The global tech industry is set for substantial growth, driven by remote work demand, rising tech service investments, technology adoption in emerging markets, the need for advanced hardware, progress in 5G and IoT, digital transformations across sectors, and improved cybersecurity.
Amid this backdrop, investors could look to buy fundamentally strong tech stocks Box, Inc. (BOX), LiveRamp Holdings, Inc. (RAMP), and Lantronix, Inc. (LTRX), given their robust growth prospects.
In 2024, global IT spending is estimated to hit $5.06 trillion, showing an 8% rise from 2023. Gartner predicts that spending on IT services will climb by 9.7% to $1.52 trillion this year. This underscores how crucial technology is for operations, resilience, and productivity. Globally, enterprises are enhancing their digital abilities by investing in digital transformation, which is increasing the demand for tech services.
There's a rising demand for high-quality hardware to support robotics, cloud computing, edge computing, and smarter systems, meeting complex processing needs across industries. This trend is boosting hardware sales, with the IT hardware market expected to reach $191.03 billion by 2029, growing at a 7.9% annual rate.
Furthermore, investors’ interest in tech stocks is evident from the Technology Select Sector SPDR Fund’s (XLK) 35.1% returns over the past year.
Considering these conducive trends, let’s assess the fundamentals of the above-mentioned technology stocks.
Box, Inc. (BOX)
BOX provides a cloud content management platform that enables organizations of various sizes to manage and share their content from anywhere on any device. It serves financial services, health care, government, and legal services industries internationally.
On April 9, 2024, BOX announced that Bulletproof, an independent global brand agency, has selected Box as its centralized cloud platform to manage content and production work. Bulletproof will use BOX to eliminate on-premise servers and facilitate secure collaboration with clients and partners. Bulletproof plans to enhance workflow efficiency and deliver creative solutions by utilizing Box's cloud platform, ensuring seamless access to files and resources from anywhere.
On March 14, 2024, BOX announced that the Administrative Office of the U.S. Courts selected BOX to manage secure cloud content and collaboration for the Defender Services Office. This enables DSO to securely share content with Federal Public Defenders, investigators, and U.S. District Courts.
BOX’s levered FCF grew at a CAGR of 3.2% over the past three years. Also, its revenue grew at a CAGR of 10% over the past three years.
In terms of the trailing-12-month Return on Total Capital, BOX’s 6.99% is 160.7% higher than the 2.68% industry average. Likewise, its 11.73% trailing-12-month Return on Total Assets is 631.2% higher than the industry average of 1.60%. Its 0.92x trailing-12-month asset turnover ratio is 49.6% higher than the industry average of 0.61x.
BOX’s revenues for the first quarter ended April 30, 2024, increased 5.1% year-over-year to $264.66 million. Its non-GAAP gross profit increased 8.1% year-over-year to $212.18 million. The company’s non-GAAP operating income increased 22.7% year-over-year to $70.40 million.
Additionally, its non-GAAP attributable net income increased 22.9% year-over-year to $58.40 million. Its non-GAAP attributable net income per share increased 21.9% year-over-year to $0.39. Also, the company’s non-GAAP free cash flow came in at $123.24 million, representing an increase of 13.9% year-over-year.
Street expects BOX’s EPS and revenue for the quarter ending July 31, 2024, to increase 12.5% and 3% year-over-year to $0.41 and $269.22 million, respectively. It surpassed the revenue estimates in three of the trailing four quarters. Over the past six months, the stock has gained 10.2% to close the last trading session at $26.69.
BOX’s POWR Ratings reflect robust prospects. It has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It is ranked #5 out of 78 stocks in the Technology - Services industry. It has an A grade for Growth, and Quality and a B for Value. Click here to see BOX’s Momentum, Stability, and Sentiment ratings.
LiveRamp Holdings, Inc. (RAMP)
RAMP is a technology company that operates a data collaboration platform internationally. The company operates the LiveRamp Data Collaboration platform, which enables organizations to unify customer and prospect data to build a single view of the customer in a way that protects consumer privacy.
On April 11, 2024, RAMP announced a strategic partnership with Cross Screen Media to enhance Cross Screen Media’s video ad targeting and measurement for local agencies. This collaboration utilizes RAMP’s identity resolution and privacy-centric tools to improve Cross Screen Media's capabilities and prepare for a cookieless future.
RAMP’s revenue grew at a CAGR of 14.2% over the past three years. Also, its levered FCF grew at a CAGR of significantly over the past three years.
In terms of the trailing-12-month levered FCF margin, RAMP’s 18.18% is 79.4% higher than the 10.13% industry average. Moreover, its leveraged free cash flow experienced a considerable CAGR of 1,191.8% over the past three years.
For the fourth quarter that ended December 31, 2023, RAMP’s revenues increased 15.6% year-over-year to $171.85 million. Its adjusted EBITDA rose 11.2% year-over-year to $16.84 million. Moreover, the company’s non-GAAP net earnings from continuing operations and non-GAAP EPS from continuing operations came in at $17.24 million and $0.25, respectively.
For the quarter ending June 30, 2024, RAMP’s revenue is expected to increase 11.6% year-over-year to $171.90 million, and its EPS for the same quarter is expected to increase 8.5% year-over-year to $0.31. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 23% to close the last trading session at $31.07.
RAMP’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
It has an A grade for Growth and a B for Value, and Sentiment. Within the Technology - Services industry, it is ranked #6. To access the additional POWR Ratings of RAMP for Momentum, Stability, and Quality, click here.
Lantronix, Inc. (LTRX)
LTRX provides solutions for video surveillance, infotainment systems, and intelligent substation infrastructure in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific region, including Japan. The company's IoT products include IoT System Solutions, power for IoT end devices through Power over Ethernet, embedded IoT modules, and software and engineering services.
On April 16, 2024, LTRX announced the launch of its FOX4 and Bolero 43 edge compute tracker telematic gateways, aimed at the growing telematics market. These new devices, designed for asset and fleet management, come pre-configured with the Percepxion IoT edge software platform for secure device management.
LTRX’s EBITDA grew at a CAGR of 57.8% over the past three years. Likewise, its Tang Book Value and Total Assets grew at a CAGR of 29.4% and 29.3% during the same period.
In terms of the trailing-12-month levered FCF margin, LTRX’s 11.22% is 10.7% higher than the 10.13% industry average. Moreover, its 0.98x trailing-12-month asset turnover ratio is 59.1% higher than the industry average of 0.61x.
During the fiscal third quarter ended on March 31, 2024, LTRX’s net revenue increased 24.9% year-over-year to $41.18 million. Its gross profit rose 12.7% from the year-ago value to $16.50 million. In addition, the company’s non-GAAP net income amounted to $4.23 million and $0.11, representing increases of 97.7% and 83.3% year-over-year, respectively.
Analysts expect LTRX’s EPS and revenue for the quarter ending June 30, 2024, to increase 158.3% and 41% year-over-year to $0.16 and $49.26 million, respectively. The stock has gained 1.9% over the past month to close the last trading session at $3.77.
LTRX’s positive outlook is reflected in its POWR Ratings. It has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
It has an A grade for Growth, and Sentiment and a B for Value, Momentum, and Quality. Within the B-rated Technology - Hardware industry, it is ranked #3 out of 38 stocks. To see LTRX’s Stability ratings, click here.
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BOX shares were trading at $26.61 per share on Monday afternoon, down $0.08 (-0.30%). Year-to-date, BOX has gained 3.90%, versus a 12.91% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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