Renewed investor interest in the technology sector owing to a resurgence of COVID-19 cases and a continuing  digital transformation of industry has caused the prices of many prominent tech stocks to soar to fresh highs lately. However, some tech players that are absent from the headlines have sufficient fundamental strength to ride the tech wave.

While the major stock market indexes are hovering near their all-time highs thanks to the Senate’s recent passage of a whopping infrastructure spending bill and solid corporate earnings, many analysts expect the market to experience  a correction in the near term on concerns over the spread of the Delta variant of COVID-19 and rising inflation. However, the odds of the market witnessing a year-end rally are very high considering the continuing economic recovery.

So, we think it could be wise to bet on under-the-radar tech stocks United Microelectronics Corporation (UMC), Commvault Systems, Inc. (CVLT), ChipMOS Technologies Inc. (IMOS), and Information Services Group, Inc. (III) to cash in on the technology industry’s solid growth prospects.

United Microelectronics Corporation (UMC)

UMC is a Taiwan-based semiconductor foundry that provides integrated circuits (ICs), mask tooling, wafer fabrication, and assembly and testing services. The company focuses on communication, consumer electronics, computer, memory, new generation light-emitting diodes (LED), and other industries.

In an announcement on July 13, 2021, UMC reported that Cadence Design Systems, Inc.’s (CDNS) Cadence digital full flow had been optimized and certified for use on UMC’s 22ULP/ULL process technologies to accelerate consumer, 5G, and automotive application design. CDNS’ flow, which incorporates leading implementation and signoff technology for ultra-low power designs, enables mutual customers to meet stringent design requirements and achieve design and productivity goals.

On June 1, UMC announced its pledge to reach net-zero carbon emissions by 2050 and to be the first semiconductor foundry globally to take concrete steps to Net Zero Action. UMC is teaming up with more than 500 suppliers in cutting carbon emissions, with the goal of a 20% reduction, and raising renewable energy to 20% of total power consumption  in the UMC supply chain by 2030.

UMC’s operating revenues for its fiscal second quarter, ended June 30, 2021, increased 14.7% year-over-year to $1.83 billion. The company’s gross profit came in at $571 million, up 55.2% from the prior-year period. Its operating income has been reported at $406 million for the quarter, representing a 93.3% rise from the prior-year period. UMC’s net income increased 96.3% year-over-year to $426 million. Its earnings per ADS increased 77.8% year-over-year to $0.18. The company had $4.45 billion in cash and cash equivalents as of June 30, 2021.

A $0.19 consensus EPS estimate for the current quarter, ending September 30, 2021, represents a 40.4% improvement year-over-year. UMC surpassed consensus EPS estimates in three of the trailing four quarters. The $1.96 billion consensus revenue estimate for the current quarter represents a 25.5% gain from the prior-year period. Analysts expect the stock’s EPS to grow at a 19.5% rate per annum over the next five years.

The stock has gained 100.9% over the past nine months and 13.6% over the past month. It closed yesterday’s trading session at $10.84.

UMC’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

The stock has an A grade for Sentiment, and a B grade for Quality, Stability, Value, and Momentum. Click here to see the additional ratings for UMC’s Growth.

UMC is ranked #2 of 99 stocks in the B-rated Semiconductor & Wireless Chip industry.

Click here to checkout our Semiconductor Industry Report for 2021

Commvault Systems, Inc. (CVLT)

CVLT provides data protection and information management software applications and related services internationally. The Oceanport, N.J.-based company also sells appliances that integrate  software with hardware for use in a range of business needs and use cases. It sells directly through its sales force to enterprises, government agencies and indirectly through its distribution network, value-added resellers, systems integrators, corporate resellers, and OEMs.

On July 20, 2021, CVLT announced its support for the AWS for Health initiative from Amazon.com, Inc.’s (AMZN) Amazon Web Services (AWS) as a vehicle for delivering secure, scalable, and compliant data management and protection solutions for organizations in the healthcare space. CVLT’s broad native support for AWS services and integration into leading EHR systems allow customers to efficiently manage their healthcare data and protect it from looming threats like ransomware.

CVLT partnered with SoftwareONE, a leading provider of end-to-end software and cloud technology solutions, on July 13 to launch SoftwareONE’s BackupSimple, powered by Metallic, for delivering Intelligent Data Services offerings to MSPs. BackupSimple protects and manages data from SaaS applications to endpoints to hybrid cloud workloads, and CVLT expects to see rising demand for it in the coming months as markets move quickly to the cloud.

For its fiscal first quarter, ended June 30, 2021, CVLT’s total revenue increased 6% year-over-year to $183.42 million. The company’s gross profit has been reported at $158.15 million, up 6.5% from the prior-year period. Its non-GAAP income from operations came in at $41 million, representing a 26.3% year-over-year improvement. CVLT’s non-GAAP net income was $30.03 million, up 25.4% from the prior-year period. And its non-GAAP EPS increased 21.6% year-over-year to $0.62. As of June 30, 2021, the company had $359.15 million in cash and cash equivalents. Analysts expect CVLT’s EPS to improve 28.1% in the current quarter, ending September 30, 2021, to $0.58. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Analysts expect its revenue to be $184.78 million for the current quarter, representing an 8% rise year-over-year. Its EPS is expected to grow at a 10% rate  per annum over the next five years.

The stock has gained 71.9% over the past nine months and 14.3% over the past three months. It ended yesterday’s trading session at $76.41.

CVLT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.

The stock has an A grade for Quality, and a B grade for Growth, Value, and Sentiment. We also have graded CVLT for Momentum and Stability. Click here to access all CVLT’s ratings.

Of the 143 stocks in the Software – Application industry, CVLT is ranked #1.

Click here to check out our Software Industry Report for 2021

ChipMOS Technologies Inc. (IMOS)

Based in Taiwan, IMOS is engaged in integrated circuits (IC) packaging and related assembly and testing businesses. The company’s products and services are applied in information products, PCs, communication equipment, office automation, and consumer electronics. It serves fabless semiconductor companies, integrated device manufacturers, and independent semiconductor foundries.

The company has reported $86.50 million in revenue for the month of July 2021, representing a 28.2% year-over-year improvement. This new revenue record was driven by the high utilization levels of IMOS’ assembly and DDIC high-end test platforms, with continued strong demand across its businesses.

IMOS’ revenue for its fiscal second quarter, ended June 30, 2021, increased 28.6% year-over-year to $250.17 million. The company’s operating profit has been reported at $55.17 million, representing a 95.1% year-over-year improvement. IMOS’ net profit came in at $45.99 million, up 135.6% from the prior-year period. Its earnings per ADS increased 133.3% year-over-year to $1.26. As of June 30, 2021, the company had $193.50 million in cash and cash equivalents.

For the current quarter, ending September 30, 2021, analysts expect IMOS’ revenue to be $263.24 million, up 32.7% from the prior-year period. IMOS has gained 109.9% over the past nine months and 15.3% over the past month. It closed yesterday’s trading session at $41.55.

It’s no surprise that IMOS has an overall A rating, which equates to Strong Buy in our POWR Ratings system.

The stock has an A grade for Value, and a B grade for Growth, Stability, Momentum, Stability, and Quality. Click here to see the additional ratings for IMOS’ Quality.

IMOS is ranked #1 in the B-rated Semiconductor & Wireless Chip industry.

Click here to checkout our Semiconductor Industry Report for 2021

Information Services Group, Inc. (III)

Stamford, Conn.-based III is a technology research and advisory firm that specializes in digital transformation services, sourcing advisory, managed governance and risk, network carrier, technology strategy, operations design, and market intelligence and technology research and analysis services worldwide.

According to an III report, released on August 10, 2021, digital transformation initiatives leveraging cloud technologies and enabling remote working are leading to  rising demand for cybersecurity solutions in Australia. The use of AI with cybersecurity tools will grow, driven by the adoption of the IoT, an increase in threats, concerns about data privacy, and stringent new regulations. Next-generation identity and access management, messaging, and network security will be key cybersecurity investment areas for Australian companies through 2022, the report asserts.

III’s revenue for its fiscal second quarter, ended June 30, 2021, increased 23% year-over-year to $70.60 million. The company’s operating income came in at $5.84 million, up 66.3% from the prior-year period. While its adjusted net income increased 121.5% year-over-year to $6.33 million, its adjusted EPS increased 100% year-over-year to $0.12. The company had $16.51 billion in cash and cash equivalents as of June 30, 2021.

Analysts expect III’s revenue to be $66.76 million for the current quarter ending September 30, 2021, representing an 8.3% rise from the prior-year period. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Analysts expect the stock’s EPS to grow at an 8% rate  per annum over the next five years. III has gained 147.4% over the past nine months and 10.5% over the past month. It closed yesterday’s trading session at $6.63.

III’s POWR Ratings reflect its solid prospects. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system.

III has an A grade for Sentiment, and a B grade for Value and Quality. In addition to the POWR Ratings grades we’ve just highlighted, one can see III’s ratings for Growth, Momentum, and Stability here.

III is ranked #1 of 6 stocks in the A-rated Outsourcing – Management Services industry.

UMC shares were trading at $10.80 per share on Thursday morning, down $0.04 (-0.37%). Year-to-date, UMC has gained 31.13%, versus a 19.30% rise in the benchmark S&P 500 index during the same period.

About the Author: Sweta Vijayan

Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...

More Resources for the Stocks in this Article