The tech hardware industry is witnessing significant growth due to increased use in enterprises, process automation adoption, personal computer usage for gaming, and digitization.

So, I think quality tech stocks Quantum Corporation (QMCO), Ricoh Company, Ltd. (RICOY), and Panasonic Holdings Corporation (PCRFY), which have been making impressive gains, are well worth your attention this month.

The tech hardware market is thriving, thanks to the growing digitization of the public sector. The expansion of the IT industry, fuelled by cloud computing and big data analytics, is driving demand for advanced and efficient IT hardware solutions.

The IT hardware market is expected to grow at a CAGR of 7.9% until 2028.

In addition, the fast-paced innovation in electronics is driving consistent demand. Digital technologies like the Internet of Things (IoT) and cutting-edge communication technologies like 5G are anticipated to facilitate the development of innovative electronic products, bolstering the tech hardware industry.

As a result, the electrical and electronics market is expected to grow to $4.99 trillion in 2027, at a CAGR of 7.5%.

Furthermore, the rise in the number of computer households presents opportunities for expanding PC accessory product portfolios. Also, emerging technologies such as augmented reality (AR), virtual reality (VR), and artificial intelligence (AI) are driving demand for PC accessories.

The PC Accessories Market is estimated at $24.60 billion in 2023, and is expected to reach $43.61 billion by 2028, growing at a CAGR of 12.1%.

With these favorable trends in mind, let’s delve into the fundamentals of the three Technology – Hardware stock picks, beginning with the third choice.

Stock #3: Quantum Corporation (QMCO)

QMCO delivers end-to-end solutions to analyze, enrich, store, manage, protect, and preserve unstructured data across its entire lifecycle. The company specializes in solutions for video data, images, and other large files. Its portfolio of products includes primary storage software and systems, secondary storage software and systems, as well as devices and media.

QMCO’s trailing-12-month CAPEX / Sales of 2.91% is 20.1% higher than the 2.42% industry average. Its trailing-12-month asset turnover ratio of 1.89x is 204.7% higher than the 0.62x industry average.

QMCO reported total revenues of $91.79 million in the first quarter that ended June 30, 2023. Its gross profit increased 2.6% year-over-year to $34.93 million and operating expenses declined marginally from the year-ago quarter to $40.78 million.

The company is expected to report a revenue of $79.31 million in the fiscal second quarter that ended September 2023. Moreover, it has exceeded the consensus revenue estimates in each of the trailing four quarters, which is impressive.

Shares of QMCO lost 2.6% intraday to close the last trading session at $0.59.

QMCO’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which equates to a 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 also has a B grade for Value. It is ranked #12 in the 42-stock Technology – Hardware industry.

Click here to see QMCO’s additional rating for Growth, Stability, Sentiment, Momentum, and Quality.

Stock #2: Ricoh Company, Ltd. (RICOY)

Headquartered in Tokyo, Japan, RICOY offers office and commercial printing solutions and related solutions. The company operates through Digital services; Digital Products; Graphic Communications; and Industrial Solutions segments.

RICOY’s trailing-12-month net income margin of 2.55% is 25.3% higher than the 2.03% industry average. Its trailing-12-month asset turnover ratio of 1.07x is 72.3% higher than the 0.62x industry average.

On September 12, 2023, NR-Power Lab Co., Ltd., a jointly invested company of RICOY’s and NGK Insulators, Ltd. announced that it was collaborating with Japanese IoT start-up CollaboGate Japan, Inc. and Sassor Inc. to develop a proprietary virtual power plant (VPP) system.

This VPP system, set to be completed by fiscal 2023, aims to optimize the management of diverse energy resources, including renewable energy, storage batteries, and facility consumption.

RICOY pays $0.24 annually as dividends, which translates to a yield of 2.72% at the current price, higher than its four-year average dividend yield of 2.53%.

In the fiscal first quarter that ended June 30, 2023, RICOY’s sales increased 16.4% year-over-year to ¥534.60 billion ($3.58 billion) and its gross profit grew 13.2% from the year-ago quarter to ¥190 billion ($1.27 billion). The company’s operating profit came in at ¥10.10 billion ($67.55 million), an increase of 5.7% year-over-year.

Furthermore, its EPS attributable to owners of the parent rose 20.5% from the previous-year quarter to ¥14.43.

Analysts expect RICOY’s revenue to grow 307.3% year-over-year to $15.21 billion for the fiscal year ending March 2024. Moreover, RICOY topped the consensus revenue estimates in each of the trailing four quarters.

Shares of RICOY have gained 18.1% over the past year and 5.5% over the past month to close the last trading session at $8.73.

RICOY’s POWR Ratings reflect its solid fundamentals. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.

RICOY has a B grade for Value and Stability. It is ranked #6 in the same industry.

Beyond what is stated above, we’ve also rated for Growth, Sentiment, Momentum, and Quality. Get all RICOY ratings here.

Stock #1: Panasonic Holdings Corporation (PCRFY)

Headquartered in Kadoma, Japan, PCRFY manufactures and sells various electronic products through five segments: Lifestyle; Automotive; Connect; Industry; and Energy. Its main product offerings include automotive-use batteries, refrigerators, and industrial motors and sensors.

PCRFY’s trailing-12-month net income margin of 4.95% is higher than the industry average of 4.40%. Its trailing-12-month CAPEX/Sales of 4.10% is 27.5% higher than the 3.22% industry average.

On September 23, PCRFY’s wholly owned subsidiary Panasonic Energy Co. and Nouveau Monde Graphite Inc. announced that they were working towards a definitive offtake agreement based on their framework agreement. This collaboration aims to support NMG’s integrated production of ore-to-anode materials and is progressing through technological engagement and commercial discussions.

The company pays an annual dividend of $0.22, which translates to a dividend yield of 1.92% on the prevailing price level. Its four-year average dividend yield is 2.62%.

During the fiscal first quarter that ended June 30, 2023, PCRFY’s net sales increased 2.8% year-over-year to ¥2.03 trillion ($13.58 billion). Its operating profit rose 41.9% from the year-ago quarter to ¥90.37 billion ($604.37 million). In addition, the company’s EPS stood at ¥86.06, up 310.4% year-over-year.

Street expects PCRFY’s EPS and revenue for the second quarter (ended September 30, 2023) to increase 29.7% and marginally year-over-year to $0.22 and $14.18 billion, respectively. The company has a remarkable surprise history, surpassing the consensus revenue and EPS estimates in three of the trailing four quarters.

The stock has gained 32.9% year-to-date and 54.6% over the past year to close the last trading session at $11.10.

PCRFY’s POWR Ratings reflect this robust outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.

It has an A grade for Value and a B for Stability. The stock is ranked #5 in the same industry.

To see the other ratings of PCRFY for Growth, Momentum, Sentiment, and Quality, click here.

What To Do Next?

43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.

2024 Stock Market Outlook >

PCRFY shares were unchanged in premarket trading Wednesday. Year-to-date, PCRFY has gained 34.15%, versus a 11.74% rise in the benchmark S&P 500 index during the same period.

About the Author: Kritika Sarmah

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities. More...

More Resources for the Stocks in this Article