The increasing need for centralized access systems and expanding digital economy are expected to drive growth in the tech industry. As the industry shows solid potential, quality tech stocks Panasonic Holdings Corporation (PCRFY), Ricoh Company, Ltd. (RICOY), and Spirent Communications plc (SPMYY)  might be solid buys now to capitalize on the industry’s tailwinds. These companies also pay stable dividends.

As digital technologies have risen to prominence, the IT sector has witnessed remarkable growth in recent years. In addition, the Bring Your Device Policy (BYOD) and the increasing need for centralized access systems are expected to help keep the demand for servers high during the forecast period.

The global IT hardware market is expected to grow by registering a CAGR of 6.1% until 2027.

Moreover, digital data’s growing importance and usefulness are driving the global hardware storage market. Also, rising consumer demand for devices to store their pictures and other data, smartphone penetration, and an increase in sales of consumer electronics are expected to drive growth. Aided by the expanding digital economy, the market is expected to grow further until 2028, growing at a CAGR of 13%.

In addition, modern GPUs are very efficient at manipulating computer graphics and image processing, and their highly parallel structure makes them more efficient than general-purpose CPUs for algorithms where the processing of large blocks of data is done in parallel.

As of 2023, the global Graphic Processing Unit market is estimated at $22.22 billion, and is anticipated to reach $40.10 billion in 2028, at a CAGR of 10.3%.

Let’s discuss the stocks mentioned above in detail:

Panasonic Holdings Corporation (PCRFY)

Headquartered in Kadoma, Japan, PCRFY research, develops, manufactures, sells, and services various electrical and electronic products worldwide. It operates through five segments: Lifestyle; Automotive; Connect; Industry; and Energy.

On July 5, 2023, PCRFY announced the upcoming release of the Ver.2.3 firmware update program for the LUMIX GH6 to offer a more flexible workflow.

PCRFY’s trailing-12-month CAPEX/Sales of 3.45% is 7.9% higher than the 3.20% industry average. Its trailing-12-month asset turnover ratio of 1.04x is 3.8% higher than the 1x industry average.

PCRFY pays $0.22 annually as dividends which translates to a yield of 1.81% at the current price. Its four-year average dividend yield is 2.90%.

PCRFY’s net sales increased 13.4% year-over-year to YEN8.38 trillion ($60.24 billion) in the fiscal year, which ended March 31, 2023. Its net profit rose 5.7% year-over-year to YEN280.56 billion ($2.02 billion), and gross profit increased 8.6% year-over-year to YEN2.26 trillion ($16.26 billion).

PCRFY’s revenue is expected to be $13.88 billion for the fiscal first quarter ended June 2023. The company’s EPS for the same quarter is expected to increase 39.5% year-over-year to $0.21. Moreover, PCRFY topped consensus revenue estimates in each of the trailing four quarters, which is impressive.

The stock has gained 71.4% over the past nine months to close the last trading session at $11.96.

PCRFY’s POWR Ratings reflect its promising outlook. The stock 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.

PCRFY also has an A grade for Value and a B for Sentiment and Stability. It is ranked first out of 43 stocks in the Technology – Hardware industry.

To access additional ratings for PCRFY’s Growth, Quality, and Momentum, click here.

Ricoh Company, Ltd. (RICOY)

Based in Tokyo, Japan, RICOY provides various office and commercial printing solutions and related solutions worldwide. It operates through Digital services; Digital Products; Graphic Communications; and Industrial Solutions segments.

On May 30, RICOY unveiled a new brand reflecting the company’s recent transformative efforts to evolve its business, expand its product portfolio, and enhance its go-to-market strategy.

RICOY pays $0.24 annually as dividends which translates to a yield of 2.79% at the current price. Its four-year average dividend yield is 2.55%.

RICOY’s trailing-12-month net income margin of 2.55% is 48.8% higher than the 1.71% industry average. Its trailing-12-month asset turnover ratio of 1.07x is 75.5% higher than the 0.61x industry average.

During the fiscal year that ended March 31, 2023, RICOY’s sales increased 21.4% year-over-year to ¥2.13 trillion ($15.34 billion). Profit attributable to owners of the parent increased 79% year-over-year to ¥54.30 billion ($3.90 million), while its earnings per share attributable to owners of the parent increased 42.8% year-over-year to ¥88.10.

RICOY’s revenue is expected to increase 2.8% year-over-year to $3.53 billion for the fiscal first quarter that ended June 2023. Moreover, RICOY topped consensus revenue estimates in each of the trailing four quarters.

Shares of RICOY have gained 15% over the past six months to close the last trading session at $8.53.

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

The stock has an A grade for Value and a B in Growth, Stability, and Quality. It is ranked #2 in the same industry.

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

Spirent Communications plc (SPMYY)

Headquartered in Crawley, the United Kingdom, SPMYY offers automated test and assurance solutions in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. The company operates in Lifecycle Service Assurance and Networks & Security segments.

On June 15, 2023, SPMYY announced the availability of its new over-the-air (OTA) performance monitoring solution designed to bring the network edge into the complete end-to-end test and monitoring landscape.

The Spirent Mobile Test Platform (MTP) is a simple-to-deploy small form factor solution that provides extensive edge service monitoring and full remote management.

Its trailing-12-month asset turnover ratio of 0.87x is 43.2% higher than the 0.61x industry average. Its trailing-12-month gross profit margin of 71.95% is 47.7% higher than the 48.72% industry average.

The company pays an annual dividend of $0.42, which translates to a yield of 4.90% at the current price level. It has a four-year average dividend yield of 2.49%. Its dividend payments have grown at a CAGR of 12.7% over the past three years.

SPMYY’s adjusted revenue rose 5.5% year-over-year to $607.5 million in the fiscal year that ended December 31, 2022. The company’s adjusted profit for the year attributable to owners of the parent company increased 13.5% year-over-year to $114.5 million, while its adjusted EPS increased 14% year-over-year to 18.75 cents.

Street expects SPMYY’s revenue for the fiscal year ending December 2023 to increase marginally year-over-year to $597.82 million.

The stock has gained 3.4% over the past month to close the last trading session at $9.36.

SPMYY’s robust prospects are reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.

SPMYY has an A grade for Quality and Stability and a B in Value. It is ranked #2 in the same industry.

Click here to see the additional POWR Ratings for SPMYY (Growth, Momentum, and Sentiment).

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PCRFY shares were unchanged in premarket trading Thursday. Year-to-date, PCRFY has gained 44.54%, versus a 17.96% rise in the benchmark S&P 500 index during the same period.

About the Author: Nidhi Agarwal

Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...

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