The tech industry incurred heavy losses in the past year as high-interest rates, supply chain disruptions, and market turbulence plagued the macroeconomy. However, the sector is well-positioned for long-term growth. Therefore, investors could consider buying fundamentally strong tech growth stocks Box, Inc. (BOX), NetScout Systems, Inc. (NTCT), and Celestica Inc. (CLS).
The tech industry is constantly evolving thanks to new trends and advancements, making it a sector with rapid growth. As tech services companies continue offering innovations to boost efficiency and growth, private and government spending is expected to increase.
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.
The consumer price index increased 4% relative to a year earlier, its lowest rate since March 2021, representing a decline in inflation for the month of May. While recession concerns remain, the industry should witness robust growth over the long term. Revenue in the IT services market is expected to grow at a CAGR of 6.9%, resulting in a market volume of $1.57 trillion by 2027.
Additionally, investors’ interest in tech stocks is evident from the Technology Select Sector SPDR ETF’s (XLK) 40.3% returns year-to-date.
Given these factors, investors could look to buy the featured tech stocks. Let’s take a closer look at their fundamentals.
Box, Inc. (BOX)
BOX provides a cloud content management platform that enables organizations of various sizes to manage and share their content from anywhere on any device. The company’s Software-as-a-Service platform allows users to collaborate on content, automate content-driven business processes, develop custom applications, and implement data protection, security, and compliance features.
BOX’s revenue grew at a CAGR of 11.9% over the past three years. Its EBITDA grew at a CAGR of 14.8% over the past three years. Moreover, its total assets grew at a CAGR of 5.3% over the past three years.
For the fiscal first quarter ended April 30, 2023, BOX’s non-GAAP gross profit increased 7.8% year-over-year to $196.18 million. Its non-GAAP operating income increased 16.7% year-over-year to $57.36 million.
Its non-GAAP net income attributable to common stockholders rose 33.7% year-over-year to $47.52 million. Additionally, its non-GAAP net EPS attributable to common stockholders came in at $0.32, representing a 39.1% increase over the prior-year period.
BOX’s EPS and revenue for the quarter ending July 31, 2023, are expected to increase 24.9% and 6.2% year-over-year to $0.35 and $261.29 million, respectively. It has an impressive earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters.
Over the past year, the stock has gained 31.7% to close the last trading session at $29.84.
BOX’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Within the B-rated Technology - Services industry, it is ranked #2 out of 80 stocks. The stock has an A grade for Growth and Quality and a B for Value.
Click here to see the additional ratings of BOX for Momentum, Stability, and Sentiment.
NetScout Systems, Inc. (NTCT)
NTCT provides service assurance and cybersecurity solutions for protect digital business services against disruptions worldwide. The company offers nGeniusONE management software, nGeniusPULSE, and nGenius Business Analytics, among other cybersecurity solutions.
NTCT’s EBITDA grew at a CAGR of 6.9% over the past three years. Moreover, its EBIT grew at a CAGR of 57.9% over the past three years.
NTCT’s non-GAAP gross profit for the fourth quarter that ended March 31, 2023, increased 8.9% year-year-over-year to $161.43 billion. Its non-GAAP income from operations increased 37.9% year-over-year to $32.71 million.
Its non-GAAP net income increased 25.7% year-over-year to $27.19 million. Additionally, its non-GAAP net EPS came in at $0.38, representing a 31% increase over the prior-year quarter.
NTCT’s EPS for the quarter ending June 30, 2023, is expected to increase 27.1% year-over-year to $0.31. It has a commendable earnings surprise history, surpassing the consensus EPS estimates in three of the trailing four quarters. Over the past three months, the stock has gained 5.9% to close the last trading session at $29.51.
NTCT’s POWR Ratings reflect solid prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. It is ranked first in the same industry. It has an A grade for Growth and Value and a B for Sentiment and Quality.
In total, we rate NTCT on eight different levels. Beyond what we stated above, we have also given NTCT grades for Momentum and Stability. Click here to access all the ratings.
Celestica Inc. (CLS)
Headquartered in Toronto, Canada, CLS provides hardware platform and supply chain solutions in North America, Europe, and Asia. It operates through two segments, Advanced Technology Solutions and Connectivity & Cloud Solutions.
CLS’ revenue grew at a CAGR of 9.2% over the past three years. Its EBITDA grew at a CAGR of 32.7% over the past three years. Moreover, its total assets grew at a CAGR of 15.6% over the past three years.
CLS’ revenue increased 17.3% year-over-year to $1.84 billion for the first quarter ended March 31, 2023. The company’s non-IFRS adjusted gross profit increased 25% year-over-year to $172.60 million.
Its non-IFRS adjusted net earnings increased 18.7% year-over-year to $57.20 million. In addition, its non-IFRS adjusted EPS came in at $0.47, representing a 20.5% increase from the prior-year quarter.
CLS’ EPS and revenue for the quarter ending June 30, 2023, are expected to increase 7.9% and 5.6% year-over-year to $0.47 and $1.81 billion, respectively. The company has a creditable earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters.
Over the past nine months. the stock has gained 50.7% to close the last trading session at $14.24.
It is no surprise that CLS has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. It is ranked #4 in the Technology - Services industry. The stock has an A grade for Value and Momentum and a B for Growth.
Click here to see the additional ratings of CLS for Stability, Sentiment, and Quality.
What To Do Next?
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BOX shares were trading at $29.84 per share on Monday morning, down $0.20 (-0.67%). Year-to-date, BOX has declined -4.14%, versus a 15.35% 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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