The stock market has been volatile owing to the inflationary environment. Nevertheless, despite mixed economic indicators, The Goldman Sachs Group, Inc. (GS) expects the S&P 500 to rise 9% to 5,100 by the end of 2022. Furthermore, according to the IDC report, the technology market is expected to exceed $5.3 trillion in 2022.
In addition, since hybrid working is becoming the ‘new normal’ and businesses are digitizing their processes, the demand for technology products and solutions should not decline anytime soon. Investors’ interest in tech stocks is evidenced by the Technology Select Sector SPDR Fund’s (XLK) 8.3% returns over the past month, versus the SPDR S&P 500 Trust ETF’s (SPY) 5.3% gains.
So, we think fundamentally sound tech stocks Activision Blizzard, Inc. (ATVI) and Teradata Corporation (TDC) could be solid additions to one’s portfolio now. They are currently trading below their 52-week price highs, but Wall Street analysts expect them to rally by more than 30% in the coming months.
Activision Blizzard, Inc. (ATVI)
ATVI in Santa Monica, Calif., together with its subsidiaries, develops and publishes interactive entertainment content and services around the globe. The company operates through three segments: Activision Publishing, Inc.; Blizzard Entertainment, Inc.; and King Digital Entertainment.
On September 23, 2021, Jen O’Neal, the co-leader of Blizzard Entertainment, said, “Diablo II: Resurrected will introduce one of our most beloved games to all-new audiences. It was an honor for Vicarious Visions to join Blizzard and form the team that brought this classic back to life. Everyone involved was driven by a commitment to do right by the players, and I’m hugely proud of what they’ve accomplished.”
ATVI’s total revenues increased 5.9% year-over-year to $2.07 billion for the third quarter, ended September 30, 2021. The company’s operating income came in at $824 million, up 5.9% year-over-year. While its net income increased 5.8% year-over-year to $639 million, its EPS was $0.82, up 5.1% year-over-year.
Analysts expect ATVI’s revenue and EPS to increase 3.7% and 9.8%, respectively, year-over-year to $8.73 billion and $3.81 in its fiscal 2021. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock is currently trading 36.7% below its 52-week high of $104.53, which it hit on February 16, 2021. It has lost 8.8% in price over the past month to close yesterday’s trading session at $66.14. However, Wall Street analysts expect the stock to hit $95 in the near term, which indicates a potential 43.6% upside.
ATVI’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. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
ATVI has a B grade for Value and Quality. In the Entertainment – Toys & Video Games industry, it is ranked #5 out of 23 stocks. Click here to see the additional POWR Ratings for Momentum, Growth, Sentiment, and Stability for ATVI.
Teradata Corporation (TDC)
TDC, together with its subsidiaries, operates as a hybrid cloud analytics software provider. The company offers Teradata Vantage, a data warehouse, and analytics platform. Also, its solutions and services comprise software, hardware, and related business consulting and support services. TDC is headquartered in San Diego, Calif.
On November 4, 2021, TDC announced a three-year Strategic Collaboration Agreement (SCA) with Amazon Web Services, Inc. Doug Yeum, the Global Head of Partner Organization at AWS, said, “This collaboration accelerates Teradata’s ability to meet the demands of the largest data workloads we see, with cloud services from AWS to expedite the value and benefits Teradata can offer customers.”
TDC’s total revenue came in at $460 million for its fiscal third quarter ended September 30, 2021, versus $454 million in the previous period. Its non-GAAP operating income was $71 million, up 6% year-over-year. And its non-GAAP net income came in at $49 million, up 2.1% year-over-year. Its non-GAAP EPS remained flat at $0.43.
For its fiscal year 2021, TDC’s revenue and EPS are expected to grow 4.6% and 61.1%, respectively, year-over-year to $1.92 billion and $2.11. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past year, the stock has gained 123.2% in price to close yesterday’s trading session at $47.36. Also, it is currently trading 20.5% below its 52-week high of $59.58, which it hit on February 9, 2021. Wall Street analysts expect the stock to hit $62.88 in the near term, which indicates a potential 32.8% upside.
TDC’s strong fundamentals are reflected in its POWR ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
In addition, it has an A grade for Value and Quality, and a B grade for Growth. TDC is ranked #1 of 3 stocks in the Technology – Storage industry. Click here to see the additional POWR Ratings for TDC (Momentum, Sentiment, and Stability).
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ATVI shares were trading at $64.56 per share on Wednesday morning, down $1.58 (-2.39%). Year-to-date, ATVI has declined -30.13%, versus a 26.45% 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. More...
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