The technology industry continues to expand to meet the increasing demand in the ever-evolving world. Tech stocks, known for their consistent upward trajectory, benefit from the persistent high demand for technology solutions. So, investors could consider investing in top tech stocks Box, Inc. (BOX), Teradata Corporation (TDC), and Materialise NV (MTLS), which boast lower-than-industry valuation multiples.
The technology market experiences a surge in adoption by enterprises, leading to significant growth across various industries and applications. This year, the global tech market is projected to reach $9.04 trillion. The market is further expected to expand at a CAGR of 8.3% to reach $12.42 trillion by 2028. Moreover, the tech industry's positive outlook is strengthened by increasing cloud technology adoption, the rise of AI, and widespread IoT implementation.
Besides, the Biden-Harris administration, via the U.S. Department of Commerce’s Economic Development Administration (EDA), announced the designation of 31 Tech Hubs across the nation. Funded by the bipartisan CHIPS and Science Act, this program seeks to elevate U.S. regions into globally competitive innovation hubs, aligning with President Biden’s Investing in America agenda.
Further, the tech sector also benefits from the rising 3D printing market. The global 3D printing market is expected to be worth $23.41 billion by 2031, driven by demand for customized products and rapid prototyping.
In light of these encouraging trends, let’s look at the fundamentals of the three best tech stocks:
Box, Inc. (BOX)
BOX offers a cloud content management platform facilitating seamless content sharing and collaboration across devices. Serving diverse industries worldwide, the company enhances productivity and streamlines business processes for over 100,000 paying organizations.
BOX’s forward non-GAAP P/E of 17.67x is 29.3% lower than the industry average of 25x. Its forward PEG multiple of 0.04 is 54.8% lower than the 1.96 industry average.
On April 9, BOX announced that it had been chosen by Bulletproof, a global brand agency based in London, as its central cloud platform for content and production management, aiming to securely replace on-premise servers and improve collaboration.
On March 5, 2024, BOX expanded its collaboration with Microsoft Corporation (MSFT) by integrating with Azure OpenAI Service. This integration brings advanced AI capabilities to BOX's cloud content management platform, ensuring strong security and compliance.
BOX’s revenues increased 2.5% year-over-year to $262.88 million in the fourth quarter that ended January 31, 2024. Its non-GAAP operating income and net income attributable to common stockholders rose 5.3% and 8.7% from the prior year’s quarter to $70.07 million and $61.18 million, respectively. The company’s non-GAAP net income per share attributable to common stockholders grew 13.5% from the prior-year quarter to $0.42.
For the fiscal year 2025, BOX anticipates revenue between $1.08 billion to $1.09 billion. Additionally, the company’s non-GAAP diluted net income per share is projected to range between $1.53 to $1.57.
Street expects BOX’s revenue to increase 3.9% year-over-year to $261.80 million for the fiscal first quarter ending April 2024. Its EPS is expected to rise 13.2% from the previous year's quarter to $0.36 for the same quarter. Moreover, the company surpassed consensus revenue and EPS estimates in three of the trailing four quarters, which is promising.
BOX’s shares have climbed 11.5% over the past three months to close the last trading session at $27.93.
BOX’s POWR Ratings reflect this rosy outlook. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted optimally.
The stock has an A grade for Quality and a B for Growth and Value. In the 80-stock Technology – Services industry, BOX is ranked #5.
For more insights into BOX’s Momentum, Stability, and Sentiment ratings, click here.
Teradata Corporation (TDC)
TDC provides a connected multicloud data platform called Teradata Vantage, enabling enterprises to leverage their data across the organization. It integrates diverse data sources to simplify ecosystems and facilitate the transition to the cloud. Additionally, TDC offers business consulting, support, and maintenance services.
TDC’s forward non-GAAP P/E multiple of 17.32 is 30.4% lower than the industry average of 24.88. Its forward P/S of 2.03x is 29.2% lower than the 2.87x industry average.
On April 9, TDC and Anaconda Inc. announced a collaboration to integrate popular Python and R packages into Taradata VantageCloud through the Anaconda Repository. Combined with ClearScape Analytics, this integration aims to empower enterprises to deploy large-scale data science, AI, and ML projects efficiently and cost-effectively.
On February 15, TDC announced its partnership with HCA Healthcare Inc. (HCA), with HCA moving some of its data and analytics operations to Taradata VantageCloud on Google Cloud. This marks a significant step in HCA's cloud data strategy, leveraging TDC's expertise, with whom they've had a longstanding partnership.
During the fiscal year 2023, TDC saw strong growth and generated significant free cash flow, returning 87% of it to shareholders. Its total revenue increased 2.1% year-over-year to $1.83 billion. Its ARR rose 5.9% from the previous year to $1.57 billion. The company’s non-GAAP operating income rose 16.1% year-over-year to $332 million. Moreover, its non-GAAP net income increased 21.8% and 32.3% year-over-year to $212 million and $2.07 per share.
For fiscal year 2024, TDC projects solid growth, including a 35 to 41% increase in public cloud ARR, a 4-8% growth in total ARR, and a 1-3% rise in recurring revenue, all in constant currency. Total revenue is expected to grow by 0-2% in constant currency, with non-GAAP EPS at $2.15-$2.31. Cash flow from operations is forecasted at $360 million—$400 million, and free cash flow at $340 million to $380 million.
According to analysts, TDC’s revenue and EPS for the fiscal year 2024 are expected to increase marginally and 6.6% year-over-year to $1.84 billion and $2.21, respectively. It topped the consensus revenue estimates in each of the trailing four quarters.
The stock soared marginally intraday to close the last trading session at $38.59.
TDC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has an A grade for Value and Quality. Within the Technology – Services industry, it is ranked #6.
In addition to the ratings stated above, one can access TDC’s Growth, Momentum, Stability, and Sentiment ratings here.
Materialise NV (MTLS)
MTLS, headquartered in Leuven, Belgium, provides additive manufacturing, medical software, and 3D printing services in the Americas, Europe, Africa, and the Asia-Pacific. The company operates through three segments: Materialise Software; Materialise Medical; and Materialise Manufacturing.
MTLS’ forward EV/Sales of 0.84x is 71.4% lower than the industry average of 2.93x. Its forward P/B multiple of 1.16 is 71.9% lower than the 4.14 industry average.
During the fiscal fourth quarter that ended December 31, 2023, MTLS’ revenue increased 4.1% year-over-year to €65.30 million ($70.91 million), and its gross profit rose 5.2% from the prior-year quarter to €37.55 million ($40.78 million). Also, its adjusted EBITDA came in at €8.47 million ($9.20 million), up 99% from the prior-year quarter.
As of December 31, 2023, MTLS’ total current liabilities stood at €104.95 million ($113.97 million), compared to €106.11 million ($115.23 million) as of December 31, 2022.
Given prevailing market conditions, MTLS anticipates its fiscal year consolidated revenues for 2024 to range between €265 million ($287.77 million) and €275 million ($298.63).
MTLS’ revenue is expected to rise 5.7% year-over-year to $292.92 million in the fiscal year 2024.
Over the past six months, the stock has returned 3.3% to close the last trading session at $5.34.
MTLS’ robust fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It has an A grade for Value and a B for Stability and Sentiment. It is ranked #2 out of five stocks in the Technology – 3D Printing industry.
Click here to see MTLS’ additional grades for Growth, Momentum, and Quality.
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BOX shares were trading at $27.26 per share on Wednesday afternoon, down $0.67 (-2.40%). Year-to-date, BOX has gained 6.44%, versus a 8.41% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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