The Fed’s hawkish stance marred the optimal growth potential of interest rate-sensitive tech stocks in the first half of 2022, resulting in 17.3% year-to-date losses of the NASDAQ composite. However, amid improving investors’ sentiments, the benchmark index has gained 13% over the past month.
In addition, U.S. President Joe Biden signed a law promising $280 billion to high-tech manufacturing and scientific research in the U.S. as a part of the CHIPS and Science Act.
Also, rapid advancements and increasing deployment of Artificial Intelligence (AI), The Internet of things (IoT), and cloud-based solutions are shaping the prospects of the industry. According to Gartner, Worldwide IT spending is projected to total $4.50 trillion in 2022, an increase of 3% year-over-year, despite the high inflation and supply chain issues.
Given the backdrop, we think investors should add fundamentally sound tech stocks Cisco Systems, Inc.(CSCO), AudioCodes Ltd. (AUDC), Juniper Networks, Inc. (JNPR), and Hackett Group Inc. (HCKT) to their watchlist.
Cisco Systems, Inc.(CSCO)
CSCO designs, manufactures, and sells Internet Protocol-based networking and other products related to the communications and information technology industry in the Americas, Europe, the Middle East, Africa, the Asia Pacific, Japan, and China. It provides infrastructure platforms.
Moreover, on July 21, 2022, CSCO launched a new Webex Wholesale Route-to-Market for Service Provider partners to address the evolving needs of small to mid-size businesses. This is expected to improve the customer experience.
CSCO’s service revenue increased marginally year-over-year to $3.41 billion for the fiscal fourth quarter ended July 30, 2022. Revenue from its EMEA segment came in at $3.58 billion, up 8% year-over-year. Moreover, revenue from end-to-end security products came in at $984 million, up 20% year-over-year.
Analysts expect CSCO’s revenue to increase 2.6% year-over-year to $52.89 billion in the current year. Its EPS is estimated to increase 5.1% year-over-year to $3.53 for the same period. It has surpassed EPS estimates in all four trailing quarters. Over the past month, the stock has gained 8.3% to close the last trading session at $46.66.
CSCO’s overall B rating equates to a Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Quality and a B grade for Stability. Within the Technology – Communication/Networking industry, it is ranked #6 out of 53 stocks. Click here to see the additional POWR Ratings for Growth, Momentum, Sentiment, and Value for CSCO.
AudioCodes Ltd. (AUDC)
Headquartered in Lod, Israel, AUDC provides advanced communications software, products, and productivity solutions for the digital workplace. The company offers solutions, products, and services for unified communications, contact centers, VoiceAI business lines, and service provider businesses.
On April 25, 2022, AUDC announced that it had been approved as a partner for Microsoft Corporation’s (MSFT) Operator Connect Accelerator. This collaboration might drive solid business growth.
AUDC’s total revenues came in at $68.36 million for the second quarter ended June 30, 2022, up 12.9% year-over-year. Its gross profit increased 5.8% year-over-year to $44.51 million. Also, its service revenue came in at $27.77 million, up 21.9% year-over-year.
Street expects AUDC’s revenue to increase 11.9% year-over-year to $278.55 million in 2022. Its EPS is estimated to increase 14.1% per annum for the next five years. Over the past month, the stock has gained 2.3% to close the last trading session at $22.82.
AUDC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our POWR Ratings system. It has an A grade for Quality and a B for Stability and Value.
AUDC is ranked first in the same industry. Click here to see the additional POWR Ratings for AUDC (Growth, Momentum, and Sentiment).
Juniper Networks, Inc. (JNPR)
JNPR designs, develops, and sells network products and services worldwide. It sells its products through direct sales, distributors, value-added resellers, and original equipment manufacturers to end-users in the cloud, service provider, and enterprise markets.
On July 26, 2022, Rami Rahim, JNPR’s CEO, said, “Demand signals remain healthy, and we are seeing attractive opportunities across our enterprise, cloud, and service provider markets. Based on this momentum, the backlog we have built, and our latest expectations regarding supply, I am increasingly optimistic regarding our revenue growth prospects for the year.”
JNPR’s total net revenues came in at $1.27 billion for the second quarter ended June 30, 2022, up 8.3% year-over-year. Its net income increased 82.9% year-over-year to $113.40 million. In addition, its EPS increased 84.2% year-over-year to $0.35.
JNPR’s revenue is expected to increase 10.1% year-over-year to $5.21 billion in 2022. Its EPS is estimated to increase 14.5% per annum for the next five years. Over the past month, the stock has gained marginally to close the last trading session at $28.82.
JNPR has an overall B rating, equating to a Buy in our POWR Ratings system. It has a B grade for Value and Quality. It is ranked #10 in the same industry. We’ve also rated JNPR for Momentum, Sentiment, Growth, and Stability. Get all JNPR ratings here.
Hackett Group Inc. (HCKT)
HCKT operates as a strategic advisory and technology consulting firm primarily in North America and internationally. It offers best practice accelerators that provide web-based access to best practices, customized software configuration tools, and best practice process flows and advisor inquiry for fact-based advice on proven approaches and methods.
HCKT’s total revenue came in at $75.93 million for the second quarter ended July 1, 2022, up 3.7% year-over-year. Its S&BT segment’s revenue increased 26% year-over-year to $33.39 million. The company’s EPS remained constant at $0.32.
HCKT’s revenue is expected to increase 6.6% year-over-year to $297.20 million in 2022. Its EPS is estimated to increase 15% per annum for the next five years. Also, it has surpassed EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 17.1% to close the last trading session at $22.24.
HCKT has an overall A rating, equating to a Strong Buy in our POWR Ratings system. It has an A grade for Quality and a B for Stability and Sentiment. It is ranked #1 among 10 stocks in the A-rated Outsourcing – Tech Services industry. We’ve also rated HCKT for Momentum, Value, and Growth. Get all HCKT ratings here.
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CSCO shares were trading at $49.34 per share on Thursday afternoon, up $2.68 (+5.74%). Year-to-date, CSCO has declined -20.43%, versus a -9.48% 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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