The advent of a hybrid work culture has made it imperative for enterprises to acquire modernized and up-to-date computer hardware, ensuring uninterrupted operations. Furthermore, the rapid pace of digitalization and widespread adoption of advanced technologies are expected to drive industry growth.
Given these circumstances, it appears prudent to keep track of prominent technology stocks Apple Inc. (AAPL), NetApp, Inc. (NTAP), and TransAct Technologies Incorporated (TACT), as they exhibit the potential for substantial returns. Let's delve into a detailed analysis.
Tech hardware plays a crucial role in enabling peak software performance. The enduring demand for such hardware is expected to endure in the foreseeable future, driven by continuous investments from consumers, governments, and enterprises, ensuring a sustained growth trajectory.
The burgeoning adoption of cutting-edge technologies stands as a primary driver for the industry's upward trajectory. The emergence of Artificial Intelligence (AI) and machine learning has particularly sparked a surge in demand for intricately specialized hardware components.
IoT technology continues to fortify enterprise digital transformation, igniting significant demand for interconnected hardware, encompassing sensors, processors, and wireless solutions. According to a Mordor Intelligence report, the IoT devices market is projected to grow at a CAGR of 23.3% and reach $336.64 billion by 2028.
Furthermore, in accordance with a report from The Business Research Company, the global computer hardware market is poised to reach $909.80 billion by 2027, growing at a CAGR of 6.6%. This growth is underpinned by the increasing demand for resilient and energy-efficient computing systems.
In light of these encouraging trends, let's look at the fundamentals of the three best Technology - Hardware stocks, beginning with number 3.
Stock #3: Apple Inc. (AAPL)
AAPL crafts smartphones, personal computers, tablets, wearables, and accessories. It extends support through AppleCare and cloud services. Furthermore, it presents an array of services, including Apple Arcade, Apple Fitness+, Apple Music, Apple News+, Apple TV+, Apple Card, and Apple Pay, and licenses its valuable intellectual property.
On September 18, AAPL unveiled iOS 17, a groundbreaking update that elevates the iPhone's personalization and user-friendliness. It brings major enhancements to communication apps, introduces StandBy for an improved charging experience, simplifies sharing with AirDrop, and boosts typing speed and accuracy with intelligent input.
These innovations are poised to broaden the iPhone's appeal, potentially driving increased sales and positively impacting AAPL's financial performance.
On September 12, AAPL unveiled the Apple Watch Series 9, elevating the world's best-selling watch and achieving a notable environmental milestone. The Series 9 features the potent S9 SiP, enhancing performance, and introducing a double-tap gesture, brighter display, faster on-device Siri with health data access, and Precision Finding for iPhone.
These innovations position the Apple Watch Series 9 as a compelling wearable, likely to expand AAPL's customer base. The launch is expected to bolster the company's financial performance through increased sales and heightened customer satisfaction.
For the third quarter that ended July 1, 2023, AAPL’s gross margin increased 1.5% year-over-year to $36.41 billion. Its net income and EPS grew 2.3% and 5% from the year-ago value to $19.88 million and $1.26, respectively.
As of July 1, 2023, the company’s cash and cash equivalents came in at $28.41 billion, compared to $23.65 billion as of September 24, 2022.
The consensus revenue estimate of $405.92 billion for the fiscal year ending September 2024 reflects a 5.9% rise year-over-year. Likewise, the consensus EPS estimate of $6.57 for the next year indicates an 8.2% year-over-year improvement. Moreover, the company surpassed the consensus EPS estimates in three of the trailing four quarters.
AAPL’s shares have gained 39.1% year-to-date to close the last trading session at $173.93.
AAPL’s fundamentals are apparent in its POWR Ratings. The stock has an A grade for Quality. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
AAPL has ranked #24 in the 42-stock Technology - Hardware industry. In addition to the POWR Ratings I’ve just highlighted, you can see AAPL’s ratings for Growth, Value, Momentum, Stability, and Sentiment here.
Stock #2: NetApp, Inc. (NTAP)
NTAP delivers cloud-led and data-centric services globally, facilitating data management and sharing across on-premises and public/private clouds. The company also provides application-aware data management, along with professional and support services. Its segments include Hybrid Cloud and Public Cloud.
On August 24, NTAP extended its partnership with Google Cloud, aiming to provide elevated storage performance while maintaining the cloud's simplicity and flexibility. By introducing Google Cloud NetApp Volumes, customers can effortlessly transfer critical workloads from both Windows and Linux environments to Google Cloud.
This includes even the most demanding scenarios, such as VMware and SAP migrations, all achieved without the need for code refactoring or process redesign. This streamlined cloud integration could enhance operational efficiency, attract more clients, and consequently drive higher revenue for the company.
On June 28, NTAP unveiled enhanced capabilities within NetApp BlueXP, solidifying its status as the premier choice for secure data storage. These advancements encompass streamlined backup and recovery, broader data protection across various environments, and deployment in the most stringent security contexts, such as government sites.
The strategic move positions NTAP to attract a wider customer base, enhance its reputation, and subsequently bolster its financial performance. Also, the expanded features are poised to increase customer acquisition and retention, leading to revenue growth and improved profitability for the company.
For the fiscal 2024 first quarter that ended July 28, 2023, NTAP’s revenue from services increased 4.5% year-over-year to $842 million. Its cash inflow from operating activities rose 61.2% from the year-ago value to $452 million. Also, the company’s free cash flow grew 93.5% from the prior year’s period to $418 million.
The company’s revenue for the fiscal year ending April 2025 is expected to increase 4.4% year-over-year to $6.41 billion. Similarly, analysts expect NTAP’s EPS for the next year to come in at $6.16, up 7.4% from the previous year. Also, the company topped the consensus EPS estimates in all four trailing four quarters.
The stock has gained 24.9% year-to-date, closing the last trading session at $75.90.
NTAP’s prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to Buy in our proprietary rating system.
NTAP has an A grade for Quality. The stock is ranked #14 out of 42 stocks within the Technology – Hardware industry.
Click here to access the additional NTAP ratings (Growth, Value, Momentum, Stability, and Sentiment).
Stock #1: TransAct Technologies Incorporated (TACT)
TACT designs, develops, and markets transaction-based and specialty printers and terminals. Its offerings encompass thermal printers, consumable products like POS receipt paper, inkjet cartridges, ribbons, and printing supplies, as well as replacement parts, accessories, maintenance, repair services, and refurbished printers.
On May 2, TACT unveiled its new BOHA! Terminal 2, an FDA-compliant grab 'n go labeling solution that elevates the original BOHA! Terminal. It boasts enhanced speed, print resolution, label width options, screen brilliance, and sensitivity—delivering an abundance of features cherished by BOHA! customers.
With improved features and usability, it's poised to attract more customers, driving higher sales and revenue. Furthermore, its enhanced efficiency should lead to cost savings and increased profitability.
For the second quarter that ended June 30, 2023, TACT’s net sales increased 57.7% year-over-year to $19.61 million. Its adjusted EBITDA came in at $3.18 million, compared to a loss of $2.54 million in the prior year’s quarter.
In addition, the company’s net income and net income per common share stood at $765 million and $0.08, compared to a net loss and loss per share of $2.38 million and $0.24 in the previous year’s quarter.
The consensus revenue estimate of $72.39 million for the fiscal year ending December 2023 reflects a 24.5% rise year-over-year. Likewise, the consensus EPS estimate of $0.32 for the current year indicates a 153.3% year-over-year improvement. Moreover, the company's EPS is expected to grow 20% per annum over the next five years.
Over the past year, the stock has surged 40.5%, closing the last trading session at $6.44.
TACT’s strong outlook is apparent in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
The stock has an A grade for Value and Sentiment and a B for Quality. It is ranked #4 out of 42 stocks within the same industry.
Click here to access additional TACT ratings for Growth, Momentum, and Stability.
What To Do Next?
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AAPL shares were trading at $175.36 per share on Friday afternoon, up $1.43 (+0.82%). Year-to-date, AAPL has gained 35.54%, versus a 14.09% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
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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