Despite the Fed’s hawkish stance, tech stocks have regained a degree of price stability of late. Since investors seem to have absorbed most of the market negatives, the industry might rebound soon on steady demand for tech products and services. According to the Computing Technology Industry Association, the U.S. tech industry is estimated to register a 2% increase in jobs this year.
With continuing hybrid lifestyles and rapid worldwide digitization, the demand for tech products is expected to soar. Investors’ interest in the tech industry is evidenced by the Technology Select Sector SPDR ETF’s (XLK) 7.8% returns over the past month compared to SPDR S&P 500 Trust ETF’s (SPY) 5.7% returns.
Given this backdrop, we think it could be wise to bet on fundamentally strong tech stocks Avid Technology, Inc. (AVID), Box, Inc. (BOX), Rambus Inc. (RMBS), and Celestica Inc. (CLS). They have each gained more than 5% in price year-to-date because of their solid growth attributes and are rated Strong Buy or Buy in our POWR Ratings system.
Avid Technology, Inc. (AVID)
Together with its subsidiaries, AVID in Burlington, Mass., develops, markets, and supports software and integrated solutions for video and audio content creation, management, and distribution worldwide.
On March 1, 2022, AVID’s CEO and president, Jeff Rosica, said, “As we begin 2022, we continue to see strength across the end markets for our solutions, and we will continue to make selective investments in new products and innovation to enable Avid to continue delivering the industry-leading solutions that our customers depend on and to achieve our company strategy and our long-term growth and profitability targets.”
AVID’s total net revenues came in at $119.06 million for the fourth quarter ended Dec. 31, 2021, up 14.2% year-over-year. Its non-GAAP net income came in at $20.87 million, up 37% year-over-year, while its non-GAAP EPS was $0.46, up 39.4% year-over-year.
AVID’s 19.95% forward EBITDA growth is 19.1% higher than the 16.75% industry average.
AVID’s revenue is expected to increase 8.1% to $475.71 million in 2023. Its EPS is estimated to increase 17.7% to $1.73 in 2023. Also, it surpassed EPS estimates in each of the four trailing quarters. The stock has gained 12.5% in price year-to-date to close yesterday’s trading session at $35.31.
AVID’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.
AVID has an A grade for Quality and a B grade for Growth and Sentiment. Within the Technology – Services industry, it is ranked #7 of 81 stocks. Click here to see the additional POWR Ratings for Value, Momentum, and Stability for AVID.
Note that AVID is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.
Box, Inc. (BOX)
BOX provides a cloud content management platform that enables organizations of various sizes to manage and share their content from anywhere on any device. The Los Altos, Calif.-based company has more than 105,000 paying organizations, and its solution is offered in 25 languages and has 77.70 million registered users.
On March 2, 2022, Dylan Smith, BOX’s co-founder and CFO, said, “With a sharp focus on delivering profitable growth as we capitalize on our expanded market opportunity, we expect to deliver another year of accelerating revenue growth and expanding operating margins for the full year of fiscal 2023.”
BOX’s revenue increased 17.3% year-over-year to $233.36 million for the fourth quarter ended Jan. 31, 2022. Its net loss came in at $4.33 million compared to $4.94 million in the year-ago period. Also, its total current assets were $916.56 million for the period ended Jan. 31, 2022, compared to $879.29 million for the period ended January 31, 2021.
BOX’s 18.35% forward EBITDA growth is 9.6% higher than the 16.75% industry average.
Analysts expect BOX’s revenue to be $993.51 million in 2023, representing a 13.6% year-over-year rise. The company’s EPS is expected to increase 32.9% to $1.13 in 2023. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 11.7% in price year-to-date to close yesterday’s trading session at $28.84.
BOX has an overall B rating, which indicates a Buy in our proprietary rating system. It has an A grade for Growth and Quality and a B grade for Value. BOX is ranked #8 in the Technology – Services industry. Click here to see BOX’s additional POWR Ratings for Momentum, Stability, and Sentiment.
Rambus Inc. (RMBS)
Sunnyvale, Calif.-based RMBS, a pioneer in high-performance memory subsystems, provides semiconductor products in the United States, Taiwan, South Korea, Japan, Europe, Canada, Singapore, China, and internationally. The company offers DDR5, DDR4, and DDR3 memory interface chips.
On March 9, 2022, RMBS announced that its Rambus Root of Trust RT-640 Embedded Hardware Security Module (HSM) received Automotive Safety Integrity Level B (ASIL-B) certification per the ISO 26262 international standard. Neeraj Paliwal, RMBS’ general manager of Security IP, said, “With the Rambus RT-640 Embedded HSM, automotive manufacturers get the best of both worlds: robust cybersecurity anchored in hardware with the assurance of ASIL-B functional safety.”
RMBS’ total revenue for its fiscal fourth quarter, ended Dec. 31, 2021, came in at $91.78 million, up 48.2% year-over-year. Also, its net income was $6.11 million, compared to a $12.05 million loss in the prior period. Furthermore, its EPS came in at $0.05, compared to an $0.11 loss per share in the year-ago period.
RMBS’ 1,084.02% year-over-year EBITDA growth is significantly higher than the 26.20% industry average.
Analysts expect RMBS’ revenue to increase 13.3% year-over-year to $513.40 million in its fiscal year 2022. Its EPS is expected to increase 8.4% per annum for the next five years. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 5.8% in price year-to-date to close yesterday’s trading session at $28.62.
It is no surprise that RMBS has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Growth and a B grade for Quality. RMBS is ranked #31 of 96 stocks in the A-rated Semiconductor & Wireless Chip industry. Click here to get all the RMBS ratings (Value, Momentum, Stability, and Sentiment).
Celestica Inc. (CLS)
Headquartered in Toronto, Canada, CLS provides hardware platform and supply chain solutions in North America, Europe, and Asia. It operates through Advanced Technology Solutions and Connectivity & Cloud Solutions.
On Jan. 26, 2022, Rob Mionis, CLS’ President and CEO, said, “We enter 2022 with confidence that Celestica is well-positioned to be successful. Our focus is squarely on meeting our 2022 performance expectations while successfully managing the dynamic macro environment.”
For its fiscal fourth quarter, ended Dec. 31, 2021, CLS’ revenue came in at $1.51 billion, up 9.1% year-over-year. Its net earnings for the period were $31.90 million, up 58.7% year-over-year, while its EPS was $0.26, up 62.5% year-over-year.
CLS’ 32.65% year-over-year EBITDA growth is 24.6% higher than the 26.20% industry average.
CLS’ revenue is expected to be $6.34 billion in its fiscal year 2022, representing a 12.4% year-over-year rise. In addition, the company’s EPS is expected to increase 24.1% per annum for the next five years. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 6% in price year-to-date to close yesterday’s trading session at $11.36.
CLS has an overall A rating, which equates to a Strong Buy in our proprietary rating system. It has an A grade for Growth and a B grade for Value and Sentiment. CLS is ranked #5 of 81 stocks in the Technology – Services industry. Click here to see CLS’ ratings for Momentum, Stability, and Quality.
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AVID shares were unchanged in premarket trading Wednesday. Year-to-date, AVID has gained 8.41%, versus a -5.64% 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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