Looming interest rate hikes to curb inflation are expected to hinder the tech industry’s near-term growth. Nevertheless, we think it could be wise to exploit the current dip in quality tech stocks because they could rebound quickly on the increasing demand for advanced technologies.
Given the inexorable digitization of nearly every industry, the tech sector is expected to witness consistent and robust demand. Citi recently upgraded the U.S. tech industry. With the extended hybrid work and lifestyle, the overwhelming demand for tech solutions should drive the sector’s long-term growth.
So, we think it could be wise to bet on quality tech stocks SAP SE (SAP), Infineon Technologies AG (IFNNY), Zebra Technologies Corporation (ZBRA), LG Display Co., Ltd. (LPL), and Seiko Epson Corporation (SEKEY), which are currently trading near their 52-week lows. Also, they have Strong Buy or Buy ratings in our proprietary rating system.
SAP SE (SAP)
Headquartered in Walldorf, Germany, SAP operates worldwide as an enterprise application software company. The company operates through four segments: Applications Technology & Support; Concur; Qualtrics; and Services.
On Jan. 27, 2022, Christian Klein, CEO, said, “The magnitude of our cloud strength is evident. More and more companies are choosing SAP to help them transform their businesses, build resilient supply chains, and become sustainable enterprises as they move to the cloud. This momentum is reflected in the tremendous success of “RISE with SAP,” our signature cloud offering, as well as excellent growth across our entire portfolio.”
For its fourth quarter, ended Dec. 31, 2021, SAP’s total revenue increased 5.9% year-over-year to €7.98 billion ($8.66 billion). The company’s gross profit came in at €5.82 billion ($6.32 billion), up 3.3% year-over-year. Also, its cash and cash equivalents were €8.90 billion ($9.66 billion) for the period ended Dec. 31, 2021, compared to €5.31 billion ($5.77 billion) for the period ended Dec. 31, 2020.
Analysts expect SAP’s revenue to be $32.28 billion in its fiscal year 2022, representing a 6.1% year-over-year increase. The company’s EPS is expected to rise 11.5% to $6.39 for its fiscal 2023. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. The stock closed yesterday’s trading session at $104.97. It is currently trading marginally above its 52-week low of $104.95, which it hit on March 7, 2022.
SAP’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
SAP has a B grade for Value, Stability, Sentiment, and Quality. It is ranked #3 out of 164 stocks within the Software - Application industry. Click here to see the additional POWR Ratings for Growth and Momentum for SAP.
Click here to check out our Software Industry Report for 2022
Infineon Technologies AG (IFNNY)
Headquartered in Munich, Germany, IFNNY designs, manufactures, and markets semiconductors and related system solutions worldwide. Its segments are Automotive; Industrial Power Control; Power & Sensor Systems; and Connected Secure Systems.
On Feb. 3, 2022, Dr. Reinhard Ploss, CEO, IFNNY, said, "Infineon has made a successful start into the 2022 fiscal year. We were able to increase our revenue and our segment results significantly. Demand for our products and solutions remains very strong. The utilization of our manufacturing capacities is very high, and we are expanding them step by step. This will help us improve the availability of products that we manufacture in-house over the year.”
IFNNY’s revenue increased 20.1% year-over-year to €3.16 billion ($3.43 billion) in its fiscal 2022 first quarter, ended Dec. 31, 2021. Its profit for the period came in at €457 million ($496.14 million), up 78.5% year-over-year, while its adjusted EPS came in at €0.41, up 46.4% year-over-year.
Analysts expect IFNNY’s revenue to increase 11.6% year-over-year to $14.75 billion in its fiscal year 2022. Its EPS is estimated to grow 37.1% year-over-year to $1.96 in its fiscal year 2022. The stock closed yesterday’s trading session at $28.22 after hitting its 52-week low of $28.03.
According to our POWR Ratings, IFNNY has an overall A rating, which indicates a Strong Buy in our proprietary rating system.
It has a B grade for Value, Sentiment, Stability, and Growth. Within the B-rated Semiconductor & Wireless Chip industry, IFNNY is ranked #8 of 97 stocks. Click here to see the additional POWR Ratings for Momentum and Quality for IFNNY.
Click here to checkout our Semiconductor Industry Report for 2022
Zebra Technologies Corporation (ZBRA)
ZBRA, together with its subsidiaries, provides enterprise asset intelligence solutions in the automatic identification and data capture solutions industry worldwide. It operates in Asset Intelligence & Tracking and Enterprise Visibility & Mobility. ZBRA is headquartered in Lincolnshire, Ill.
On Feb. 10, 2022, Anders Gustafsson, CEO, ZBRA, said, “Our team delivered solid fourth-quarter results, closing out a record year of sales and profitability. Performance was at the high end of our guidance, despite an exceptionally challenging supply chain environment, including premium freight costs that were higher than our expectations.”
ZBRA’s net sales for the fourth quarter, ended Dec.31, 2021, came in at $1.47 billion, up 12.2% year-over-year. Its non-GAAP net income came in at $245 million, up 2.1% year-over-year, and its non-GAAP EPS was $4.54, up 1.8% year-over-year.
For its fiscal year 2022, analysts expect ZBRA’s revenue to increase 5.6% year-over-year to $5.95 billion. Its EPS is estimated to grow 13% to $22.40 in 2023. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. The stock closed yesterday’s trading session at $381.65. The stock is currently trading marginally above its 52-week low of $380.91, which it hit on March 7, 2022.
ZBRA’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system.
It has a B grade for Sentiment and Quality. Within the B-rated Industrial - Machinery industry, it is ranked #24 of 77 stocks. Click here to see the additional POWR Ratings for Growth, Value, Momentum, and Stability for ZBRA.
Click here to check out our Industrial Sector Report for 2022
LG Display Co., Ltd. (LPL)
Headquartered in Seoul, South Korea, LPL designs, manufactures, and sells thin-film transistor liquid crystal display (TFT-LCD) and organic light-emitting diode (OLED) technology-based display panels.
On Dec. 29, 2021, LPL unveiled its newest OLED TV technology, ‘OLED EX.’ Dr. Oh Chang-ho, Executive Vice President & Head of the TV Business Unit at LPL, said, “With our new OLED EX technology, we aim to provide even more innovative, high-end customer experiences through the evolution of our OLED technology, algorithms, and designs."
For the fourth quarter, ended Dec. 31, 2021, LPL’s revenues came in at KRW 8.81 trillion ($7.12 billion), up 21.9% sequentially. Its gross profit came in at KRW 1.31 trillion ($1.06 billion), up 0.5% sequentially. Also, its interest expenses decreased 23.4% sequentially to KRW 91.65 billion ($74.14 million).
LPL’s EPS is expected to grow 32.5% per annum over the next five years. The stock closed yesterday’s session at $7.38. It is currently trading 1.8% above its 52-week low of $7.25, which it hit on Oct. 6, 2021.
LPL’s POWR Ratings reflect its promising outlook. It has an overall B rating representing a Buy in our POWR Rating system.
LPL has an A grade for Value and a B grade for Stability. It is ranked #16 of 47 stocks in the Technology - Electronics industry. Click here to see the additional POWR Ratings for LPL (Momentum, Growth, Sentiment, and Quality).
Seiko Epson Corporation (SEKEY)
Headquartered in Suwa, Japan, SEKEY develops, manufactures, sells, and provides products and services in printing solutions, visual communications, wearable and industrial products, and other businesses. It operates through three segments: Printing Solutions; Visual Communications; and Wearable & Industrial Products.
SEKEY’s revenue increased 17.9% year-over-year to $7.36 billion for the nine months ended Dec. 31, 2021. The company’s profit for the period increased 202.7% year-over-year to $534.73 million. Furthermore, its gross profit came in at $2.75 billion, up 24.4% year-over-year.
SEKEY’s revenue is expected to increase 4.4% year-over-year to $2.46 billion for the period ended Sept. 30, 2022. The stock closed yesterday’s session at its 52-week low of $6.90.
SEKEY has an overall B grade, which equates to a Buy in our POWR Rating system. It has an A grade for Value, Stability, and Quality. It is ranked #3 of 45 stocks in the B-rated Technology - Hardware industry. Click here to see Growth, Momentum, and Sentiment ratings for SEKEY.
SAP shares were trading at $105.63 per share on Tuesday morning, up $0.66 (+0.63%). Year-to-date, SAP has declined -24.61%, versus a -11.80% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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