sales organizations are expected to transition from intuition-based to data-driven decision-making, using technology that unites workflow, data, and analytics.

According to a report by Fortune Business Insights, the global big data analytics market is expected to grow at a 13.5% CAGR from $307.52 billion in 2023 to $745.15 billion by 2030.

Let’s discuss the fundamentals of PDFS, MGIC, and ABST to understand why it could be wise to invest in them to capitalize on the industry’s promising growth prospects.

PDF Solutions, Inc. (PDFS)

PDFS provides cloud analytics platforms for organizations in the semiconductor industry. Its products and services enable engineers and data scientists to connect, collect, manage, and analyze data about design, equipment, manufacturing, and testing to improve product quality and yield.

On March 9, PDFS and Voltaiq joined forces to assist battery manufacturers in enhancing yield, decreasing costs, and expediting factory ramp-ups. The partnership aims to optimize and accelerate battery development and production by merging PDFS’ expertise in semiconductor manufacturing analysis and control with Voltaiq’s proficiency in managing extensive battery data.

The collaboration is expected to aid PDFS in establishing a presence in the battery market by utilizing its unique semiconductor process control approach in battery manufacturing.

On March 1, the company announced that Analog Devices Inc. (ADI) had selected PDFS’ Exensio Manufacturing Analytics and Exensio Test Operations as its worldwide backend data management and analytics solution, deployed in the Exensio cloud environment.

The partnership should enable PDFS to showcase its expertise and expand its presence in the semiconductor industry, leading to increased market visibility and credibility.

PDFS’ total revenues increased 35.6% year-over-year to $40.52 million in the fourth quarter, which ended December 31, 2022. Its non-GAAP gross profit grew 54.2% from the year-ago value to $30.02 million. In addition, the company’s non-GAAP net income increased 164% year-over-year to $7.40 million, while its non-GAAP net income per share rose 171.4% year-over-year to $0.19.

The consensus revenue estimate of $170.66 million for the fiscal year (ending December 2023) reflects a 14.9% year-over-year improvement. Likewise, the consensus EPS estimate of $0.69 for the current year indicates a 14.6% rise year-over-year. Moreover, the company surpassed its consensus revenue and EPS estimates in all four trailing quarters, which is impressive.

The stock has gained 49.8% over the past six months to close the last trading session at $36.28.

PDFS’ positive outlook is apparent in its POWR Ratings. The stock has an overall rating of B, equating to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

PDFS has an A grade for Growth and Sentiment and a B for Quality. It is ranked #12 out of 134 stocks in the D-rated Software - Application industry.

In addition to the POWR Ratings I’ve just highlighted, you can see PDFS’ ratings for Value, Stability, and Momentum here.

Magic Software Enterprises Ltd. (MGIC)

Headquartered in Or Yehuda, Israel, MGIC offers application development, business process integration platforms, vertical software solutions, and professional services. The company operates through two segments, Software Solutions, and IT Professional Services.

Guy Bernstein, MGIC’s CEO, said, “Our strong results demonstrate the growing investment made by enterprises and organizations worldwide to leverage their digital technologies and cloud-based platforms creating high demand for our innovative software solutions and services which together with the outstanding execution by our teams led to another year of strong performance recorded across our business.”

“With our investment portfolio well diversified, we continue to invest organically and inorganically in our service lines and are excited about the innovative capabilities we are building to drive continued long term profitable growth and shareholder value,” he added.

For the fourth quarter that ended December 31, 2022, MGIC’s revenues increased 10.6% year-over-year to $147.15 million. Its non-GAAP gross profit grew 11.5% from the year-ago value to $43.17 million. Non-GAAP net income attributable to MGIC’s shareholders increased 9.9% from the year-ago value to $13.89 million, while non-GAAP EPS grew 7.7% year-over-year to $0.28.

Analysts expect MGIC’s revenue to increase 3.9% year-over-year to $589.10 million for the fiscal year ending December 2023. The company’s EPS for the ongoing year is expected to grow 7.6% from the previous year to $1.14. Moreover, the company topped the consensus revenue estimates in all four trailing quarters.

Shares of MGIC have gained 3.2% over the past five days to close the last trading session at $13.46.

MGIC’s solid fundamentals are apparent in its POWR Ratings. The stock has an overall rating of B, translating to Buy in our proprietary rating system.

MGIC has an A grade for Sentiment and Stability and a B for Value. The stock is ranked #13 out of 134 in the Software – Application industry.

Click here to access additional MGIC ratings for Quality, Growth, and Momentum.

Absolute Software Corporation (ABST)

Based in Vancouver, Canada, ABST develops and markets software services for managing and securing computing devices, applications, data, and networks. Its cloud-based Absolute platform offers endpoint visibility and control solutions, enabling users to secure their data, ensure compliance, and manage all their devices and applications.

On March 9, ABST announced the expansion of its Absolute Application Resilience ecosystem through its latest product release, allowing joint customers to enhance the health and resiliency of over 70 mission-critical security and business tools using ABST's patented Persistence technology.

The company's commitment to growing its ecosystem strengthens its customers’ security posture and defense against malicious attacks, improving customer experience.

During the fiscal 2023 second quarter ended December 31, 2022, ABST’s adjusted revenue increased 9.1% year-over-year to $57.70 million. Its adjusted gross margin grew 8.1% from the year-ago value to $50.80 million. The company’s total ARR was $225 million on December 31, 2022, up 15% year-over-year, driven by strong Enterprise & Government ARR growth of 18% year-over-year.

Analysts expect ABST’s revenue to grow 10.8% year-over-year to $233.19 million for the fiscal year ending June 2023. Also, the company’s revenue for the next fiscal year (ending June 2024) is expected to increase by 15% year-over-year to $268.06 million. The stock gained 4.9% intraday to close the last trading session at $8.16.

ABST’s POWR Ratings reflect its promising prospects. The stock has an overall rating of B, equating to Buy in our proprietary rating system.

The stock has a B grade for Value and Quality. It has ranked #14 out of 134 stocks within the same industry.

To see additional POWR Ratings for Stability, Growth, Sentiment, and Momentum for ABST, click here.

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PDFS shares were trading at $36.54 per share on Tuesday afternoon, up $0.26 (+0.72%). Year-to-date, PDFS has gained 28.12%, versus a 7.70% rise in the benchmark S&P 500 index during the same period.

Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.

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