The rapidly evolving tech sector is expected to witness significant growth in the long term. Therefore, investors could look to buy fundamentally strong tech stocks TDK Corporation (TTDKY), Toshiba Corporation (TOSYY), and Quantum Corporation (QMCO).
The tech hardware sector is anticipated to grow owing to innovation and advancement, optimizing the performance of products, making it more widely used in downstream applications. The global IT hardware market is expected to grow by registering a CAGR of 6.1% until 2027.
Moreover, governments are increasing digital investments. According to the latest forecast by Gartner, worldwide government IT spending is projected to total $589.80 billion in 2023, an increase of 7.6% from the past year.
Additionally, investors’ interest in tech stocks is evident from the Technology Select Sector SPDR ETF’s (XLK) 37.9% returns over the past six months.
Given these factors, investors could consider the featured tech stocks. Let’s take a closer look at their fundamentals.
TDK Corporation (TTDKY)
Headquartered in Tokyo, Japan, TTDKY engages in the manufacture and sale of electronic components worldwide. The company operates through four segments: Passive Components, Sensor Application Products, Magnetic Application Products, Energy Application Products, and Other segments.
TTDKY’s revenue grew at a CAGR of 17% over the past three years. Its EBIT grew 19.9% over the past three years. In addition, its EPS grew at a CAGR of 25.5% during the same time frame.
In terms of forward EV/ Sales, TTDKY’s 1.14x is 61.4% lower than the 2.94x industry average. Its 5.91x forward EV/EBITDA is 59.5% lower than the 14.59x industry average. Likewise, its 1.05x forward Price/Sales is 63.8% lower than the 2.89x industry average.
TTDKY’s net sales increased 14.7% year-over-year to ¥2.18 trillion ($15.13 billion) for the fiscal year that ended March 31, 2023. The company’s operating profit increased 1.2% year-over-year to ¥168.83 billion ($1.17 billion). Its gross profit increased 3.7% year-over-year to ¥584.52 billion ($4.06 billion). In addition, its net EPS came in at ¥300.64.
TTDKY’s EPS and revenue for fiscal 2024 are expected to increase 15% and 288.5% year-over-year to $3.03 and $14.40 billion, respectively. Over the past year, the stock has gained 36.8% to close the last trading session at $37.71.
TTDKY’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Within the Technology - Hardware industry, it is ranked #12 out of 42 stocks. The stock has a B grade for Value and Stability. Click here to see the additional ratings of TTDKY for Growth, Momentum, Sentiment, and Quality.
Toshiba Corporation (TOSYY)
Headquartered in Tokyo, Japan, TOSYY provides electronic devices and storage solutions worldwide. It operates through five segments: Energy Systems & Solutions; Infrastructure Systems & Solutions; Building Solutions; Digital Solutions; and Other segments.
TOSYY’s EBITDA grew at a CAGR of 114.7% over the past three years. Its EBIT grew at a CAGR of 39.9% over the past three years.
In terms of forward EV/ Sales, TOSYY’s 0.65x is 62.4% lower than the 1.72x industry average. Its 8.45x forward EV/EBITDA is 22.6% lower than the 10.92x industry average. Likewise, its 0.60x forward Price/Sales is 55.7% lower than the 1.36x industry average.
For the fiscal year that ended March 31, 2023, TOSYY’s net sales increased maginally over the prior-year quarter to ¥3.36 trillion ($23.33 billion). Also, its total liabilities and equity declined 5.2% from the previous year to ¥3.54 trillion ($24.56 billion).
Street expects TOSYY’s revenue for fiscal 2024, to increase significantly year-over-year to $22.47 billion. Over the past month, the stock has fallen 3.8% to close the last trading session at $15.55.
TOSYY’s strong prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. TOSYY is ranked #11 in the same industry. It has a B grade for Value and Momentum. We have also given TOSYY grades for Growth, Stability, Sentiment, and Quality. Get all TOSYY ratings here.
Quantum Corporation (QMCO)
QMCO provides products for storing and managing digital video and unstructured data in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. Some of the company’s products include CatDV, StorNext software systems, and Scalar tape systems.
On March 1, 2023, QMCO announced a partnership with WaitTime, the industry leader in crowd intelligence analytics, to deliver a certified solution that provides real-time crowd intelligence using video surveillance data captured and stored by Quantum's Unified Surveillance Platform (USP).
This certified solution is easy to deploy and gives organizations increased visibility within the operations of their venue while providing additional value to end users.
QMCO’s total assets grew at a CAGR of 8.8% over the past three years, while its forward EBITDA grew at a 29.1% CAGR.
In terms of forward EV/ Sales, QMCO’s 0.44x is 85% lower than the 2.94x industry average. Its 10.71x forward EV/EBITDA is 26.6% lower than the 14.59x industry average. Likewise, its 0.26x forward Price/Sales is 90.9% lower than the 2.89x industry average.
QMCO’s total revenue for the fourth quarter that ended March 31, 2023, increased 10.6% year-over-year to $105.34 million. Its non-GAAP gross profit increased 2.2% year-over-year to $37.41 million. The company’s adjusted EBITDA increased 145.2% year-over-year to $1.04 million.
Analysts expect QMCO’s revenue for the quarter ended September 30, 2023, to increase marginally year-over-year to $99.53 million. Over the past three months, the stock has gained 13.7% to close the last trading session at $1.07.
QMCO’s positive outlook is reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It is ranked #8 in the Technology - Hardware industry. It has a B grade for Value, Sentiment, and Quality. Click here to see the other ratings of QMCO for Growth, Momentum, and Stability.
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TTDKY shares were trading at $38.38 per share on Friday afternoon, up $0.67 (+1.78%). Year-to-date, TTDKY has gained 17.95%, versus a 16.58% rise in the benchmark S&P 500 index during the same period.
About the Author: Malaika Alphonsus
Malaika's passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions.
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