The technology industry has been witnessing unprecedented growth since the onset of the COVID-19 pandemic because individuals and businesses have turned en masse to technology platforms to stay operational (and entertained). Seeing this, investors have piled into most of the technology stocks. This is in-part evidenced by the iShares U.S. Technology ETF’s (IYW) 53.7% returns over the past year.
While moving data and applications to cloud platforms has been the key trend, the need for devices to access and execute things on the cloud remotely has led in turn to a significant increase in demand for computer hardware also. As pandemic-driven trends are expected to continue in the post-pandemic world, the demand for hardware should remain robust for foreseeable future.
The global computer hardware industry is expected to grow at a CAGR of 6% until 2025. This growth will be led by emerging technologies, such as internet-of-things (IoT) and virtual reality, along with new trends such as remote working, remote learning, on-demand entertainment, online gaming, cloud computing, and more.
As global leaders in the hardware space, HP, Inc. (HPQ), Canon, Inc. (CAJ), Panasonic Corporation (PCRFY), and Lenovo Group Limited (LNVGY) should keep benefiting from the sector tailwinds. These companies are driving growth through their innovative offerings in a changing technology landscape. Shares of these companies have delivered double-digit gains over the past year, and we expect them to continue performing well this year and beyond.
HP, Inc. (HPQ)
HPQ is involved in the manufacture and marketing of desktops, laptops, and tablets. The company also delivers related software, services, and accessories. HPQ’s stock has gained 39.4% over the past year to close Friday’s trading session at $28.9.
HPQ has signed a definitive agreement to acquire HyperX, which is the gaming division of Kingston Technology Company. The acquisition is meant to expand HPQ’s gaming ecosystem. The company has also released cloud-based printing solutions for enterprise and retail consumers.
For its fiscal first quarter 2021, the company saw a growth in net revenues of 7%. The company’s EPS improved 80% during the same period.
HPQ is expected to see a revenue growth of 14.5% for the quarter ended April 30, 2021 and 6.1% for full year 2021. The company’s EPS is estimated to grow 37.7% in 2021 and at a rate of 15.1% per annum over the next five years.
HPQ’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to Strong Buy in our proprietary ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
HPQ has an A grade for Value and B for both Momentum and Quality. In the B-rated Technology – Hardware industry, it is ranked #4 of 51 stocks.
In total, we rate HPQ on eight different levels. Beyond what we stated above we also have given HPQ grades for Stability, Sentiment, and Growth. Get all the HPQ ratings here.
Canon, Inc. (CAJ)
CAJ manufactures and markets electronic devices such as copying machines, laser printers, cameras, lithography equipment, etc. The company has worldwide operations and has returned 26.1% over the past six months. It closed its last trading session at $21.63.
The company recently began selling FPA-5520iV LF Lithography systems that allow for more advanced packaging. CAJ has also reached a new milestone by completing the manufacture of 150 million RF and EF series interchangeable lenses.
For the quarter ended December 31, 2020, the company saw an increase in gross profit of 45.4% compared to the same period last year. Its net income increased 64.3% during the same period.
CAJ’s revenue is estimated to increase 14.9% for the quarter ended March 31, 2021 and 9.4% in 2021. Its EPS is expected to rise 39.2% in 2021 and 1% per annum over the next five years.
It’s no surprise that CAJ has an overall rating of A, which equates to Strong Buy in our POWR Ratings system. CAJ has a B grade for Value, Momentum, Quality, and Sentiment. In the B-rated Technology – Hardware industry, it is ranked #7 of 51 stocks.
Click here to see the additional POWR Ratings for CAJ (Growth and Stability).
Panasonic Corporation (PCRFY)
PCRFY develops, manufactures, and markets electronic products such as home appliances, computer peripherals, industrial equipment, and telecommunications. PCRFY has worldwide operations. PCRFY’s stock has returned 39.6% over the past year, and its last closing price was $13.11.
PCRFY is currently developing a medical imaging projection system for use during surgeries. This system has the potential to revolutionize the medical services industry. The company also recently unveiled its new collection of smart refrigerators, washing machines, fans, and other appliances connected to its Miraie platform.
For the quarter ended December 31, 2020, the company’s comprehensive income improved 122% compared to the same period last year.
PCRFY is expected to see revenue growth of 7.3% for the quarter ended March 31, 2021 and 6.2% in 2022. Its EPS is estimated to grow 400% for the quarter ended June 30, 2021.
The POWR Ratings are also high on PCRFY. It has an overall Rating of A, which translates to a Strong Buy. The stock has an A grade for Value and B for Growth and Stability. In the B-rated Technology – Hardware industry, it is ranked #3 of 51 stocks.
Beyond what we stated above we also have given PCRFY’s grades for Sentiment, Quality and Momentum. Get all the PCRFY ratings here.
Lenovo Group Limited (LNVGY)
LNVGY develops, manufactures, and markets personal computers and hand-held devices. The company has global operations. LNVGY has gained 107.8% over the past year to close the last trading session at $25.3.
The company has recently unveiled its ThinkBook Plus Gen 2i range of laptops, which is designed for mobile professionals. The company has also unveiled the new Lenovo Legion 7, which is designed for high-performance gamers.
For the quarter ended September 2020, the company witnessed a 7% revenue increase versus the same period last year. Its net income increased 53% during the same period.
It’s no surprise that LNVGY has an overall rating of A, which equates to Strong Buy in our POWR Ratings system. LNVGY has an A grade for both Growth and Value, and B for Momentum, Stability, and Sentiment. In the B-rated Technology – Hardware industry, it is ranked #2 of 51 stocks.
Click here to see the additional POWR Ratings for LNVGY.
The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
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HPQ shares were trading at $29.97 per share on Monday afternoon, up $1.00 (+3.45%). Year-to-date, HPQ has gained 21.88%, versus a 4.28% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaryaman Aashind
Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks. More...
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