The stock market has remained highly volatile of late due to geopolitical tensions, inflation, supply chain challenges, and interest rate increases. These factors are driving investors away from tech stocks. However, the technology industry has a high concentration of companies with relatively low risks and robust fundamentals, suggesting good long-term growth potential and solid portfolio returns.
The tech industry holds immense growth potential, with businesses worldwide investing in emerging technologies to bolster their positions in the industry. Organizations are attaching significant importance to areas that include analytics, cloud computing, seamless customer experiences, and security, further propelling the tech sector’s growth. According to Gartner, worldwide IT spending is projected to reach $4.40 trillion in 2022, indicating a 4% increase from 2021.
Given the industry’s solid growth prospects, we think red-hot technology stocks Avnet, Inc. (AVT), Celestica Inc. (CLS), and Science Applications International Corporation (SAIC) could be ideal bets to strengthen one’s portfolio.
Avnet, Inc. (AVT)
AVT in Phoenix, Ariz., is a technology solutions company that markets, sells, and distributes electronic components through its two operating segments–Electronic Components and Farnell.
In March 2022, AVT advanced to Dell Technologies Inc.’s (DELL) highest level partner tier, Titanium, for Dell’s fiscal year 2023. This partnership with DELL should prove beneficial for the company.
AVT’s sales have increased 25.6% year-over-year to $5.87 billion in its fiscal second quarter, ended Dec. 31, 2021. Its non-GAAP operating income for the quarter came in at $215.50 million, reflecting a 170.7% increase year-over-year, while its net income stood at $150.82 billion, up 687% year-over-year. Its non-GAAP EPS grew 214.6% to $1.51 from the prior-year quarter.
The $1.49 consensus EPS estimate for its fiscal third quarter, ended March 31, 2022, represents a 101.9% improvement year-over-year. The $5.69 billion consensus revenue estimate for the same quarter represents a 15.7% increase from the same period last year. It has an impressive earnings surprise history; it topped the Street’s EPS estimates in each of the trailing four quarters.
AVT’s stock has declined marginally in price to close the last trading session at $37.12.
AVT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which translates to Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
AVT also has a B grade in Growth and Value. It is ranked #9 of 48 stocks in the Technology - Electronics industry.
Beyond what is stated above, we have also rated AVT for Momentum, Stability, Sentiment, and Quality. Get all the AVT ratings here.
Note that AVT is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.
Celestica Inc. (CLS)
CLS in Toronto, Canada, is a provider of a hardware platform and supply chain solutions in North America, Europe, and Asia. It operates through two segments: Advanced Technology Solutions; and Connectivity & Cloud Solutions.
Last month, Urbx Logistics, the world’s first on-demand robotics fulfillment system for last-mile delivery, announced that it would leverage CLS’ global supply chain network, engineering expertise, and production capabilities to bring faster, cost-effective, and efficient next-gen robotics solutions to life. This collaboration proves CLS’ strong positioning in its industry.
In January, the company announced that its AbelConn Electronics facility in Maple Grove, Minn., earned ISO 13485:2016 certification to produce medical devices. “Earning ISO 13485 certification enables us to provide healthcare customers, especially in the United States and throughout North America, with quick-turn manufacturing and delivery capabilities, improving their resilience to supply chain disruptions with an in-region solution,” said Kevin Walsh, VP of CLS.
CLS’ revenue increased 9.1% year-over-year to $1.51 billion in its fiscal fourth quarter, ended Dec. 31, 2021. Its earnings from operations grew 40.6% from its year-ago value to $49.90 million, while its net earnings for the period improved 58.7% year-over-year to $31.90 million. Its EPS increased 62.5% from its year-ago value to $0.26.
The Street expects CLS’ EPS for its fiscal quarter ended March 31, 2022, to improve 57.1% year-over-year to $0.35. The $1.48 billion consensus revenue estimate for the same period represents a 19.6% increase year-over-year. The company also surpassed the consensus EPS estimates in each of the trailing four quarters.
CLS has gained 28.3% in price over the past year and 49.9% over the past nine months to close the last trading session at $11.29.
It is no surprise that CLS has an overall A rating, which equates to Strong Buy in our POWR Ratings system.
CLS also has an A grade in Growth and a B in Value and Sentiment. Among the 82 stocks in Technology – Services industry, CLS is ranked #5.
In addition to the POWR Rating grades I have just highlighted, one can see the CLS’ Momentum, Stability, and Quality ratings here.
Science Applications International Corporation (SAIC)
SAIC in McLean, Va., provides technical, engineering, and enterprise information technology (IT) services primarily to the U.S. government.
On March 23, SAIC declared a $0.37 per share dividend on the company’s common stock, payable on April 29, 2022, to stockholders of record on April 14, 2022.
Last January, SAIC was awarded prime contract positions on the General Services Administration (GSA) ASTRO multiple-award, indefinite-delivery, indefinite-quantity family of contracts. The award of the GSA ASTRO contracts is a strategic addition to SAIC’s existing portfolio of contract vehicles accessible to customers across the federal government. The company also received $410 million in contract awards from space and intelligence community organizations for the fourth quarter of its fiscal year 2022, bringing the full fiscal-year contract awards to $2 billion.
For its fiscal fourth quarter, ended Jan. 28, 2022, SAIC’s revenue increased 3.8% year-over-year to $1.78 billion. Its operating Income for the fiscal year ended Jan. 28, 2022, stood at $462 million, reflecting an 18.5% increase from the previous year, while its net income attributable to common stockholders grew 32.5% from its year-ago value to $277 million. Its EPS was $4.77, up 34% from the previous year.
Analysts expect SAIC’s revenue for the fiscal quarter ending April 30, 2022, to come in at $1.93 billion, indicating an increase of 2.7% year-over-year. Also, the company’s revenue is expected to grow 1.1% year-over-year to $7.48 billion in the current fiscal year.
SAIC has gained 8.6% year-to-date and 4.2% over the past month to close the last trading session at $90.75.
SAIC’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system.
The company also has a B grade in Value. The stock is ranked #17 in the Technology – Services industry.
To get SAIC’s ratings for Growth, Quality, Momentum, Stability, and Sentiment, click here.
AVT shares were trading at $37.45 per share on Monday morning, up $0.33 (+0.89%). Year-to-date, AVT has declined -8.60%, versus a -6.23% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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