Businesses heavily depend on software solutions to enhance operations, elevate customer experiences, gain data-driven insights, and protect their systems as they strive to adapt and stay competitive in the ever-changing digital landscape.
Thus, investors could consider adding fundamentally sound tech stocks TaskUs, Inc. (TASK), PROS Holdings, Inc. (PRO), and OneSpan Inc. (OSPN) to their portfolios, which are currently trading under $20.
The growing demand for IT services for management and implementation is fueled by the widespread adoption of cloud computing and its benefits, such as scalability, cost savings, and automatic updates.
Companies are actively seeking automation solutions to boost productivity and streamline processes. Therefore, the global IT services market is expected to grow at a CAGR of 7.1% by 2034.
Moreover, in today’s technologically advanced world, the global cybersecurity market is crucial in safeguarding businesses, organizations, and individuals against cyber threats and attacks. The global cybersecurity market is expected to grow at a CAGR of 11.3% by 2031.
As companies are actively seeking upgradation, tech spending is flying high. According to Gartner, global IT spending is expected to grow by 7.5% this year, while software spending is projected to grow by 12.6% in the same period.
Considering these factors, let’s take a look at the fundamentals of the three tech stock picks.
TaskUs, Inc. (TASK)
TASK provides digital outsourcing services for companies. It offers a digital customer experience that consists of omnichannel customer care services primarily delivered through non-voice digital channels and other solutions, including experience and customer care services for new product or market launches and customer acquisition solutions.
On June 3, 2024, TASK and AI-powered product support platform Mavenoid announced their strategic partnership. Together, TASK and Mavenoid would combine expertise in AI and personalized product support to optimize next-generation, personalized self-help product support solutions trusted by some of the world’s leading consumer brands.
TASK’s forward EV/EBITDA of 6.13x is 44.8% lower than the industry average of 11.12x. Its forward EV/EBIT multiple of 13.26 is 14.8% lower than the industry average of 15.56.
For the second quarter ended June 30, 2024, TASK reported service revenue at $237.94 million, up 3.8% year-over-year. Its adjusted EBITDA came in at $51.25 million. The company’s adjusted net income stood at $28.64 million and $0.31 per share. In addition, as of June 30, 2024, the company’s total assets stood at $886.15 million, compared to $864.20 million as of December 31, 2023.
Analysts expect TASK’s revenue for the fourth quarter (ending December 2024) to increase 10% year-over-year to $256.73 million, while its EPS is expected to grow marginally year-over-year to $0.35. In addition, the company surpassed the consensus EPS and revenue estimates in each of the trailing four quarters.
Over the past year, the stock has gained 34.5% to close the last trading session at $13.40.
TASK’s POWR Ratings reflect its robust 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.
TASK has an A grade for Growth and a B for Quality and Value. It is ranked #6 out of 75 stocks in the Technology - Services industry.
Beyond what is stated above, we’ve also rated TASK for Stability, Sentiment, and Momentum. Get all TASK ratings here.
PROS Holdings, Inc. (PRO)
PRO provides software solutions that optimize selling and shopping processes in the digital economy in Europe, the Asia Pacific, the Middle East, Africa, and internationally.
PRO’s forward Price/Sales of 2.71x is marginally lower than the industry average of 2.72x.
In the second quarter that ended June 30, 2024, PRO’s total revenue increased 8% year-over-year to $82 million. Its gross profit grew 37.3% from the year-ago value to $53.19 million. Its non-GAAP net income and non-GAAP EPS were $3.25 million and $0.07 compared to non-GAAP net loss and non-GAAP loss per share of $309 thousand and $0.01, respectively.
Street expects PRO’s revenue to increase 6.3% year-over-year to $82.09 million for the third quarter ending September 2024. The company’s EPS for the same quarter is expected to be $0.09. Also, PRO surpassed the consensus revenue estimates in each of the trailing four quarters, which is impressive.
The stock has gained marginally intraday to close the last trading session at $19.01.
PRO’s robust fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to a Buy in our proprietary rating system.
The stock has an A grade for Growth. PRO is ranked #29 out of 131 stocks in the Software - Application industry.
Click here to access the additional PRO ratings (Momentum, Sentiment, Quality, Stability, and Value).
OneSpan Inc. (OSPN)
OSPN designs, develops, and markets digital solutions for identity, authentication, and secure digital agreements worldwide. The company offers OneSpan Sign, OneSpan Cloud Authentication, and OneSpan Identity Verification.
On June 11, 2024, OSPN announced the launch of the OneSpan Integration Platform. This platform enables organizations to effortlessly integrate eSignatures into well-known applications, ensuring that sending, signing, and storing transactions is seamless and more efficient.
OSPN’s trailing-12-month Price/Sales of 2.30x is 15.5% lower than the industry average of 2.72x. Its forward EV/Sales multiple of 2.08 is 23.3% lower than the industry average of 2.71.
OSPN’s total revenue for the fiscal second quarter that ended June 30, 2024, amounted to $60.92 million, up 9.3% year-over-year. Its gross profit rose 17.6% from the prior-year quarter to $40.34 million. The company’s non-GAAP net income stood at $11.98 million and $0.31 per share, respectively, compared to a non-GAAP net loss of $7.28 million and $0.18 per share in the year-ago quarter.
For the quarter ending September 30, 2024, OSPN’s EPS is expected to increase 114.8% year-over-year to $0.19. Its revenue for the same quarter is expected to be $55.31 million. It surpassed consensus revenue and EPS estimates in each of the trailing four quarters.
Over the past three months, the stock gained 29%, closing the last trading session at $15.48.
OSPN’s POWR Ratings reflect bright prospects. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
The stock has a B grade for Value and Growth. OSPN is ranked #4 out of 23 stocks in the B-rated Software - Security industry.
In addition to the POWR Ratings highlighted above, one can access OSPN’s ratings (Quality, Momentum, Stability, and Sentiment) here.
What To Do Next?
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TASK shares were trading at $14.04 per share on Wednesday morning, up $0.64 (+4.78%). Year-to-date, TASK has gained 7.42%, versus a 15.21% 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.
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