The tech industry has been impressively resilient amid the COVID-19 pandemic, given the rising digitization across businesses and the increasing rate of technological uptake. According to Gartner, worldwide IT spending is projected to increase at a 4% CAGR to $4.40 trillion in 2022, while tech budgets in the U.S. are expected to expand by 6.7% this year, with software spending expected to be especially strong compared to other tech categories.
Rising concerns over historically high inflation currently and climbing interest rates have battered several fundamentally sound technology stocks this year. However, this provides the right opportunity to scoop up these stocks at attractive prices for future gains.
Given this backdrop, we think fundamentally sound tech stocks Autodesk, Inc. (ADSK), Infineon Technologies AG (IFNNY), and Keysight Technologies, Inc. (KEYS), which have declined more than 30% in price this year but poses solid growth potential, could be ideal bets now.
Autodesk, Inc. (ADSK)
ADSK in San Rafael, Calif., is a three-dimensional (3D) design, engineering, and entertainment software and services company with primary product offerings that include AutoCAD Civil 3D, a surveying, design, and documentation solution, BIM 360, a construction management cloud-based software, and AutoCAD LT, drafting and detailing software.
In March, ADSK launched Bridge, a data-sharing capability that gives control to construction teams to share only relevant data with project stakeholders. This new capability ensures data privacy and works efficiency by reducing the need to process manual data. This marks a significant enhancement to Autodesk Construction Cloud.
Also in March, the company announced that it had signed a definitive agreement to acquire The Wild, a cloud-connected, extended reality (XR) platform, intending to meet the technological advancements required in the field of augmented reality (AR) and virtual reality (VR) within the architecture, engineering, and construction (AEC) industry. This should prove beneficial for the company because “XR is a must-have business imperative for today and an important part of Autodesk’s Forge platform vision,” said Andrew Anagnost, CEO, and president of ADSK.
ADSK’s total net revenue increased 16.6% from the prior-year quarter to $1.21 billion in its fiscal fourth quarter, ended Jan. 31, 2022. Its gross profit for the quarter came in at $1.10 billion, reflecting a 15.8% increase year-over-year. For the fiscal year ended Jan. 31, 2022, its net cash provided by operating activities stood at $1.53 billion, up 6.5% year-over-year.
The $1.34 consensus EPS estimate for the fiscal first quarter, ended April 30, 2022, represents a 29.6% improvement year-over-year. The $1.15 billion consensus revenue estimate for the same quarter represents a 16.4% increase from the same period the prior year. It has an impressive earnings surprise history; it has topped the Street’s EPS estimates in each of the trailing four quarters.
ADSK’s shares have slumped 33.7% in price year-to-date to close the last trading session at $186.32.
ADSK’s strong fundamentals are reflected in its POWR Ratings. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree. ADSK has an A grade in Quality. It is ranked #32 of 157 stocks in the Software - Application industry.
Beyond what is stated above, we have also rated ADSK for Momentum, Stability, Sentiment, Value, and Growth. Get all the ADSK ratings here.
Infineon Technologies AG (IFNNY)
IFNNY is a Germany-based designer, developer, and manufacturer of semiconductors and related system solutions. The company operates through four segments Automotive; Industrial Power Control; Power Management & Multimarket; and Chip Card & Security.
On May 5, IFNNY announced that it had switched the operation of its Austin, Tex., semiconductor factory to 100% renewable power, which will help the company minimize energy losses, enable higher device and application performance, and use energy more efficiently. This brings the company closer to its carbon neutrality goal for all its U.S. sites by 2022.
On April 19, Winbond Electronics Corporation, a leading global supplier of semiconductor memory solutions, and IFNNY announced the expansion of their collaboration with the launch of the new HYPERRAM™ 3.0., which has a higher bandwidth, low power consumption, and easy control, enabling it to improve the performance of IoT end devices significantly. The company is expected to continue benefiting from this collaboration amid the fast-growing IoT market.
IFNNY’s revenue increased 20.1% from the prior-year quarter to €3.16 billion ($3.42 billion) in its fiscal first quarter, ended Dec. 31, 2021. Its gross profit for the quarter came in at €1.31 billion ($1.42 billion), reflecting a 33.2% increase year-over-year, while the operating profit stood at €617 million ($668.37 million), up 85.8% year-over-year. Its EPS increased 84.2% from the prior-year quarter to €0.35.
The Street expects IFNNY’s EPS for its fiscal year ending Sept.30, 2022, to improve 28.5% year-over-year to $1.78. The $13.89 billion consensus revenue estimate for the same period represents a 9.4% increase year-over-year. The company also surpassed the consensus EPS estimates in three of the trailing four quarters.
IFNNY’s shares have slumped 41.1% in price year-to-date to close the last trading session at $27.09.
IFNNY’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our POWR Ratings system.
The company also has a B grade in Growth, Value, and Stability. The stock is ranked #14 in the B-rated Semiconductor & Wireless Chip industry. To get IFNNY’s ratings for Momentum, Quality, and Sentiment, click here.
Click here to checkout our Semiconductor Industry Report for 2022
Keysight Technologies, Inc. (KEYS)
KEYS in Santa Rosa, Calif., is a technology company that provides electronic design and test solutions. It operates through two segments: Communications Solutions Group (CSG); and Electronics Industrial Solutions Group (EISG).
On May 2, 2022, KEYS partnered with TestEquity, the largest authorized distributor of test and measurement solutions and production supplies, to add Keysight InfiniiVision 3000G Oscilloscope to TestEquity’s product portfolio. This is expected to be strategically beneficial for the company.
On April 26, KEYS announced the launch of a new four-channel M9484C VXG vector signal generator with a frequency of up to 54 GHz that offers up to 5 GHz of radio frequency (RF) bandwidth and low phase noise in a single instrument. This should expand the company’s VXG series portfolio with real-time capabilities to support demanding wireless industry applications.
For its fiscal first quarter, ended Jan. 31, 2022, KEYS’ revenue increased 5.9% year-over-year to $1.25 billion. Its income from operations grew 27.8% from its year-ago value to $271 million. Its net income for the quarter stood at $229 million, reflecting a 33.1% increase year-over-year. Furthermore, its net EPS was $1.24, up 34.8% from the prior-year quarter.
KEYS’ revenue for its fiscal quarter ended April 30, 2022, is expected to come in at $1.30 billion, indicating a 6.8% year-over-year growth. The company’s EPS is expected to increase 16.4% year-over-year to $1.68 for the same quarter. KEYS also beat the consensus EPS estimates in the trailing four quarters.
The stock has slumped 36% in price year-to-date to close yesterday’s trading session at $132.20.
It is no surprise that KEYS has an overall B rating, which equates to Buy in our POWR Ratings system. The stock has an A grade in Quality and a B in Stability and Sentiment. Among the 48 stocks in Technology - Electronics industry, KEYS is ranked #6.
In addition to the POWR Rating grades I have just highlighted, one can see the KEYS’ ratings for Growth, Value, and Momentum here.
ADSK shares were trading at $186.40 per share on Tuesday afternoon, up $0.08 (+0.04%). Year-to-date, ADSK has declined -33.71%, versus a -15.84% 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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