The Federal Reserve recently hinted at hiking interest rates by fiscal 2022. This caused a mixed reaction among investors, and the tech-heavy Nasdaq and the S&P 500 declined. However, Art Hogan, chief market strategist at National Securities in New York, stated, “There's a real good chance that a lot of the things that have caused turbulence in both November and much of December are now in the rear-view mirror, and markets might now be able to glide higher.” This outlook indicates an eventual recovery by the teach-heavy indices.
In addition, experts expect the tech market to withstand initial losses caused by a high-interest-rate environment. This may be due to the hybrid work culture amid concerns surrounding the COVID-10 omicron variant. Continuing digital transformation should also support the industry’s growth. Investor interest in the industry is evidenced by the Technology Select Sector SPDR Fund’s (XLK) 7% gains over the past three months versus SPDR S&P 500 Trust ETF’s (SPY) 4.3% returns.
Therefore, we think it could be wise to scoop up shares of quality tech stocks SS&C Technologies Holdings, Inc. (SSNC), Avnet, Inc. (AVT), and Himax Technologies, Inc. (HIMX), which are expected to rally in the near term. They are A (Strong Buy) or B (Buy) rated in our POWR Ratings system.
SS&C Technologies Holdings, Inc. (SSNC)
SSNC in Windsor, Conn., together with its subsidiaries, provides software products and software-enabled services to financial services and healthcare industries. It operates in the U.S.; the U.K.; Europe, the Middle East, and Africa; Asia Pacific and Japan; Canada; and the Americas.
On December 9, SSNC announced that it had agreed to acquire Hubwise Holdings Limited. Bill Stone, Chairman and CEO, said, “Adding Hubwise is a natural step for our successful existing partnership. In addition, the combination of SS&C and Hubwise will create a unique solution for the adviser and distributor community to better address increasing competitive and regulatory pressures.”
SSNC’s adjusted revenue increased 9.5% year-over-year to $1.27 billion in its fiscal third quarter, ended September 30, 2021. Its adjusted operating income came in at $524.1 million, up 16.8% year-over-year. Also, its adjusted EPS was $1.32, up 20% year-over-year.
Analysts expect SSNC’s revenue to increase 7.2% year-over-year to $5.02 billion in its fiscal 2021. Its EPS is estimated to grow 15.6% year-over-year to $4.97 in the current year. It surpassed the EPS estimates in each of the trailing four quarters. And over the past year, the stock has gained 12.1% in price to close yesterday’s trading session at $79.91.
SSNC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
SSNC has a B grade for Growth, Value, Sentiment, Stability, and Quality. Within the Software - Business industry, it is ranked #1 of 62 stocks. Click here to see the additional POWR Ratings for Momentum for SSNC.
Click here to check out our Software Industry Report for 2021
Avnet, Inc. (AVT)
AVT, a technology solutions company, markets, sells, and distributes electronic components. The Phoenix, Ariz.-based concern operates through two segments: Electronic Components and Farnell. It is a leading global technology distributor.
On November 10, AVT and Assess-IoT, LLC formed a strategic partnership to accelerate and scale IoT deployments for customers worldwide. Lou Lutostanski, IoT vice president, AVT, said, “Avnet is excited to partner with Assess-IoT in order to accelerate successful IoT projects and bring open, secure, integrated, and scalable end-to-end solutions to their end customers.”
For its fiscal year 2022 first quarter, ended October 2, 2021, AVT’s sales increased 18.2% year-over-year to $5.58 billion. Its adjusted operating income came in at $178.75 million, up 174.7% year-over-year. Furthermore, its adjusted EPS increased 238.9% year-over-year to $1.22.
AVT’s revenue is expected to be $22.14 billion in its fiscal 2022, representing a 13.3% year-over-year rise. The company’s EPS is expected to increase 82.7% year-over-year to $4.95 in the current year. In addition, it surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 17% in price to close yesterday’s trading session at $38.73.
It is no surprise that AVT has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Growth and a B grade for Value.
AVT is ranked #2 of 44 stocks in the Technology - Electronics industry. Click here to see the additional POWR Ratings for AVT (Momentum, Stability, Sentiment, and Quality).
Himax Technologies, Inc. (HIMX)
Headquartered in Tainan City, Taiwan, fabless semiconductor company HIMX provides display imaging processing technologies in China, Taiwan, the Philippines, Korea, Japan, Europe, and the USA. It has two segments: Driver IC and Non-Driver Products.
On November 4, Jordan Wu, President and Chief Executive Officer of Himax, said, “Backed by solid supply agreements, the automotive segment is on track to become our single largest revenue contributor starting 2022, and we will be able to solidify our leading position by further widening the gap with our competitors.”
For the third quarter, ended September 30, 2021, HIMX’s total revenues increased 75.4% year-over-year to $420.94 million. The company’s operating income came in at $148.24 million, up 1,469.7% year-over-year. Also, its gross profit was $216.72 million, up 304.3% year-over-year.
HIMX’s revenue is expected to grow 74.2% year-over-year to $1.55 billion in its fiscal 2021. Its EPS is estimated to grow 721.2% year-over-year to $2.48 in the current year. It surpassed the Street’s EPS estimates in three of the trailing four quarters. And over the past year, the stock has gained 60.5% in price to close yesterday’s trading session at $11.36.
HIMX’s POWR ratings reflect this promising outlook. The stock has an overall B rating, which equals a Buy in our proprietary rating system. In addition, it has an A grade for Value and Momentum and a B grade for Growth.
HIMX is ranked #48 out of 100 stocks in the Semiconductor & Wireless Chip industry. Click here to see HIMX’s Stability, Sentiment, and Quality ratings.
Click here to checkout our Semiconductor Industry Report for 2021
SSNC shares were trading at $79.91 per share on Friday morning, down $0.00 (0.00%). Year-to-date, SSNC has gained 10.86%, versus a 24.55% 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.3 Tech Stocks to Buy for a Potential Year-End Rally appeared first on StockNews.com