The COVID-19 pandemic-induced rapid digitalization and consumers’ growing reliance on tech products and services have helped the tech industry thrive. Furthermore, increasing corporate and government investments and continuing technological breakthroughs should drive the industry’s growth.
However, because it is interest-rate sensitive by nature, the industry suffered a massive sell-off lately with the Fed tightening its ultra-loose monetary policy to fight multi-decade high inflation. While many tech stocks may not yet have hit bottom, considering the industry’s solid growth prospects, many high-quality stocks are now trading at attractive prices.
Therefore, we think it could be an opportune time to buy high-quality tech stocks Accenture plc (ACN), Taiwan Semiconductor Manufacturing Company Limited (TSM), Radware Ltd. (RDWR), Veeva Systems Inc. (VEEV), and Keysight Technologies, Inc. (KEYS), which are each down 20% in price or more year-to-date.
Accenture plc (ACN)
Based in Dublin, Ireland, ACN is a professional services company that provides management and technology consulting services. The company operates through five business groups—Communications, Media, and Technology; Financial Services; Health and Public Service; Products; and Resources. It also provides managed security and cyber defense services (MSS).
On May 3, 2022, ACN and German multinational software corporation SAP SE (SAP) introduced a new joint offering that combines the RISE with SAP solution and SOAR with Accenture services to help large enterprises move to the cloud. Supporting business processes and rapid innovation can help large enterprises build a highly optimized operations model across SAP and third-party applications, resulting in flexible operating expenses and lower upfront costs. This offering should witness high demand from enterprises in the coming months.
For its fiscal year 2022 second quarter, ended Feb. 28, 2022, ACN’s revenues increased 24.5% year-over-year to $15.05 billion. The company’s operating income came in at $2.06 billion, representing a 24.7% rise from the prior-year period. Its net income increased 13.4% year-over-year to $1.66 billion. ACN’s EPS came in at $2.54, representing a 13.5% year-over-year improvement. And as of Feb. 28, 2022, the company had $5.47 billion in cash and cash equivalents.
Analysts expect ACN’s EPS to grow 32.1% year-over-year to $10.30 for its fiscal year 2022, ending Aug. 31, 2022. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The $58.95 billion consensus revenue estimate for the same fiscal year represents a 31.5% rise from the prior-year period. The company’s EPS is expected to grow at a 13.2% rate per annum over the next five years.
ACN’s trailing-12-month gross profit margin, EBITDA margin, and net income margin are 32.3%, 16.8%, and 11.3%, respectively.
The stock has declined 24.1% year-to-date and closed yesterday’s trading session at $314.86, down 27% from its 52-week high of $417.37.
ACN’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has an A grade for Quality, and a B grade for Stability and Sentiment. Click here to see the additional ratings for ACN’s Growth, Value, and Momentum.
ACN is ranked #3 of 10 stocks in the A-rated Outsourcing - Tech Services industry.
Note that ACN is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.
Taiwan Semiconductor Manufacturing Company Limited (TSM)
Hsinchu, Taiwan-based TSM manufactures, sells, and packages integrated circuits and other semiconductor devices and provides computer-aided design services. The company offers wafer manufacturing, probing, assembly, testing, mask production, and design services. It serves customers in the computer, communications, consumer, and industrial and standard segments worldwide.
On Feb. 15, 2022, TSM announced that Japan-based automotive components manufacturer DENSO Corporation would take a minority stake in TSM’s majority-owned manufacturing subsidiary Japan Advanced Semiconductor Manufacturing, Inc. (JASM), with a $350 million investment. Expected to begin production by 2024, TSM will enhance JASM’s capabilities with 12/16 nanometer FinFET process technology in addition to a previously announced 22/28 nanometer process and increase monthly production capacity to 55,000 12-inch wafers.
TSM’s net revenue for its fiscal year 2022 first quarter ended March 31, 2022, increased 35.5% year-over-year to $17.57 billion. The company’s gross profit came in at $9.77 billion, up 43.9% from the prior-year period. Its income from operations increased 48.7% year-over-year to $8.01 billion. While its net income increased 45.2% year-over-year to $7.26 billion, its earnings per ADR grew 45.1% to $1.40. The company had $40.27 billion in cash and cash equivalents as of March 31, 2022.
Analysts expect the company’s EPS to hit $5.76 for its fiscal year 2022 ending Dec. 31, 2022, representing a 39.8% rise from the prior-year period. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The $72.29 billion consensus revenue estimate for the same fiscal year indicates a 27.2% year-over-year improvement. Analysts expect TSM’s EPS to improve at a 20.2% rate per annum over the next five years.
TSM’s trailing-12-month gross profit margin, EBITDA margin, and net income margin are 38.4%, 66.7%, and 38.4%, respectively. The stock has declined 20.2% in price year-to-date and ended yesterday’s trading session at $95.99, down 35.4% from its 52-week high of $145.
TSM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
It has an A grade for Quality and a B grade for Growth, Sentiment, and Stability. Click here to see the additional ratings for TSM (Value and Momentum).
TSM is ranked #20 of 95 stocks in the A-rated Semiconductor & Wireless Chip industry.
Click here to checkout our Semiconductor Industry Report for 2022
Radware Ltd. (RDWR)
Headquartered in Tel Aviv, Israel, RDWR provides cyber security and application delivery solutions for virtual, cloud, and software-defined data centers worldwide. The company sells its products primarily to independent distributors, including value-added resellers, original equipment manufacturers, and system integrators.
On May 3, 2022, RDWR announced the spinoff of its Cloud Native Protector (CNP) business to form a new company called SkyHawk Security, a leader in enterprise cloud threat detection and protection using its AI/ML technologies. An affiliate of leading technology investment firm Tiger Global Management will make a $35 million strategic external investment to accelerate SkyHawk Security’s development and growth opportunities. SkyHawk Security’s easy-to-deploy, agentless solution identifies and prevents compliance violations, cloud security misconfigurations, excessive permissions, and malicious activity in the cloud. It should witness high demand in the coming months.
RDWR’s revenues for its fiscal year 2022 first quarter, ended March 31, 2022, increased 10.4% year-over-year to $73.71 million. The company’s non-GAAP gross profit came in at $61.32 million, up 11.5% from the prior-year period. Its non-GAAP operating income was $9.61 million, representing a 28.4% rise from the year-ago period. Its non-GAAP net income came in at $8.84 million for the quarter, indicating a 10.2% year-over-year improvement. Its non-GAAP EPS was $0.19, representing an 11.7% rise from the prior-year period. The company had $54.48 million in cash and cash equivalents as of March 31, 2022.
Analysts expect the company’s revenue to hit $311.54 million for its fiscal 2022 ended Dec. 31, 2022, representing an 8.7% rise from the prior-year period. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The company’s EPS is expected to grow at a 15% rate per annum over the next five years.
RDWR’s trailing-12-month gross profit margin, EBITDA margin, and net income margin are 81.7%, 9.9%, and 2.7%, respectively. The stock has declined 33.5% in price year-to-date and closed yesterday’s trading session at $28.63, down 32.1% from its 52-week high of $42.19.
RDWR’s POWR Ratings reflect its solid prospects. It has an overall rating of B, which equates to Buy in our proprietary rating system.
The stock has an A grade for Quality and a B grade for Growth. In addition to the POWR Ratings we have just highlighted, the ratings for RDWR’s Value, Momentum, Sentiment, and Stability are here.
RDWR is ranked #1 of 31 stocks in the Software - Security industry.
Click here to checkout our Cybersecurity Industry Report for 2022
Veeva Systems Inc. (VEEV)
VEEV in Pleasanton, Calif., provides cloud-based software solutions for the global life sciences industry. The company offers enterprise applications, multi-channel platforms, customer relationships, and content management solutions to meet its customers’ needs and their strategic business functions, from research and development (R&D) to commercialization.
On May 4, 2022, medical device manufacturer PAVmed Inc. (PAVM) subsidiary Lucid Diagnostics (LUCD), a commercial-stage cancer prevention medical diagnostics company, selected VEEV’s Veeva Vault CDMS to provide electronic data capture (EDC), coding, and data cleaning in their forthcoming study for EsoGuard in patients undergoing standard of care screening for, and management of, Barrett’s esophagus or esophageal adenocarcinoma. This should nurture VEEV’s partnership with LUCD in the long term.
VEEV’s total revenues for its fiscal year 2022 fourth quarter, ended Jan.31, 2022, increased 22.4% year-over-year to $485.50 million. The company’s non-GAAP gross profit came in at $361.83 million, representing a 23.5% rise from the prior-year period. Its non-GAAP operating income was $186.25 million, up 21.6% from the year-ago period. While its non-GAAP net income increased 16.5% year-over-year to $146.95 million, its non-GAAP EPS increased 15.4% to $0.90. The company had $1.14 billion in cash and cash equivalents as of January 31, 2022.
Analysts expect the stock’s EPS to improve 6.4% year-over-year to $3.97 for its fiscal year 2023 ending Jan. 31, 2023. The company surpassed the Street EPS estimates in each of the trailing four quarters. The consensus $2.15 billion revenue estimate for the same fiscal year represents a 16.2% year-over-year improvement. VEEV’s EPS is expected to grow at a 13.1% rate per annum over the next five years.
VEEV’s trailing-12-month gross profit margin, EBITDA margin, and net income margin are 72.8%, 28.8%, and 23.1%, respectively. The stock has declined 26.3% year-to-date and closed yesterday’s trading session at $188.19, down 88.8% from its 52-week high of $343.96.
VEEV’s strong fundamentals are reflected in its POWR Ratings. The stock has an A grade for Quality and a B grade for Growth and Sentiment. Click here to see the additional ratings for VEEV (Value, Stability, and Momentum).
The stock is ranked #26 of 82 stocks in the Medical - Services industry.
Click here to checkout our Healthcare Sector Report for 2022
Keysight Technologies, Inc. (KEYS)
KEYS provides electronic design and test solutions to commercial communications, networking, aerospace, defense, government, automotive, energy, semiconductor, electronic, and education industries internationally. The Santa Raso, Calif.-based company operates through its Communications Solutions Group and Electronic Industrial Solutions Group segments. It offers product support, technical support, training, and consulting services and sells its products through a direct sales force, distributors, resellers, and manufacturer’s representatives.
On May 2, 2022, KEYS’ Keysight InfiniiVision 3000G Oscilloscope was added to the catalog of testing equipment by TestEquity, the industry’s largest authorized distributor of test and measurement solutions and production supplies. Being the official distributor of KEYS’ InfiniiVision 3000G Oscilloscopes, KEYS would gain more exposure to the broader markets and help solve test and measurement challenges by quickly diagnosing elusive signal anomalies.
For its fiscal year 2022 first quarter, ended Jan. 31, 2022, KEYS’ revenue increased 5.9% year-over-year to $1.25 billion. The company’s income from operations came in at $271 million, representing a 27.8% rise from the prior-year period. KEYS’ non-GAAP net income increased 13% year-over-year to $305 million. Its non-GAAP EPS came in at $1.65, up 15.4% from its year-ago period. The company had $1.98 billion in cash and cash equivalents as of Jan.31, 2022.
Analysts expect the company’s EPS to reach $7.01 for its fiscal year 2022, ending Oct. 31, 2022, representing a 12.5% rise from the prior-year period. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The $5.28 billion consensus revenue estimate for the same fiscal year indicates a 6.9% rise from the prior-year period. KEYS’ EPS is expected to grow at a 10.2% rate per annum over the next five years.
KEYS’ trailing-12-month gross profit margin, EBITDA margin, and net income margin are 63.2%, 28.4%, and 19%, respectively. The stock has declined 29% year-to-date and ended yesterday’s trading session at $146.60, down 31.6% from its 52-week high of $209.08.
KEYS’ strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, which equates to Buy in our proprietary rating system.
The stock has an A grade for Quality and a B grade for Stability and Sentiment. Click here to see the additional KEYS ratings (Momentum, Value, and Growth).
KEYS is ranked #6 of 48 stocks in the Technology - Electronics industry.
ACN shares were trading at $298.71 per share on Thursday afternoon, down $16.15 (-5.13%). Year-to-date, ACN has declined -27.54%, versus a -12.68% 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.
The post Scoop Up These 5 High-Quality Tech Stocks Down 20% or More appeared first on StockNews.com
