Despite prevailing market uncertainties, the tech industry is constantly evolving and pushing boundaries, driving innovation across various sectors. Moreover, as businesses and industries recognize the immense value Artificial Intelligence (AI) can bring, the demand for technology, expertise, and solutions continues to surge.
Given the backdrop, fundamentally sound tech stocks HP Inc. (HPQ), Nomura Research Institute, Ltd. (NRILY) and Gilat Satellite Networks Ltd. (GILT) could be solid portfolio additions. But before jumping into the fundamentals of the featured stocks, let us look at how the tech industry has been faring so far.
While the tech sector seemed to be struggling initially post-pandemic, it made a solid comeback fueled by staggering demand for AI across various sectors. Moreover, the global AI market is expected to grow significantly at a 37.3% CAGR from 2023 to 2030.
In addition, IT solutions are experiencing a surge driven by the rapid pace of digitalization, the widespread adoption of enterprise applications, and the growing popularity of remote work arrangements.
According to Gartner, worldwide IT spending is expected to reach $5.10 trillion in 2024, reflecting an increase of 8% from the current year. This growth is driven by increased investments in cloud computing, generative AI, and business digital transformation programs, along with rising demand for new technology and innovative solutions.
Furthermore, tech stocks have gained significant investor attention this year, with the Technology Select Sector SPDR Fund (XLK) gaining 47.2% year-to-date, outpacing the 17.7% gains of the broader SPDR S&P 500 ETF Trust (SPY) over the same period.
With such constructive trends in mind, let’s now dive into the fundamentals of the aforementioned stocks of the technology industry.
HP Inc. (HPQ)
HPQ provides personal computing and other access devices, imaging and printing products, and related technologies, solutions, and services internationally. The company operates through three segments: Personal Systems; Printing; and Corporate Investments.
On November 7, HPQ declared a dividend of $0.2756 per share on its common stock, representing an increase of approximately 5% from the prior dividend and payable to shareholders on January 3, 2024. Its annual dividend of $1.10 yields 3.91% on prevailing prices.
On the same day, the company announced a strategic partnership with INDO-MIM, a firm engaging in the Metal Injection Molding (MIM) and additive manufacturing powder industry. This collaboration marks a milestone toward scaling HPQ’s Metal Jet technology.
HPQ’s net revenues for the fiscal third quarter ended July 31, 2023, came in at $13.20 billion, up 2.2% from the prior quarter. Its non-GAAP net earnings rose 9.4% sequentially to $859 million. The company’s non-GAAP earnings per share came in at $0.86, up 8.9% sequentially. Additionally, its cash inflow from operating activities rose 147.7% from the year-ago value to $976 million.
Street expects HPQ’s EPS for the ongoing quarter (ending January 2024) to increase 13.2% from the prior-year period to $0.85. Its revenue for the same quarter is expected to increase 1% year-over-year to $13.97 billion.
The stock has increased 5% year-to-date and 4.9% over the past month to close the last trading session at $28.21.
HPQ’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has a B grade for Growth and Value. Within the B-rated Technology – Hardware industry, it is ranked #3 out of 38 stocks. To see HPQ’s Momentum, Stability, Sentiment, and Quality ratings, click here.
Nomura Research Institute, Ltd. (NRILY)
Headquartered in Tokyo, Japan, NRILY provides consulting, financial information technology solution, industrial IT solution, and IT platform services in Japan. The company operates through the broad segments of Consulting; Financial IT Solutions; and IT Platform Services.
On November 1, NRILY announced that it had partnered with three Japanese regional banks to launch TSUBASA – AML Center, a joint venture aimed at combating financial crimes. NRI will provide its AML/CFT SaaS, GPLEX, as a centralized operational platform for transaction monitoring, suspicious transaction reporting, name screening, and customer risk assessment.
The move reflects NRI’s commitment to collaborative efforts in the Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) space and enhances its position as a provider of financial IT solutions.
NRILY’s revenue increased 8.1% year-over-year to ¥185.36 billion ($1.23 billion) in the second quarter of the fiscal year ending March 2024. The company’s gross profit increased 8.3% from the prior-year period to ¥65.20 billion ($431.81 million), while its earnings per common share increased 21.1% year-over-year to ¥35.
Analysts expect NRILY’s revenue for the fiscal year ending March 2024 to increase 49.2% from the prior year to $4.90 billion. For the fiscal year ending March 2025, its revenue is estimated to increase 5% year-over-year to $5.14 billion. The stock has gained 9.7% over the past year to close the last trading session at $27.46. It has also gained 15.9% year-to-date.
NRILY’s solid prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
NRILY has a B grade for Stability and Quality. It is ranked #4 in the A-rated 9-stock Outsourcing – Tech Services industry.
Click here to see the additional POWR Ratings for NRILY (Growth, Value, Momentum, and Sentiment).
Gilat Satellite Networks Ltd. (GILT)
Headquartered in Petah Tikva, Israel, GILT offers satellite-based broadband communication solutions internationally. It operates in three segments: Satellite Networks; Integrated Solutions; and Network Infrastructure and Services.
On November 16, GILT announced that it had completed acquiring DataPath, Inc., a market leader in trusted communications for the U.S. DoD Military and Government sectors. This should bolster the company’s position in the defense market.
On August 1, 2023, Satcom Direct and GILT partnered to develop ultra-low profile Electronically Steered Antennas (ESA) optimized for OneWeb’s Low Earth Orbit (LEO) constellation, enhancing in-flight connectivity. These antennas, optimized for OneWeb’s LEO constellation, will be available from 2025, improving connectivity for business, government, and defense customers.
GILT’s revenues for the third quarter ended September 30, 2023, increased 5.9% year-over-year to $63.93 million. Its non-GAAP gross profit increased 12.1% from the prior-year period to $25.91 million. The company’s non-GAAP operating income increased 39.6% from the previous year’s value to $6.10 million.
In addition, its non-GAAP net income rose 51.2% from the prior-year quarter to $4.58 million. Its non-GAAP EPS came in at $0.08, representing an increase of 33.3% year-over-year.
For the fiscal quarter ending December 2023, GILT’s revenue is expected to increase 4.8% year-over-year to $76.12 million. Its revenue for the fiscal year ending December 2023 is expected to increase 11.7% from the past year to $267.87 million.
Over the past six months, the stock has gained 12.9% to close the last trading session at $6.30. The stock has gained 10.1% over the past year.
It’s no surprise that GILT has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
It has a B Grade for Growth, Value, Sentiment, and Quality. Within the Technology – Communication/Networking industry, it is ranked first out of 45 stocks.
Beyond what we stated above, we also have given GILT grades for Momentum and Stability. Get all GILT ratings here.
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HPQ shares were trading at $28.20 per share on Friday afternoon, down $0.01 (-0.04%). Year-to-date, HPQ has gained 7.80%, versus a 19.16% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...
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