The rising popularity of tech gifts, strong spending intentions, flash sales, diverse shopping channels, and pre-holiday discounts make the consumer tech sector an attractive investment. Therefore, investors may consider fundamentally strong, consumer tech stocks like Amazon.com, Inc. (AMZN), HP Inc. (HPQ), and Lenovo Group Limited (LNVGY).
A blend of in-store and online shopping trends, along with strong consumer preferences for mass merchants and electronics stores, signals a busy holiday season, driving demand for consumer tech products. Sales of smart home devices, wearables, AI-powered PCs, and other tech items are surging, with U.S. e-commerce revenue expected to grow by $657.80 billion, or 53.79%, from 2024 to 2029.
Furthermore, with expanding internet reach, consumers are more connected, informed, and ready to shop, especially with pre-Christmas discounts targeting savvy buyers. This trend supports the rise of AI-powered tech and 5G integration, with the IT hardware market projected to grow at a 7.9% CAGR to $191.03 billion by 2029.
Considering these conducive trends, let’s assess the fundamentals of the three abovementioned consumer tech stocks.
Amazon.com, Inc. (AMZN)
AMZN engages in the retail sale of consumer products and subscriptions through online and physical stores in North America and internationally. It operates through three segments: North America, International, and Amazon Web Services (AWS). The company's products offered through its stores include merchandise and content purchased for resale; and products offered by third-party sellers.
On October 31, 2024, AMZN’s AWS and Lumen announced a partnership to enhance U.S. network operations using AWS’s generative AI technology and Lumen’s fiber network, supporting scalable, AI-driven services and autonomous network capabilities.
On November 4, 2024, AWS launched the Generative AI Partner Innovation Alliance to expand the reach of its Generative AI Innovation Center. This alliance will connect customers globally with partners to help develop and deploy generative AI solutions.
In terms of the trailing-12-month net income margin, AMZN’s 8.04% is 74% higher than the 4.62% industry average. Likewise, its 11.25% trailing-12-month Capex / Sales is 290.2% higher than the 2.88% industry average. Moreover, the stock’s 1.16x trailing-12-month asset turnover ratio is 16.2% higher than the 1x industry average.
AMZN’s total net sales for the fiscal third quarter, which ended on September 30, 2024, were $143.08 billion. The company’s operating income was $11.19 billion. Additionally, the company’s net income and EPS were $9.88 billion and $0.94, respectively.
Street expects AMZN’s EPS and revenue for the quarter ending December 31, 2024, to increase 46.9% and 10.1% year-over-year to $1.47 and $187.14 billion, respectively. It surpassed the Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 44.1% to close the last trading session at $206.84.
AMZN’s POWR Ratings reflect its robust outlook. It has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
AMZN has an A grade for Sentiment and a B for Growth and Quality. It is ranked #12 out of 52 stocks in the A-rated Internet industry. Beyond what we have stated above, we also have given AMZN grades for Value, Momentum, and Stability. Get all the AMZN’s ratings here.
HP Inc. (HPQ)
HPQ provides personal computing and other digital access devices, imaging and printing products, and related technologies, solutions, and services worldwide. The company operates through three segments: Personal Systems, Printing, and Corporate Investments.
On October 30, 2024, HPQ announced HP Amplify AI, a new AI-focused program to support partners with tools, training, and resources for driving AI outcomes, along with the global expansion of the HPQ’s Business Partner Program.
On October 29, 2024, HPQ partnered with Staples to introduce the HP DesignJet XL3800 printers in stores nationwide, providing customers with same-day, high-quality, large-format color printing options for posters, blueprints, and more.
In terms of the trailing-12-month EBIT margin, HPQ’s 7.90% is 52.7% higher than the 5.17% industry average. Its 29.05% trailing-12-month Return on Total Capital is 887.3% higher than the 2.94% industry average. Also, the stock’s 1.43x trailing-12-month asset turnover ratio is 132.4% higher than the 0.61x industry average.
For the fiscal third quarter ended July 31, 2024, HPQ reported total net revenue of $13.52 billion, up 2.4% year-over-year. Its non-GAAP earnings from operations were $1.09 billion. Moreover, the company’s non-GAAP net earnings were $819 million, or $0.83 per share.
Analysts expect HPQ’s EPS for the quarter ended October 31, 2024, to increase 3.4% year-over-year to $0.93. Its revenue for the same quarter is expected to grow 1.4% year-over-year to $14.01 billion. HPQ’s stock has gained 36.4% over the past year to close the last trading session at $37.67.
HPQ’s POWR Ratings reflect strong prospects. It has an overall rating of B, translating to a Buy in our proprietary system.
It has a B grade for Value, Momentum, and Quality. Within the Technology – Hardware industry, it is ranked #8 out of 40 stocks. To access the additional POWR Ratings of HPQ for Growth, Stability, and Sentiment, click here.
Lenovo Group Limited (LNVGY)
Headquartered in Quarry Bay, Hong Kong, LNVGY is an investment holding company that develops, manufactures, and markets technology products and services. It operates through the segments of Intelligent Devices Group, Infrastructure Solutions Group, and Solutions and Services Group.
In terms of the trailing-12-month Return on Common Equity, LNVGY’s 21.82% is 445% higher than the 4% industry average. Similarly, its 2.66% trailing-12-month Return on Total Assets is 40.4% higher than the industry average of 1.90%. Furthermore, the stock’s 1.52x trailing-12-month asset turnover ratio is 146.6% higher than the industry average of 0.61x.
In the fiscal first quarter ended June 30, 2024, LNVGY’s revenue increase 19.7% year-over-year $15.45 billion. Likewise, its operating profit was $494 million, up 26.7% year-over-year. Its non-HKFRS profit attributable to equity holders stood at $315 million, indicating 64.9% growth from the prior-year quarter. Moreover, its EPS rose 34.3% year-over-year to $1.92.
For the quarter that ended September 30, 2024, LNVGY’s revenue is expected to increase 13.4% year-over-year to $16.34 billion. Its EPS for the fiscal 2025 is expected to increase 16.7% year-over-year to $1.88. Over the past nine months, the stock has gained 22.7% to close the last trading session at $25.67.
LNVGY’s robust fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which translates to a Buy in our proprietary rating system.
LNVGY’s has an A grade for Value and a B for Momentum and Sentiment. Within the Technology – Hardware industry, it is ranked #5. To see LNVGY’s Growth, Stability, and Quality ratings, click here.
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AMZN shares were trading at $208.78 per share on Tuesday afternoon, up $1.94 (+0.94%). Year-to-date, AMZN has gained 37.41%, versus a 26.87% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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