Owing to the resurgence of COVID-19 cases, a delay in office-reopening plans has rekindled a robust demand for secure and efficient cloud-based tech products and solutions from enterprises to facilitate their remote workforce productivity.
The tech-heavy Nasdaq Composite continues to hit record-highs primarily because of this surging demand and a low-interest environment.
After delivering an impressive performance in their recent quarter, we think fundamentally sound undervalued tech stocks Akamai Technologies, Inc. (AKAM) and VEON Ltd. (VEON) have the potential to grow substantially in the coming months. These two stocks have been recently upgraded to Buy in our proprietary POWR Ratings system.
Akamai Technologies, Inc. (AKAM)
AKAM, which is based in Cambridge, Mass., provides cloud services for delivering, optimizing, and securing online content and business applications internationally. The company sells its solutions through direct sales and service organizations and various channel partners.
On June 16, 2021, AKAM announced platform security enhancements to strengthen protection for web applications, APIs, and user accounts. Amid rising cyber threats, AKAM’s machine learning derives insight on malicious activity from daily client interactions to intelligently automate threat detections, time-consuming tasks, and security logic. These enhancements should generate high demand in the coming months.
On the same day, AKAM launched its new Account Protector solution, which uses proprietary behavioral analytics and reputation heuristics to detect and prevent account takeover attacks in real-time. Because human threat actors target consumers’ valuable digital assets, AKAM’s Account Protector analyzes requests, generating risk and trust indicators to calculate the likelihood that a user is the legitimate account owner or an impersonator.
AKAM’s revenue increased 7.3% year-over-year to $852.82 million for its fiscal second quarter, ended June 30, 2021. The company’s non-GAAP income from operations came in at $269.84 million, representing a 4.5% rise from the prior-year period. While its non-GAAP net income increased 2.8% year-over-year to $232.75 million, its non-GAAP EPS increased 2.9% to $1.42. AKAM had $581.07 million in cash and cash equivalents as of June 30, 2021.
Analysts expect AKAM’s EPS to increase 6.1% year-over-year to $1.39 in the current quarter, ending September 30, 2021. It surpassed the Street’s EPS estimates in each of the four trailing four quarters. Its revenue is estimated to increase 7.5% year-over-year to $852.44 million in the current quarter. The stock’s EPS is expected to grow at a 12% rate per annum over the next five years.
In terms of non-GAAP forward P/E, AKAM is currently trading at 20.07x, which is 19.7% lower than the 25x industry average. In terms of forward Price/Book, AKAM is currently trading at 3.87x, which is 41.8% lower than the 6.64x industry average. Over the past six months, the stock has gained 16% to close yesterday’s trading session at $112.71.
AKAM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree. AKAM was upgraded from Neutral to Buy on September 3, 2021.
AKAM has a B grade for Value, Stability, and Quality. In the 74-stock Technology – Services industry, it is ranked #20.
To see additional POWR Ratings for Sentiment, Growth, and Momentum for AKAM, click here.
VEON Ltd. (VEON)
Headquartered in the Netherlands, VEON is a communications and technology company that offers voice, data, and other telecommunication services through a range of wireless, fixed-line, and broadband internet services for corporations, operators, and consumers, as well as sells equipment and accessories. It provides mobile telecommunications services under contract and prepaid plans for corporate and consumer segments, as well as value-added services.
In an announcement dated September 7, 2021, VEON’s VEON Ventures division increased its investment in ShopUp, Bangladesh’s leading full-stack B2B commerce platform. As VEON increases the reach of its 4G networks, this investment in ShopUp reflects its growing focus on digital services, which are enjoying rapid customer adoption.
On August 23, 2021, Beeline, VEON’s mobile operator in Russia, collaborated with Russia’s Sechenov Medical University to leverage Beeline’s advanced capabilities in artificial intelligence (AI) and data analytics technology in diagnostic medicine to enable early detection of damage in hip joints, and identify kidney disease and potential cancers. VEON is looking forward to a long-term partnership with the University.
During the fiscal second quarter ended June 30, 2021, VEON’s total operating revenue increased 9.1% year-over-year to $2.07 billion. The company’s operating income came in at $374 million, up 14.4% from the prior-year period. The company had $1.19 billion in cash and cash equivalents as of June 30, 2021.
A $0.11 consensus EPS estimate for the current quarter, ending September 30, 2021, represents a 14% year-over-year improvement. Analysts expect VEON’s revenue to grow 6.6% year-over-year to $2.12 billion in the current quarter.
In terms of non-GAAP forward P/E, VEON is currently trading at 6.15x, which is 70% lower than the 20.52x industry average. In terms of forward Price/Sales, VEON is currently trading at 0.45x, which is 74.1% lower than the 1.72x industry average.
The stock has gained 63.1% in price over the past year and 20.5% over the past month. It ended yesterday’s trading session at $2.12.
VEON’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which translates to Buy. In addition, it was upgraded from Neutral to Buy on September 3, 2021.
VEON has a B grade for Growth, Value, and Quality. Of the 49 stocks in the B-rated Telecom – Foreign industry, VEON is ranked #6.
In addition to the POWR Rating grades I’ve highlighted, one can see VEON’s ratings for Sentiment, Momentum, and Stability here.
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AKAM shares were unchanged in after-hours trading Wednesday. Year-to-date, AKAM has gained 8.00%, versus a 21.39% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...
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