Amid tightening monetary policies of the Fed, tech stocks have witnessed significant downtrends. The tech-heavy and interest rate-sensitive NASDAQ Composite has lost 24.1% year-to-date. Moreover, St. Louis Fed President Jim Bullard is leaning toward another 75 bps hike in September, which might lead to further turmoil in the tech industry.
However, demand for tech goods and services is overwhelming amid rapid digitalization. Also, lucrative federal investments in the tech sector are expected to boost productivity. Recently, President Joe Biden signed the CHIPS and Science Act, worth $280 billion, to bolster American competitiveness in science and technology.
Tech inclination is growing rapidly. According to Statista, the number of smartphone subscriptions worldwide is projected to reach 7.69 billion by 2027, while in the U.S., the number of smartphone users is estimated to surpass 300 million by 2025.
Given the backdrop, investors might consider buying fundamentally sound tech stocks Jabil Inc. (JBL), Extreme Networks, Inc. (EXTR), and AudioCodes Ltd. (AUDC) now. These stocks are rated Strong Buy in our proprietary POWR Ratings system.
Jabil Inc. (JBL)
JBL offers products and services for manufacturing all over the world. The company operates in two segments, Electronics Manufacturing Services, and Diversified Manufacturing Services.
On July 12, 2022, JBL and IdentifySensors Biologics, a pathogen-detection platform technology company, agreed to co-develop processes for advanced manufacturing of portable devices for rapidly detecting a wide range of infections at the molecular level. This provides more accuracy than PCR testing and is a game changer in diagnostics.
JBL’s net revenues came in at $8.33 billion for the third quarter ended May 31, 2022, up 15.4% year-over-year. Its net profit increased 28.2% year-over-year to $218 million. Also, its EPS increased 35.7% year-over-year to $1.52.
Analysts expect JBL’s revenue to increase 12.1% year-over-year to $32.84 billion in 2022. Its EPS is estimated to increase 32.9% year-over-year to $7.45 in 2022. It surpassed EPS estimates in all four trailing quarters. Over the past six months, the stock has gained 5.5% to close the last trading session at $60.98.
JBL has an overall A rating, equating to a Strong 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 Growth and a B grade for Value and Quality. Within the Technology – Services industry, it is ranked #2 out of 82 stocks. Click here to see the additional POWR Ratings for Stability, Sentiment, and Momentum for JBL.
Extreme Networks, Inc. (EXTR)
EXTR offers software-driven networking solutions all around the world. It creates software for network administration, policy, analytics, security, and access controls, as well as wired and wireless network infrastructure equipment.
On August 18, 2022, EXTR introduced Extreme AP5050, the industry’s first outdoor Wi-Fi 6E Outdoor Access Point, optimized for deployment across outdoor venues, convention centers, hospital and university campuses, and large stadiums. This wireless service will offer better speed and connectivity and marks a milestone achievement for EXTR.
EXTR’s Service and subscription revenues came in at $91.11 million for the fourth quarter ended June 30, 2022, up 10.8% year-over-year. Its Service and subscription gross profit increased 23% year-over-year to $63.21 million. Also, its free cash flow came in at $59.82 million, up 14.6% year-over-year.
EXTR’s revenue is expected to increase 10.6% year-over-year to $1.23 billion in 2023. Its EPS is estimated to increase 26.8% year-over-year to $0.98 in 2023. It surpassed EPS estimates in all four trailing quarters. Over the past three months, the stock has gained 45% to close the last trading session at $14.60.
EXTR’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 rating system. It has a B grade for Quality, Growth, and Value.
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 is expected to enhance AUDC’s growth prospects.
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 12.1% year-over-year to $312.37 million in 2023. Its EPS is estimated to increase 20% year-over-year to $1.67 in 2023. AUDC’s shares have gained 2.3% intraday to close the last trading session at $22.58.
AUDC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy. It has an A grade for Quality and a B grade for Stability, Sentiment, and Value.
AUDC is ranked #1 in the same industry. Click here to see the additional POWR Ratings for AUDC (Growth and Momentum).
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JBL shares were trading at $60.98 per share on Wednesday afternoon, down $0.00 (0.00%). Year-to-date, JBL has declined -12.97%, versus a -15.46% 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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