U.S. technology stocks reached their highest level in three months, boosted by solid corporate earnings and positive economic data. The S&P 500 index rose 1.6% on Wednesday, led by technology and consumer stocks. This assisted in recouping losses from the first two days of the week. The Nasdaq Composite increased 2.6% to its highest level since early May.
Regardless of market downturns or unprecedented global events, organizations are investing in strengthening their digital capabilities as technology advances. Investments in digitization from various sectors to keep up with the fast-changing business environment are expected to generate significant revenues for tech companies in the long run.
The global information technology market is expected to be worth $13.81 trillion by 2026, with a 10.3% CAGR. The growing reliance on technology, technological advancements, and emerging technologies such as cloud computing, artificial intelligence, extended reality, data analytics, and blockchain are expected to propel the industry forward.
CTS Corporation (CTS)
CTS is a leading product designer and manufacturer of products that Sense, Connect, and Move. The company makes sensors, actuators, and electronic parts in North America, Europe, and Asia. It also sells engineered products to clients in the aerospace/defense, industrial, medical, and transportation sectors.
In June, CTS completed the previously announced cash acquisition of Ferroperm Piezoceramics from Meggitt PLC (MGGT) for 525 million Danish Krone, subject to customary net debt and working capital adjustments and other terms and conditions of the Definitive Share Purchase Agreement.
CTS’ revenues increased 11.9% from the year-ago value to $144.98 million for the second quarter ended June 30, 2022. Its operating income grew 10.2% year-over-year to $22.69 million. The company’s net income surged 1339.8% from the prior-year quarter to $12.59 million, while its EPS amounted to $0.39.
Analysts expect the EPS to increase 30.6% year-over-year to $2.52 in fiscal 2022. The consensus revenue estimate of $593.18 million in fiscal 2022 represents a 15.6% increase from the same period last year. The stock has gained 16.8% over the past year and 19.6% over the past month.
CTS’ POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
CTS has an A grade for Growth and Quality and a B for Stability. Within the Technology – Electronics industry, it is ranked #3 of 47 stocks. To see additional POWR Ratings for Value, Momentum, and Sentiment for CTS, click here.
Avnet Inc. (AVT)
AVT, a technology solutions company, markets, sells, and distributes electronic components. Electronic Components and Farnell are the company’s two operational segments.
In June, AVT and Amazon Web Services (AWS) formed a new global strategic collaboration agreement to assist Original Equipment Manufacturers (OEMs) of IoT solutions in reducing time to market. This multi-year collaboration will enable Avnet’s IoTConnect Platform to deliver the breadth and depth of AWS’ service portfolio, resulting in a scalable, secure platform that preconfigures AWS services for application-specific usage.
Also, in June, SciTech Institute, an organization dedicated to enhancing and promoting the value and importance of STEM education, announced a collaboration with AVT to expand the footprint of SciTech’s Chief Science Officers (CSO) program to new locations in the United States and internationally.
For the third quarter ended April 02, 2022, AVT’s total revenue increased 31.9% from the year-ago value to $6.49 billion. Its operating income grew 212.9% year-over-year to $274.41 million. The company’s net income surged 70.6% from the prior-year quarter to $183.42 million, while its EPS rose 71.9% year-over-year to $1.84.
AVT’s EPS is expected to grow at the rate of 10.4% per annum over the next five years. The consensus revenue estimate of $24.19 billion in fiscal 2022 represents a 23.8% increase from the same period last year. The stock has gained 14.7% over the past year and 13.9% over the past month.
It is no surprise that AVT has an overall B rating, which equates to Buy in our POWR Ratings system. The stock also has an A grade for Growth and a B for Value. In the same industry, it is ranked #6.
Beyond the POWR Ratings grades I have just highlighted, you can view AVT ratings for Momentum, Stability, and Sentiment.
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CTS shares were unchanged in premarket trading Thursday. Year-to-date, CTS has gained 11.47%, versus a -12.09% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More...
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