Many technology companies reached unprecedented highs last year driven by the massive increase in demand for their offerings during the pandemic. The Technology Select Sector SPDR ETF (XLK) was up a whopping 40% in 2020.
Though there is growing talk of new federal laws to limit unhealthy business practices of big tech stocks, like Amazon.com, Inc. (AMZN) and Alphabet Inc. (GOOGL), the technology sector is still expected to see growth in 2021.
As the companies in the tech space are reshaping how everyday life operates with their innovative products and services, investors should consider adding HP Inc. (HPQ), Dropbox, Inc. (DBX), and Jabil Inc. (JBL) to their portfolios. These stocks are well-positioned to generate massive returns in the near term.
HP Inc. (HPQ)
HPQ, famous for its portfolio of personal computers (PCs) and consumer PCs, also offers imaging and printing products, and related technologies, solutions and services. The company’s segments include Personal Systems, Printing and Corporate Investments. HPQ is also a top dividend stock with a four-year average dividend yield of 3.1%.
The company’s top-line surged 6.7% sequentially to $15.26 billion for the fiscal 2020 fourth quarter ended October 31, 2020. Consumer net revenue increased 24% year-over-year and total hardware units increased 14% year-over-year. Net earnings increased 72.2% year-over-year to $668 million. Non-GAAP EPS increased 26.5% sequentially to $0.62.
Analysts expect the company’s revenue to increase 6.7% for the quarter ending April 2021 and more than 2% in 2021. HPQ’s EPS is expected to grow 19.6% for the quarter ending April 2021, 15.8% in 2021 and at a rate of 10.7% per annum over the next five years. The company has an impressive earnings surprise history; it beat consensus EPS estimates in each of the trailing four quarters.
Yesterday, the company announced the appointment of Judith Miscik to its Board of Directors. Also, HPQ announced a number of executive leadership appointments on January 19, in order to further strengthen the company’s innovation capabilities and support its long-term growth strategy. It included the appointment of Tolga Kurtoglu as the Chief Technology Officer and Global Head of HP Labs.
The company declared a cash dividend of $0.19 per share on January 13, payable on April 7. Over the past six months, the stock rallied 39.3% to close yesterday’s trading session at $24.48. The stock is currently trading 6.4% below its 52-week high of $26.15.
HPQ’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. HPQ has a grade of A for Value and a B for both Momentum and Quality.
To see additional POWR Ratings for Growth, Stability, and Sentiment for HPQ, Click here.
Dropbox, Inc. (DBX)
Based in San Francisco, California, DBX is an online company that provides online file storage and sharing services. With a presence in more than 180 countries, the company is building a smart workspace. DBX’s platform allows individuals, teams, and organizations to collaborate and sign up for free through its website or app, as well as upgrade to a paid subscription plan in order to access premium features.
The company is scheduled to report the financial results for the fourth quarter and fiscal year ended December 31, 2020 after the market closes on February 18. For the third quarter ended September 30, 2020, DBX’s revenue climbed 13.8% year-over-year to $487.40 million. Its average revenue per paying user increased 4% year-over-year to $128.03. Gross profit increased 18.8% year-over-year to $384.2 million. Non-GAAP net income increased more than 97% year-over-year to $110.2 million, yielding a non-GAAP EPS of $0.26, which increased 100% year-over-year.
Analysts expect DBX’s revenue to increase 11.8% for the quarter ended December 2020, 10.8% for the quarter ending March 2021 and 10.6% in 2021. The company’s EPS is expected to grow 50% for the quarter ended December 2020, 16.9% in 2021 and at a rate of 16.8% per annum over the next five years. DBX has an impressive earnings surprise history; it beat consensus EPS estimates in each of the trailing four quarters.
The company announced on December 15, 2020 that it has been positioned in the Leader section of the Globe for Digital Work Hubs, 2021 for the second year in a row by Aragon Research, Inc. On November 17, 2020, DBX unveiled the next iteration of its collaborative workspace, Dropbox Spaces, along with several new features that help teams get organized, collaborate, and keep work moving securely. The stock has gained 34.5% over the past year. It is currently trading 9% below its 52-week high of $25.16, which it hit on December 23, 2020.
DBX’s POWR Ratings reflect this promising outlook. The stock has an overall rating of ,A which equates to Strong Buy in our POWR Ratings system. The stock also has a grade of A for both Growth and Quality. Also, it has a grade of B for both Value and Momentum.
Click here to see the additional POWR Ratings for DBX (Stability and Sentiment).
Jabil Inc. (JBL)
Founded in 1966, JBL provides electronic manufacturing services and solutions throughout the world. The company primarily operates through two segments — Electronics Manufacturing Services (EMS) and Diversified Manufacturing Services (DMS). JBL operates through 100 facilities in more than 29 countries. Moreover, the company also provides paper bottle and paper-based packaging solutions.
The company’s revenue increased 4.4% year-over-year to $7.83 billion for the fiscal 2021 first quarter ended November 30, 2020. Revenue from the DMS segment increased 13% year-over-year. Gross profit increased 14.6% year-over-year to $634.56 million. Net income increased 395.9% year-over-year to $200.44 million and non-GAAP EPS was reported to be $1.60 which increased 52.4% year-over-year.
Analysts expect JBL’s revenue to increase more than 13% for the quarter ending May 2021 and 2.6% next year. The company’s EPS is expected to grow 88% for the quarter ending February 2021, 59.7% in 2021 and at a rate of 13.5% per annum over the next five years. JBL’s earnings surprise history is impressive, with the company missing the consensus estimate in just one of the trailing four quarters.
The company has paid consecutive quarterly cash dividends on its common shares since May 15, 2006. Last month, JBL announced a quarterly dividend of $0.08 per share payable on March 2. On January 14, the company announced the acquisition of Ecologic Brands, Inc. which is a leading provider of sustainable packaging specializing in paper bottle and paper-based packaging solutions. Over the past three months, the stock rallied 28.5% to close yesterday’s trading session at $42.58. JBL has gained 9.5% over the past year.
It’s no surprise that JBL has an overall rating of B, which equates to Buy in our POWR Ratings system. JBL has a grade of B for both Growth and Value. In the 82-stock Technology – Services industry, it is ranked #10.
In total, we rate JBL on 8 different levels. Beyond what we stated above, we also have given JBL grades for Momentum, Quality, Stability, Sentiment, and Industry. Get all the JBL ratings here.
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HPQ shares were unchanged in after-hours trading Tuesday. Year-to-date, HPQ has gained 1.22%, versus a 2.05% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...
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