The tech industry bore the brunt of the multi-decade-high inflation, the Fed’s hawkish stance, massive layoffs, and recessionary fears. However, with individuals and businesses increasing their tech investments and adopting advanced technologies, the tech industry is poised to witness significant growth in the foreseeable future.
The global information technology (IT) market is expected to reach $6.2 trillion by 2028 at a CAGR of 4.5% between 2022 and 2030. Furthermore, as per a research report by Market Research Future (MRFR), the marketing cloud platform market is expected to reach approximately $19.8 billion by the end of 2030, growing at a CAGR of over 8.9% during the period.
Given this backdrop, it could be wise to invest in quality tech stocks Jabil Inc. (JBL) and TTM Technologies, Inc. (TTMI) for 2023 to garner significant returns.
Jabil Inc. (JBL)
JBL offers products and services for manufacturing all over the world. The company operates in two broad segments: Electronics Manufacturing Services and Diversified Manufacturing Services.
On December 15, 2022, Mark Mondello, JBL’s Chairman, and CEO, said, “I remain confident in our plan moving forward, which is supported by both strong secular tailwinds and continued refinement of our more traditional businesses.” The company raised the core EPS projection for the year (fiscal 2023) to $8.40.
On November 14, JBL inaugurated a new design facility in Wroclaw, Poland, where it is expected to create cutting-edge solutions for various industries, including healthcare and automotive. JBL aims to expand its business with this strategic move.
JBL’s trailing-12-month ROCE of 41.31% is 769% higher than the 4.75% industry average. Its trailing-12-month ROTA of 4.77% is 213.9% higher than the industry average of 1.52%.
JBL’s net revenues came in at $9.64 billion for the first quarter (ended November 30, 2022), up 12.5% year-over-year. Its gross profit increased 10.1% year-over-year to $743 million. Also, its core operating income increased 15.3% year-over-year to $461 million.
Its core earnings increased 12.3% year-over-year to $319 million, while its core earnings per share increased 20.3% year-over-year to $2.31 for the same quarter.
Analysts expect JBL’s revenue to increase 7.3% year-over-year to $8.10 billion for the fiscal second quarter ending February 2023. Its EPS is estimated to rise 9.9% year-over-year to $1.85 for the same quarter. It surpassed EPS and revenue estimates in all four trailing quarters, which is impressive.
Over the past six months, the stock has gained 45.8% to close the last trading session at $77.66. Moreover, it has also gained 31.8% over the past three months.
JBL’s POWR Ratings reflect this promising outlook. It has an overall A rating, equating to a Strong Buy. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Value, Momentum, and Quality. Within the Technology – Services industry, it is ranked #5 out of 79 stocks. To see the additional POWR Ratings for Growth, Stability, and Sentiment for JBL, click here.
TTM Technologies, Inc. (TTMI)
TTMI manufactures and sells printed circuit boards (PCBs) worldwide. The company operates through two segments: PCB and RF&S Components. It focuses on producing high-tech PCBs and backplane assemblies and also designs and produces high-frequency RF and microwave parts.
On December 6, 2022, TTMI and Raytheon Missiles & Defense, a Raytheon Technologies Corporation (RTX) business, reached a multi-year agreement to provide radio frequency assemblies, electronic hardware, and PCBs for the SPY-6 family of radars. This agreement has the potential to reach $500 million over five years.
In September, TTMI announced a distribution agreement with RFMW, a radio frequency, microwave components, and semiconductors distributor. TTMI is expected to offer its complete line of RF&S products through RFMW. This partnership might be strategically beneficial for the company.
TTMI’s trailing-12-month ROCE of 6.49% is 36.5% higher than the 4.75% industry average. Its trailing-12-month ROTA of 2.94% is 93.8% higher than the industry average of 1.52%.
For the fiscal 2022 third quarter (ended October 3, 2022), TTMI’s net sales increased 20.5% year-over-year to $671.08 million, while its non-GAAP gross profit increased 37.8% from the year-ago value to $132.30 million. Its non-GAAP operating income was $68.21 million, a 43% rise year-over-year.
Furthermore, the company’s non-GAAP net income increased 58.5% year-over-year to $57.92 million, while its non-GAAP EPS stood at $0.56, up 64.7% year-over-year.
Analysts expect TTMI’s revenue to increase 10.7% year-over-year to $643.15 million for the fiscal first quarter ending March 2023. The company’s EPS for the same period is expected to grow 45.8% year-over-year to $0.35. Moreover, the company surpassed the consensus EPS estimates in all four trailing quarters.
Shares of TTMI have gained 37.5% over the past six months and 15.4% over the past month to close the last trading session at $17.30.
TTMI’s POWR Ratings reflect its strong fundamentals. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.
The stock has an A grade for Growth and a B for Momentum, Sentiment, and Quality. Within the Technology – Electronics industry, it is ranked #4 out of 44 stocks. Click here to see additional ratings of TTMI (Value and Stability).
JBL shares were trading at $77.66 per share on Monday morning, up $1.59 (+2.09%). Year-to-date, JBL has gained 13.87%, versus a 4.20% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
2 Must-Buy Tech Stocks for 2023 StockNews.com
